It is all a question of where We are at, as this article tries to explain. I know that Our trouble started in July of 2007, though the traditional Numbers never appeared; hidden by increasing foreign sales of American product, and a higher Inflation rate. I also believe it ended in January, after American business had then to record their losses for 2007. It was a strange Recession all around, with Unemployment coming after the end of the Recession; this due to the recorded losses of 2007, and the stagflation effects of a Oil price which refuses to drop though the fundamentals for a high Oil price do not exist; Oil shortages are not there, and Speculation models continue to buy at high Prices. I find it hard to imagine that the Funds will be capable of turning a Profit in the Commodity markets anywhere in the first two Quarters of the new year, as there is nothing to basically push for increased Prices. I truly believe We have weathered the Storm, and now only must contain the Cost of the Clean-Up.
Here is a good explanation of the situation, and one which I do not believe that the Fed is helping in any manner. Wall Street and the Commodity markets were too expansive since 2005, due to their mechanical Buying pattern produced by automated Buy models. It caused a rise in the market approx. 20% more than was realistic, and the endured Recession has reset Market prices, though it has still to work itself through the Commodities. The Fed cannot help with a growth promotion of low Interest rates, which will erode the Dollar, and which will maintain the Commodity prices. Consumers will not extend their purchase patterns as their Household Income does not increase, and the Markets will not advance. I am not an Expert in the area, but cannot see the great loss of liquidity in the economy; only a loss of Profits coming from the financial markets, which because of the Fed’s close association with the financial community, becomes a Fed commitment to protect. There are times when I am extremely opposed to Fed policy, and this is one of them.
This article might miss the import of what is happening, though it is excellently written. The article assumes that niche Banking to serve specific Customers is the real Propellent towards the move to small Banking. I think the Movement is far more extensive than simple niche supply. The large Banking systems has become commercial investment organizations, and have abandoned the traditional aspects of Banking, though their traditional Customers are still consumed with the traditional needs supplied by Banks. I await the arrival of small Banks for mainstream America, as replacement for the lost traditional practices of Banking. lgl