Dec 31, 2010

Howard Davidowitz on the "wealth effect" of capital markets in 2010 on retail sales

About thirty percent of America did much better [financially in 2010] because of the performance of capital markets, so I knew there was going to be a comeback. I don't think it's indicative of anything going forward because I think if you look at our fiscal and monetary policy, we went $2 trillion in the hole last year. Two, trillion. Two TRILLION! To produce this. And unemployment, went up! ... to 9.8, and we spent two trillion.

They're printing money, we're going bananas! We've got 2.6 trillion on the [Fed] balance sheet, he's got government securities and the mortgage-backed securities. If interest rates go up a point he's bankrupt. Everything he bought is going to be underwater. All his mortgage-backed securities are underwater. The whole country is underwater. We're going nowhere.

~Howard Davidowitz, chairman, Davidowitz and Associates, Bloomberg.com interview, December 31st, 2010

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