In the cartoons, Wile E. Coyote scoots off the cliff but doesn’t fall until he looks down. I happened to walk past a TV in Road Town tuned to CNBC to see David Faber over a caption of “Subprime Meltdown” or something similar. At any rate, the ongoing collapse of subprime lending is finally coming to Page 1. So far, the implications have not been understood - the withdrawal of buyers from the housing marketplace, the reduction in consumption as refis end, and the damage to lenders which will result in the reduction of credit and eventually a vicious deflation. The BoJ’s recent tiny rise in rates will do nothing to stem the full-thottle flow of Japanese money into world markets, so in effect there is no reserve money-printing power. All that can be absorbed is being printed, although by the BoJ rather than the Fed.

Couple this credit problem with a tech wreck - just look at inventories - and job losses in construction and elsewhere- and you have a very serious situation. This has been developing slowly for a long time and will doubtless take longer than I imagine to play out. But remember Baruch and many others - their fortunes were made by selling too soon.