Markets & Economy

Years of slow recovery, low rates lie ahead

Commentary: Fears of overheating economy or Fed tightening are mostly imagined

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

During the Inquisition, the first step in extracting a confession or recantation of heresy was to show the accused the instruments to be used in the next stage. A glance at tongs, or the rack, and many would sing on the spot. So it was this week. The Fed inflicted no pain at all, just talked about the potential decision ahead, not yet made, considering at some point, maybe, depending, and if made, whenever, just a little pinch. You'd have thought every bond trader on the planet had been hanged upside down by precious body parts. However, even their shrieking was hard to hear above the yammering by the alternate-universe mobs. First, reality, then the choirs of confusion. Fed Chairman Ben Bernanke, visibly exhausted, did very smart things this week. Talk of tapering quantitative easing ("QE") exposes any parties excessively leveraged, deflating the bubble potential in QE. And some are: A group of REITs has a couple hundred billion bet on MBS leveraged with short borrowing...