Tuesday, November 5, 2013

Bubbles, Bubbles Everywhere!

A friend pointed me to this superb graphic from John Mauldin's weekly newsletter. The graphic below, in particular, looks ominous. This video is simply spectacular.

The Fed has a problem similar to what the historical character Abhimanyu in the Hindu epic Mahabharath faced - it broke conventional wisdom and monetary policy frontiers through its balance sheet expansion policies, but exiting the chakravyuha of quantitative easing is proving one heck of a challenge. The real risk is that the cheap-credit inflated foundations of balance sheet repair (of banks, firms, and households) and economic recovery may collapse dramatically. And with massive collateral damage in emerging economies to boot!

Anyways, even in the doomsday gloom, as the perceptive Tyler Durden writes, John Mauldin offers a silver-lining - how to make/save money in a bursting asset bubble! 

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