Via this item at Dealbook comes the graphic below that goes a long way in explaining how cheap money from the Fed and reckless lending by big Wall Street banks has teed up another asset bubble that now appears to be in the early stages of bursting.
Then again, this bubble may prove resilient and it might be a completely different asset bubble that ends up bursting (that’s the thing about asset bubbles – you can’t really spot them in real time). But, one thing seems certain – it won’t be too much longer until we’re in the bust phase of the boom-bust cycle and we’re lamenting how we got there.
A more sanguine view can be found in the Dealbook story:
Tumbling oil prices are dimming one of the few big bright spots that banks have enjoyed since the financial crisis.
Banks have been lending hand over fist to companies in the nation’s energy industry, underwriting bonds, advising on mergers…
At least this time around, we’ll probably be spared of any references to “the Fed’s mopping up strategy” as that early-2000’s characterization of the central bank’s handling of asset bubbles (popularized by former Fed Chief Alan Greenspan) seems to have fallen out of favor.