Didn't you participate in my last thread about the anemic payroll numbers? If not, go read what I wrote there in response to YAJ about the economy. That I see some possible problems looming for the economy doesn't mean I'm pessimistic.

For the first quote, there are two uncertain events. The first is the raising of interest rates, the other is impact on mortgage payments. The first must happen for the second to even be possible. In short, it is still an uncertain event.

By the way, the first paragraph in the second quote is out of context. I was discussing how a central banker could build a reputation as an inflation hawk. That is certainly one way of doing it. It doesn't follow that Bernanke has to use that method.

As for the last one, you do realize that next month the expansion will be 57 months old. That makes it a fairly old expansion. Hence the comment.

The recent run up in housing prices linked with the rising interest rates could result in increased monthly mortgage payements which could very likely lead consumers to cutting back in other spending. Combined with high fuel/energy prices this could lead to a recession.

One sure way to do this is to put the economy into a recession to prevent inflation from rising too fast. This sends the signal that the central banker is so concerned about keeping inflation under control that they will tank the economy in the short run.

Since Bernanke is the new Fed chairmen he may feel a need to establish his reputation and not worry about sending the economy into a recession.

This doesnâ??t mean that next month we will enter a recession, but it is a possibility.

My apologies if my comments seemed to imply something that I did not intend. I was just noting that your pessimism regarding the economy has been something of a recurring theme of late. Of course, as others have noted, economics is the dismal science.

Read the post again, and this time try to refrain from strawman arguments. I didn't say the economy was going into recession, but that it might. Even 40%, is still pretty low and not good reason to run out and short one's position.

All snark aside, this reminds me a lot of Stephen Green warning us all for the last three years of the deflation that is just around the corner. One day he'll be right.