Bond Outlook September 19th

Bernanke has put sticking plaster on the wound, a necessary but insufficient move. The problems of overspending and housing remain, and the immediate credit crisis has yet to be solved.

Bond Outlook [by bridport & cie, September 19^th 2007]

The essential first aid has been applied, brandy has been given to the victim, who has shown signs of life. Are those signs – the surge in stock markets – really evidence of a full recovery? Alas, no, for the underlying wounds have not been addressed:

US households must eventually match revenues to expenditure as otherwise this will just be another turn of the wheel before it falls off altogether
The bubble in housing must continue to deflate, i.e.