Sunday, June 29, 2008


Monthly charts on two important indicators, one is leading the other is lagging, BOTH are at extremes..
Why the banking system is more important because a bank with deposit of 5 million can lend out 100 million, so a fall of 50% does not translate into 2 million but 50 million. That's the problem with asset deflation because capital requirement means selling or curtailing lending, which is why the Fed is panicked, because the market is doing the tightening for them. and that credit contraction is now going on in the US.


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These are my own views, please enjoy these insights