Tomorrow’s paper in America will tell us what the Fed is up to. But whatever it does, the answer to the ‘what happens next’ question depends on where you are; if you are at the beginning or the middle of a credit expansion, you get one answer. If you are at the end, you get a much different one

The Fed failed to cut interest rates by 50bp, causing US stocks and carry trades to plummet and the dollar to strengthen significantly.

The US import price index is expected to have surged 11.0 percent from a year earlier – the sharpest rise in over twenty years. And Fed fund futures continue to price in multiple rate cuts next year. Won’t more accommodative monetary policy only fan price pressures?

If there is one thing you can count on it is that developers, bankers and farmers will over-do it. They all go bust every 10 years or so. What is hurting the banking industry now is subprime lending. But don’t worry. We live in an age of Zoo Capitalism, and the keepers are supposed to make sure the animals don’t get hurt.

Kathy Lien's opinion is that the Fed will most likely disappoint the market by under delivering. Even though food prices remain high, oil prices have tapered off, which means that the Fed may have slightly more flexibility in lowering interest rates.

Given all of the dovish potential surrounding the upcoming FOMC meeting, there may be more gains in store for Treasuries and US equities, while additional weakness may await the US dollar.

Currency strategist Boris Schlossberg analyzes the major currencies for the week of December 10.

Tim Bourquin interviews Mike Parker, who talks about he uses linear regression channels (LRC) on daily and four-hour charts to find trades.

This week John Mauldin takes a look at some economic theories which help explain how the more that individuals hedge their risk in economic markets - the larger the network - the more the entire system is put at risk.

Credit, it turns out, soon reaches the point of diminishing returns. During the entire period up until 1980, it took about $1.40 worth of extra credit to produce a single extra dollar of GDP. Since then, the ratio has deteriorated. And now we seem to have passed the top of the credit cycle, with the credit industry unwilling to pony up more cash and output falling.