It is not much of a surprise that this Fed tightening cycle has resulted in a subprime financial crisis. The question now is whether or not the subprime issues will spread to the broader economy and tip the economy into a recession. The chart below displays past tightening cycles and the resultant financial crisis. The blue shaded area of the chart denotes past economic recessions.
(click on chart for larger image)
The Next Rogue Wave
By: Jim Puplava
December 15, 2006