"Where Are We Now? Five Point Summary"

From: The Baseline Scenario

"1. Financial markets have stabilized – largely because people believe that the government will not allow Citigroup to fail...

2. The real economy begins to bottom out, although unemployment will not peak for a while and could stay high for several years...

3. More broadly, there is sophisticated window dressing in the pipeline but no real reform on any issue central to (a) how the banking system operates, or (b) more broadly, how hubris in finance led us into this crisis...

4. The consensus from conventional macroeconomics is that there can’t be significant inflation with unemployment so high, and the Fed will not tighten before late 2010...

5. Emerging markets are increasingly viewed as having “decoupled” from the US/European malaise...