Even if he wants to tighten, David Rosenberg reminds us of the one reason why Ben Bernanke might find that impossible.
The reason — there is a wave of mortgage refinancings coming in the housing market for one, and not only that, but in the commercial space, there are 2.7 trillion of debt coming due through 2011 and another 1.5 trillion of leveraged loans. In other words, the default rate is going to rise even further and the Fed tightening policy would only aggravate that situation. In other words, the Fed is simply immobile for at least the next two years.
It’s as simple as this well-travelled (and controversial) chart: