Through TheFLY's Eyes: Economic Outlook
from Theflyonthewall.com















David Malpass of Bear Stearns Turns Bearish On Stocks and Bonds

David Malpass, long-time international economist, has one of the best records on Wall Street for understand how money flows through the US and global economies. He was the only higher profile economist screaming in the late 1990s that deflation was a much greater risk than inflation. He was proven right.

Malpass today is saying that the incremental 25 basis point interest rate increases by the Fed are not working. The Fed is always behind the curve that is why gold is going up. His advice to the Fed: increase short-term rates by 50 bps. This will pop the gold bubble and end the selling of the dollar.

Sooner or later the Fed will recognize this and will make the move, according to Malpass. This will mean economic growth will be much slower in 2007.

Full comments by Malpass can be found on Richard Karlgaard's Digital Rules blog.

Malpass has often been proven correct with his twelve-to-eighteen month forecasts.