economy, but sparked economic crises in Mexico, Asia and Russia that lasted the rest of that decade, writes Neil Shearing, chief economist at Capital Economics, in a note this morning.
housing bubble in the mid-2000s was fuelled by lax lending and a rapid expansion of mortgage debt, said Shearing.
Capital expects a modest rise in borrowing costs to only affect markets where valuations are the most extreme.
But if rates rose a bit further than economists expect, say to 4%, or even lower if quantitative tightening had a bigger impact, it would be enough to cause a drop in prices in the U.S.
Our country grows more cash crops than almost anywhere in the world, and yet much of it is exported as raw commodities, rather than as processed goods.
As shown in Guatieri’s chart below that goes back six decades “an index that combines inflation, unemployment, and real policy rates has never been stacked so much against the Fed at the start of a tightening cycle,” he wrote.
Like with crypto, the spending will continue to grow, but the population of people who invest and turn profits is likely to narrow down to the experts.
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