The fed is really between a rock and a hard place here. Ease and the cheap credit fiesta continues, but the dollar is going to get hammered more as foreign banks head for the exits. Tighten and we’ll get a nasty deflationary spiral where both the rich and poor get poorer. Banks will fail. Wealth will be destroyed.

But I think the upcoming ease in interest rates is just going to prolong the inevitable and ultimately make things worse.

The markets need hard medicine. In the long run I think it would be better if some shaky banks failed, people got poorer for a while and had to endure hard times. The longer the easy money fiesta goes on, the more severe the ultimate crash will be.