http://baselinescenario.com/2008/12/29/exit-strategy/ What happened to the global economy and what we can do about it Sat, 26 May 2012 23:20:02 +0000 hourly 1 http://wordpress.com/ http://baselinescenario.com/2008/12/29/exit-strategy/#comment-2333 Wed, 31 Dec 2008 01:16:45 +0000 http://baselinescenario.com/?p=1763#comment-2333 Given the lags involved with both a monetary and a fiscal stimulus, and the deflationary expectations (look at the TIPS rates), the most likely scenario is the recovery will start no sooner than the end of next year. Inflation will probably not be a concern until 2011 at the earliest. And I would not worry about the Fed’s response. Bernanke is an inflation hawk. From mid 2006 until mid 2007 we had an inverted yield curve. (That in and of itself should have been an omen.) Bernanke will batten down the hatches well before inflation becomes a problem. If the last two recessions are any clue, the recovery will be slow and grueling (especially in the labor market). But most people will be grateful that we averted a full blown depression.

]]> http://baselinescenario.com/2008/12/29/exit-strategy/#comment-2324 Tue, 30 Dec 2008 16:09:16 +0000 http://baselinescenario.com/?p=1763#comment-2324 Because of the work I’m in I’ve been thinking about this recovery package for months. I’m to the point where I just want to see the darn thing so we have at least some idea of how it will work. Putting an effective one together isn’t too hard – getting it to Obama’s desk is the tricky part.

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