Enough charts and numbers and all that other stuff. We think the summation messages are very clear and certainly have implications for at least a domestic economy that is suffering primarily from a lack of aggregate demand, let alone a global economy in part suffering from the same. As hard as this may be to hear, deleveraging is still barely out of the total cycle starting gates. At the household level we have not yet even seen organic deleveraging, but rather deleverageing through defaults. Jobs and income growth are the keys to the deleveraging process at the household level, but they are for all intents and purposes missing in action in the current cycle. And that speaks to time. Time for true balance sheet healing and ultimately a recovery in aggregate demand. The very means for households to delever independent of default are not visible. Not yet. And so we need to expect 1) a stop-start real world domestic economic recovery, 2) Fed QE that does nothing to reinvigorate the real economy, but has the real potential to create yet more unproductive asset bubbles, 3) continued volatility in financial asset and commodity prices based on investor perceptions of Fed and global central banker sponsored liquidity and the effectiveness or not of liquidity injections at any point in time. In reality, this is nothing we have not already been dealing with up to this point. But for our investment activities specifically, we believe it all comes down to just how far the Fed and their global central banking brethren are willing to push the envelope in terms of money printing, currency intervention, etc. For now, investors still view these activities as virtuous. But at some point unless we do indeed see true real world economic reinvigoration, we believe the markets will come to view further Fed and global central banker monetary "experiments" quite negatively. All part of the psychology of a financial market and economic cycle.
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