A lot of faith has been placed in central banking in general, too much faith. I Blame the Fed, Bank of Japan and central banking in general for a credit creation and increased monetary base, which has hurt consumers. 70% of the economy is consumer-based.
In the last bubble, the consumer got burned with telecom and technology now, the consumer is getting burned in the housing bubble. Burned on equities following the bust of the dot-com and telecom bubble, consumers put easy surplus credit toward real estate when the interest rate was low. The rising rate has been a feared trigger for default-fueled recession. I would say the recession is in the here and now. The Fed has baked a cake, and a lot of people came to the party via mortgage.
It is not going to be a soft landing.
~ Bill Laggner, Bearing Asset Management, "A Rough Summer", Hedgefund.net, August 28, 2006