The D Word
Feb 14th, 2008 at 7:09 am by Susie
And yet, still no additional food stamps or unemployment benefits:
NEW YORK (Reuters) - Fear that a hobbled banking sector may set off another Great Depression could force the U.S. government and Federal Reserve to take the unprecedented step of buying a broad range of assets, including stocks, according to one of the most bearish market analysts.
That extreme scenario, which would aim to stave off deflation and stabilize the economy, is evolving as the base case for Bernard Connolly, global strategist at Banque AIG in London.
[...] “Avoiding a depression is, unfortunately, going to have to involve either a large, quasi-permanent increase in the budget deficit — preferably tax cuts — or restoring overvaluation of equity prices,” Connolly said on Monday.
“If conventional monetary policy is not enough to produce that result, the government may have to buy equities, financed by the Fed,” Connolly said.
Yeah, those permanent tax cuts for the wealthy! That’s the ticket!
