This could be a wild week. The volatility has already started, but there is a good chance for more turbulence to come as the week wears on. The overriding event of course is Greece, which is slowly inching into a default on its massive €320 billion of debt as it lives day-by-day with the threat of a bank bail-in hanging over its head. Add to that unstable situation a 2-day FOMC meeting ending Wednesday.
The United States Is Bankrupt If Rates Rise
My point has been that the Federal Reserve cannot raise rates because the US government cannot afford to pay a fair rate of interest. It is too overleveraged and spending too much money it doesn’t have. Mr Bernanke was telling everyone rates would be raised when unemployment fell below 6.5%, a target that has long since passed. You will recall it was only a few months ago that the Fed was telling everyone to expect an increase in interest rates to be announced at this week’s meeting. That’s a remote possibility now, with the consensus saying rates won’t increase until the end of the year. So the Fed no longer has any credibility, which is the risk that needs identifying.
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