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

To: russwinter who wrote (3298)	3/31/2004 10:38:59 PM
From: mishedlo	Respond to of 116555

Slowdown in Midwest Hiring Dims Job Hopes biz.yahoo.com

To: russwinter who wrote (3298)	3/31/2004 10:44:12 PM
From: mishedlo	Respond to of 116555

safehaven.com America - thanks to the courageous actions of the Federal Reserve in slashing interest rates and (at least, if you are a Republican) due in good measure to President Bush's visionary tax cuts - has weathered a shallow recession and is now growing strongly again - at the fastest rate in two decades, according to the headline statistics, so that the US of A is, once again, the 'locomotive of growth' for an ungrateful world. The heroic American consumer - who makes up 70% of the economy - has gone out and shopped for victory - releasing some of the 'wealth' contained in her appreciating home for the purpose - and now, at last, as uncertainty subsides and as revenues rise, businesses, too, are spending their money on investments. As growth picks up, the absence of 'inflation' - especially something called 'core inflation' measured by an index to which the Fed would draw our attention - and the existence of 'so much idle capacity worldwide' means the Fed can be 'patient' about raising the short-term interest rates it determines from their present 'accommodative' setting. True, there are a few clouds to spoil this shining prospect of prosperity to come. ... Indeed, to keep this game going will certainly require a good deal of finesse, another large dose of disingenuousness regarding inflation and - you may want to underline this - a further period of inordinate laxity in setting interest rates. Therefore, the overwhelming imperative to avoid a housing implosion, coupled with the self-imposed erosion of America's competitive edge on the world labour market, seems almost to guarantee that policy, both here and abroad, will stay too loose for too long in the vain belief that this will ease the problems caused - well - by a previous spell when policy was too loose, for too long! Thus, the likelihood is that the development of full-blown symptoms of an inflationary excess across much of the globe is presently as much of a certainty, as anything in this ever-changing world with its top-heavy, distortive, and intrinsically unstable monetary system can ever be said to be.

To: russwinter who wrote (3298)	3/31/2004 11:17:45 PM
From: philv	Read Replies (1) \| Respond to of 116555

"People in the US know darn well there is inflation, and I think serious inflation now. That's one reason why they don't hesitate to borrow at steep negative interest rates." That is a great quote, well put. Borrowing is the best deal in town especially when whatever you are buying is inflating well beyond the interest rates. Housing is a prime example, but there are lots of others. I just wonder how long the FED can deny the inevitable plain facts. The economic distortions now being created are huge and many.