Jr Deputy Accountant and Michael Panzner Discuss 2010 Part II: The Impotent Fed; An Election Year; Waiting for the Recovery

Thumbnail image for Thumbnail image for Thumbnail image for angry bear.jpgIn case you missed part one of JDA's 2010 Outlook interview with Financial Armageddon's Michael Panzner, you can find it on Going Concern here.
For the first half of my 2010 talk with Panzner, I focused on the other shoes left to drop; commercial real estate, political backlash, and the threat of the massive bubble still being inflated in China. But even bears have their bright sides and Panzner is no different. So what do we have to look forward to this year? Oh crap, more doom and gloom; sorry, I got my interviews mixed up.

Panzner points to our leaders' missteps throughout the crisis as a major factor that could place a damper on any hope of recovery. "Many of the problems and imbalances that helped about the crisis have gotten worse," he says, "That means people have less in reserve than they did before, and many have not positioned themselves for a 'new normal.' That suggests the next leg down, economically speaking at least, could be much worse than what we've experienced so far." If only we'd been prepared for the worst instead of coddled into believing everything is better, eh?
When asked to take a guess as to when the Fed would finally raise interest rates, Panzner gave an interesting answer. "In my view, the Fed is no longer in control – of the economy or its destiny. For the most part, market and other forces, not the FOMC, will determine what happens to interest rates in future." So I guess it doesn't matter when they'll raise rates, markets are no longer listening. Or are they?
A big picture sort of guy, Panzner identifies sociopolitical threats as another major concern this year, and with this being an election year (hello, Scott Brown anyone?), I'm willing to go on the record as agreeing wholeheartedly with him (shock). "Wait and see what happens to the social and political mood if and when the economy rolls over," he says ominously.
Oh, believe me, JDA is waiting. And waiting. And waiting. Still no rollover but dammit, I'll still be here twiddling my thumbs.
Hopefully I'll get a chance to check in with Panzner again come summer to see where we are.
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