The Fed and US are going to have to duck a punch(by mannfm11)

the mortgage business has funded the economy on the consumer side forthe past 15 years or so, starting with the FNMA plunge into the marketin the early 1990's. This has created more and more consumer credit andcorporate profits, giving rise to more corporate credit as well, forthings like buying back stocks from liquidating public investors.Deflation is based on the same thing as inflation, credit origination.If these companies are either out of business or mortally wounded, thenthis bodes for less credit, not more. Hillary Clinton proposed thelargest federal assistance I heard, $1 billion, which is like peeing inthe lake to raise the level 3 feet. Even a lake the size of a coffeecan isn't going to respond to that.

I'm watching here. Thequestion has always been whether the Fed and government would bewilling to destroy themselves before they allow deflation. I think oncethis deflation gets started, it will be like having Michael Vicks dogJane get on your leg (Jane supposedly won 3 fights, meaning you don'tmess with Jane). The Fed and US are going to have to duck a punch toinflate out of this one.