This is exactly what Greenspan did in 2005 right before he left office: he raised the interest knowing full well that millions of variable rate mortgages would suffer the consequences, thus initiating the 2008 Great Depression. So the Federal Reserve private bank deliberately imploding the economy again.....because liar home loans are back in full swing, just called by a different name, and lots of variable rate loans will start going into default this year. The reality is we have never "recovered" from 2008.
Why will 2016 be different from 2015: Simply because the Fed has finally started to raise interest rates and will continue to slowly do so until the US economic recession fully manifests. Whether or not Ms. Yellen has finished rate hikes or if the Fed can get in one or two more before the bottom falls out is largely irrelevant. The fact remains that Q4 GDP growth is barely above 1%, according to the Atlanta Fed GDP model. Any additional rate hikes will only expedite the inevitable slowdown as the global recession has already hit US shores. The catalyst for this imminent recession is that asset prices and debt levels have increased to a level that can no longer be supported by incomes and economic growth.
I cannot stress how important the watershed change in US monetary policy will be for markets in early 2016. The major markets (meaning currencies, bonds and equities) have been anticipating a graceful exit from QE and the trillions of dollars’ worth of deficit spending that have been deployed since 2011. In other words, the entire world of capital markets have been banking on the success of central banks. In the vanguard of this belief has been the universal carry trade of going long the dollar and equities, while shorting precious metals.I believe in realities not fantasies. I’m betting that you cannot solve the debt crisis evident during the Great Recession by taking on a record amount of debt, and that you cannot fix the asset bubbles evident during the Great Recession by artificially pushing them to record high prices through QE and ZIRP. It is this reality that will take its vengeance in 2016. And it is the unraveling of this delusion that is the basis of Pento Portfolio Strategies’ investment model that is the opportunity we are prepared to profit from......