The key is the stimulus next year

AGA7d

This year we see an extraordinary stimulus package - so for the economy to sustain next year, the gov has to continue the stimulus without much cutback. However, I don't see that to be an easy task in Congress. There are already lots of calls for gov to reduce the amount of budget deficit. Given the reduced income (several hundred billion), the same spending will increase the deficit (things will be different if the Bush tax expires without renewal).

Another big source of money pumping is from the central bank, the Fed has loaded on its balance sheet with enormous amount of illiquid assets. So it will be a hard push for the congress to authorize further increase of its balance. On the contrary, there is talk already going on how to unload the assets.

I see the green shoots will die next year unless the gov takes the unpopular route of continued stimulus spending. Likely there will be bills for extending the unemployment benefits to allay the social unrest. But there will be big cuts in other categories.

nctree

epsom

Thanks

weigoodone01

trueself

Alchemist