The Twelve Steps to Financial Disaster

Thanks Nathan

http://www.rgemonitor.com/blog/roubini/242290

Why did the Fed ease the Fed Funds rate by a whopping 125bps in eight days this past January?

To understand the Fed actions one has to realize that there is now a rising probability of a “catastrophic” financial and economic outcome, i.e. a vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe. The Fed is seriously worried about this vicious circle and about the risks of a systemic financial meltdown.

The rest of the article goes on to describe the process of total financials meltdown. This is a little bearish even for me but as I argued in my letter I think the probabilities are higher than what most people think.

Good read so you at least know what the risks are on the downside.