I actually see the banks liquidating as a point of strength not weakness. They are finally strong enough to take the losses. And the politicians & regulators realize that the decks will have to be cleared at some point.
It isn’t 100% sure the liquidation wave has arrived, there is some strong circumstantial evidence that the leading wave is hitting but it needs to be followed up by several months of stronger trustee sales before I say it has arrived. I think April is a possible inflection point for realization, when people point back to their charts they will be pointing to April.
That said I think the reality of some of the undealt with issues we are facing will hit sometime in 2011 or late 2010 (post-election) as the market is only looking at the recovery and not all the things that aren’t “normal” that need to go on to make it happen.
I think the Fed saw the freefall and it hit the emergency brake. Now that things basically are at a standstill, they will ease off the brake and let reality….. slowly… take effect.
