Crisis after crisis after crisis after crisis.........

We had an equity bubble in 2000 thanks to easy money in 1997-1998.

The Fed eased aggressively as the equity bubble imploded after 2000.

Interest rates close to 1% gave birth to the housing bubble, the subprime expansion, and the orgy of M&A activity.

The Fed raised interest rates to more normal levels (around 5%-6%) once they determined the financial markets were under control.

The outcome is the uncovering of the bubbles: housing, subprime, and junk bond financing of M&A activity.

What will the Fed do next? If the implosion of the three bubbles keeps unfolding you can rest assured they will lower interest rates. Especially if the equity markets tank.

And so we move happily from crisis to bubble to crisis to bubble ....

More on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977