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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (397)	2/22/2004 10:40:00 AM
From: mishedlo	Respond to of 116555

Fed wording shifts focus from the calendar-McTeer FORT WORTH, Texas, Feb 21 - Dallas Federal Reserve President Robert McTeer said on Saturday a wording shift in the U.S. central bank's policy statement was an effort to force financial markets to focus on economic conditions rather than on the calendar. The Fed last month dropped language that said it could keep interest rates -- now at a 1958 low of 1 percent -- down for a "considerable period," saying instead it could afford to be "patient" because of economic slack and tame inflation. "Being patient is very similar to a considerable period of time. It shifts the emphasis that some people seem to place away from the calendar and I think a little bit more towards economic conditions," McTeer, who is not a voting member of the policy-making Federal Open Market Committee this year, told Reuters after addressing a teachers' group. "We can afford to be patient because the outlook for inflation is still fairly benign," he said. Some investors speculated at the time that the wording change brought closer the day when the Fed would start to raise interest rates. McTeer told the Texas Community College Teachers Association the "considerable period" phrase, adopted in August of last year, took on a life of its own in financial markets. His remarks echoed those of St. Louis Fed President William Poole, who said on Friday the rhetorical tweak was designed to remove the impression the central bank had made a time-bounded pledge on borrowing costs. With the U.S. job market still weak, most economists believe the Fed will not start lifting interest rates until later this year or perhaps 2005. McTeer said the U.S. economy was growing well, but that job creation remained weak. THIRD RAIL OF ECONOMICS He avoided the politically charged subject of "outsourcing" U.S. jobs to low-wage countries like China and India -- a topic looming large as the presidential election nears -- except to say that in a theoretical sense, it made economic sense for labor to chase capital and capital to chase labor. He would not discuss the impact on the U.S. economy. "These days it has become politically incorrect to say certain things -- even if everyone recognizes them to be correct," McTeer said. "Outsourcing has become the third rail of economics." Gregory Mankiw, chairman of the White House Council of Economic Advisers, earlier this month apologized for suggesting that outsourcing "is probably a plus for the economy in the long run." "My lack of clarity left the wrong impression that I praised the loss of U.S. jobs," Mankiw said in a Feb. 12 letter to House of Representatives Speaker Dennis Hastert. Since then, some Fed officials -- including the St. Louis Fed's Poole -- have said that while socially painful, outsourcing is both natural and economically beneficial. Fed Chairman Alan Greenspan on Friday acknowledged it was an "important and sensitive" issue that has opened a gulf between those hurt by the phenomenon and economists who back the benefits of free trade. "It is crucial that this gulf be bridged," he added. Greenspan said he was confident that new jobs will replace those lost and said a pickup in hiring lay ahead. cbs.marketwatch.com

To: MulhollandDrive who wrote (397)	2/22/2004 11:55:57 AM
From: TH	Respond to of 116555

MulhollandDrive, Point taken on petroleum. Lets discuss petroleum again in the fall. I was thinking of natural gas costs when I wrote that. First, the meaningful data for me is to look at my bill. Rate (inc distribution charge) of .55 in 2001. Rate of .70 in 2004. That is an increase of 27%, or about 9% per year. I would be curious for some data from outside Michigan. naturalgasfacts.org The Price of Natural Gas Natural gas prices paid by consumers and industrial users have risen sharply over the last year. Why is this so? Broadly speaking, the price of natural gas is set by the interaction of supply and demand, and demand has risen sharply. Natural gas is a victim of its own success. It has become extremely popular as a major source of energy in the U.S. for both consumers and industry, in part because it burns cleanly and has minimal impact on the environment. Many utilities, for example, have shifted away from coal or oil to natural gas to produce electricity. As a result, demand for natural gas is expected to rise by about 50 percent by 2025. And yet, as recently as the summer of 2001, prices fell so dramatically that producers sharply reduced the number of natural gas wells they were drilling in the Gulf of Mexico or on U.S. lands. Thx TH