Wednesday, October 16, 2013

Our slowing hybrid real economy is running out of gas... and is in a shutdown mode!

Our economy is like a hybrid car. It accelerates using a motor fueled by risk taking, and then, playing it safe, breaking, it draws energy which it stores in a battery that can be used to further move forward, for a while.

Unfortunately, with current perceived risk-weighted capital requirements for banks, banks are not financing the future, only refinancing the past… and so we are running only on batteries, risking running out of all risk-taking!

In other words, our real economy has been placed, by dumb regulators, in a real shutdown mode.