Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (30759)	10/29/2003 10:21:38 PM
From: T L Comiskey	Read Replies (2) \| Respond to of 89467

investorshub.com

To: Jim Willie CB who wrote (30759)	10/29/2003 10:34:09 PM
From: T L Comiskey	Respond to of 89467

wgn.net

To: Jim Willie CB who wrote (30759)	10/30/2003 12:44:36 AM
From: stockman_scott	Read Replies (1) \| Respond to of 89467

Fed Gets Best of All Worlds forexnews.com The FOMC statement of risks impacted markets by driving the dollar lower, while stocks and bonds rallied. The Fed could not wish for a more favorable outcome as it seeks to keep negative real interest rates in the hopes of further stimulating the economy and avoiding an unfavorable decline in inflation. While rates will remain accommodative, the Fed statement was fairly balanced. This favored Treasuries by maintaining the outlook to keep rates on hold for a considerable period. However, in light of improving economic data the Fed's position can lead to market dislocations in the future if long term rates (managed by the market) were to rise, thus forcing the Fed's hand. So far, this has not been the case as the market has taken the cue from the Fed's cautious wording on policy. But sooner than later record monetary and fiscal stimulus may become a concern for the bond markets. Nevertheless, the Fed appears willing to maintain favorable rates in light of an economic rebound. It is understood that record fiscal stimulus has had an impact in Q2 and Q3 due to the war in Iraq and tax cuts. These expenditures will not be in place next year and the Fed is leaning to caution over the longer term. Meanwhile economists are looking at a negative real interest rates and a weaker dollar to boost the US economy in 2004. For currency traders, the dollar may therefore continue its decline into 2004 as negative dollar sentiment remains the dominant factor in markets. Negative Rates Supported by Weak Dollar Policy On Thursday, Treasury Sec Snow will testify before Congress on currency manipulation and trade. Washington's agenda is more than clear. The strong dollar policy exists in rhetoric only and would like Chinese officials to abandon the USD/RNB peg as soon as possible. Thursday will also see US Q3 preliminary estimates for GDP in the quarter, expected to rise at an annual rate above 6%. One of the ironies of a high consumption society trying to both stimulate the economy and wean itself of foreign imports is that Americans cannot seem to do both. With half the manufacturing goods purchased in the US coming from abroad, mainly Asia, the trade deficit continues to widen as officials in Washington extend credit and tax cuts, which are still only future liabilities to be paid. In the meantime foreign savings, recycled back into the US in order to keep the dollar from falling, is financing the deficits. At least for now.

To: Jim Willie CB who wrote (30759)	10/30/2003 1:14:38 AM
From: Wharf Rat	Read Replies (2) \| Respond to of 89467

Blowing the whistle on Dubyanomics Joseph Stiglitz is sure there'll be no big economic recovery, and blames Bush and Greenspan. It would be dangerous to ignore his pessimistic forecasts, says Faisal Islam Sunday October 12, 2003 The Observer There are two Joseph Stiglitzes. In May the academic came to Oxford University to give landmark lectures on updating the work of John Maynard Keynes with 21st-century 'micro-foundations'. And that has nothing to do with make-up. This month the Nobel prize-winning economist returned to Britain as an acidic economic polemicist, with a more direct message about the US economy. There will not be a robust recovery, and the fault can be traced to Federal Reserve chairman Alan Greenspan's actions during the Nineties, and the policy failures of President Bush. 'More jobs have been lost under Bush than since Herbert Hoover and the Great Depression,' he said in an interview. 'In the private sector more money has been wasted through misallocation of capital in the stock-market bubble than the government could ever manage.' In a week in which US stock markets hit 16-month highs, surely there is some room for optimism? Stiglitz was having none of it. 'The huge tax cut in the US was very badly designed to stimulate the economy. And there has been a huge increase in mainly military spending. Yet what is remarkable is how little stimulus has been given. The US economy is still in a precarious state,' he said. Rarely does the dismal science become so Prozac-inducing. But his pessimism arises from the fact that he is no believer in market infallibility. As a theorist, his work concentrated on labour market imperfections arising out of access to information. He is now extending this analysis to capital markets. Indeed his new book, Roaring Nineties, sets out what he sees as the multiple policy errors that sowed the 'seeds of destruction' in the American economy. But surely 'destruction' is a little strong? 'Dealing with the deficit will absorb the US political economy for years to come. We're back to the Reagan era. The trade deficit has the underlying problem of what will happen when foreigners decide to stop funding the US deficit. On the private side there is a huge gap in private pension funds. Any other economy would be under water.' The scandals over conflicts of interest in accounting and banking were predictable fruits of 'market fundamentalism', he says. 'The image is Adam Smith. The reality is Enron.' But the really bad news is to come, he argues. 'What is likely to happen is more of a languishing malaise, with very weak job recovery. China has joined the WTO and is now the manufacturing engine of the world. Manufacturing is now down to 14 per cent of the economy. Those last few per cent are going to be very painful.' That transition is the unavoidable result of globalisation, the subject of his first polemic, Globalisation and its Discontents. In that book, Stiglitz presented himself as the straight thinker thrust into the heart of World Bank policymak ing. His shock at the incompetence of the technocratic class led him to expose where the skeletons are buried at the International Monetary Fund. In Roaring Nineties, he repeats the trick, using the experience as chairman of President Clinton's Council of Economic Advisers to turn his fire on the economic establishment - chiefly Greenspan. 'It's his art form that he gives his message in such an oblique way. But to a large extent the Federal Reserve's powers are overstated by the markets. It is able to do more damage than good,' argues Stiglitz. He said he has sympathy for a friend's analogy of the Fed as the driver pretending to steer a car on an amusement park merry-go-round. There have been two recessions on his watch and Greenspan failed to stop both. An entire chapter in Roaring Nineties is devoted to 'The All-Powerful Fed and Its Role in Inflating the Bubble'. Stiglitz says: '[Greenspan] had instruments available. He could have increased margin requirements, but he didn't want to spoil the party.' In 1996 the Fed discussed using this policy lever, which effectively requires investors to put down more money to buy a stock rather than borrow it from a broker. 'I guarantee you that if you want to get rid of the bubble ... [raising margin requirements] will do it,' Greenspan said in September 1996. Stiglitz believes Greenspan, having expressed concern with his 'irrational exuberance' speech, could have simply avoided talking up the new economy. Instead he became a cheerleader. 'He should have pricked the bubble rather than end up feeding it,' says Stiglitz. Greenspan should have opposed the capital gains tax cut, which meant people 'could make more money speculating in the market than working for a living'. Most controversially, he accuses the sage of global central banking over political partisanship in favour of his Republicans. 'In 1993 Greenspan held the elected US government at ransom, saying he'd refuse to cut interest rates if the budget deficit was not cut back. This raises serious questions about the nature of an independent central bank,' Stiglitz said. When Clinton planned to spend more on social plans and anti-poverty initiatives, the Fed Chairman stopped him in his tracks because he so favoured deficit reduction. In 2001, however, he backed the tax cuts that led to the current huge deficits. Such actions 'betrayed Greenspan's dishonesty' and were 'very partisan economics,' Stiglitz says. Stiglitz sparred with Greenspan on several occasions while he was defending Clinton's economic plans against attacks from the Fed. Indeed, from fending off the Fed to his attacks on Dubyanomics, his new tome reads like a decade-long chronicle of his attempts to resist resurgent Reaganomics. He was not surprised that the Fed and its chairman were fallible. What surprised him was the reverence they inspired. This Greenspan-worship was, in part, a reflection of how little the worshippers knew of economics. Stiglitz is indispensable in this regard, as a world expert who has seen economics used - and abused - in the corridors of power. We live in a world driven by economics. Liberal democracies use it as a theology to justify taxation policies, the ownership of the media, immigration policy and an unelected official's ability to overrule the manifesto of an elected President. It is a trend reflected in Britain, where the Treasury has power over unrelated spending departments. 'I had entered economics in the Sixties, the years of the civil rights and peace movements. I wanted, I suppose, to change the world, but I wasn't sure how,' Stiglitz says in his book's preface. The lesson for anyone who shares that aspiration is that economics is now a far more powerful agent of change than politics. And that makes this dismal scientist a very dangerous man. observer.guardian.co.uk

To: Jim Willie CB who wrote (30759)	10/30/2003 6:52:57 AM
From: Chas.	Read Replies (1) \| Respond to of 89467

High dollar is effect...what is cause...? How does America get back into the game, how do we get Exports up...? How do we get Imports down...? How do we lower the Trade Deficit...? How do we create more working class jobs...? American Standard of Living and financial security are in decline...? How do we get it back on track...? How much time is left before it all comes down...? Do we have to self destruct before we can re invent ourselves...? Is there any hope...? What should we do...? regards