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)
Source:
The Next Rogue Wave
Financial Sense
By: Jim Puplava
December 15, 2006
http://www.financialsense.com/stormwatch/2006/1215.html
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