4  BIS Review 75/2009  On balance, I would not be surprised if these countervailing forces – unprecedented public support and underwhelming private demand – fight to a draw by the fourth quarter. But the scale of stimulus and the recent blow to the real economy are both lacking precedent, so predicting the victor is tough business.
Of course, the extraordinary monetary and fiscal support may prove more efficacious in the near term than I expect, leading to a continued easing in credit conditions, a slowdown in the rate of deleveraging, improved inventory levels, and better quarterly economic statistics. Even so, the benefits of stimulus are likely to wane.