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

To: TH who wrote (5077)	4/26/2004 8:23:11 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Ron Paul - making sense when no one else does house.gov The Federal Reserve Debt Engine Federal Reserve Chairman Alan Greenspan testifies for both US House and Senate committees several times each year, and last week appeared before the Joint Economic committee on which I serve. These appearances by Mr. Greenspan always cause quite a stir on Capitol Hill. Often the stock markets react within hours of his pronouncements regarding the health of the economy and the future of interest rates. Congress and the financial press treat Mr. Greenspan as an all-knowing sage, seeking his wisdom on political and even social issues that have nothing to do with monetary policy. During last week's hearing Mr. Greenspan was asked his opinion on topics such as Social Security, tax cuts, federal spending, corporate accounting rules, the congressional budget process, and even immigration. It seems bizarre that a credulous Congress and public are willing to accept the judgment of on unelected, virtually unaccountable central banker while knowing little or nothing about the Federal Reserve itself. Judging by Mr. Greenspan's statements to a Senate committee in February, Fed economists are confusing debt with wealth. Mr. Greenspan praises the “sustained expansion of the US economy,” but then goes on to highlight the real reason for the expansion: loose monetary policy and near-zero interest rates. Since Fed bankers set interest rates artificially low, the cost of borrowing money is very cheap. This leads to more and more consumer spending, which Mr. Greenspan touts as the driving force for economic growth. In fact, he expressly cites the benefits of increased household spending made possible by mortgage refinancing. But new debt is not wealth, and it's impossible to borrow one's way into prosperity. Mortgage debt increased 13% last year, while consumer credit debt also increased. American households unquestionably have more debt and save less than ever before. Yet we are expected to believe that more spending and more debt are the keys to economic prosperity. During past recessions, many Americans shed debt either through bankruptcy or through austerity measures. In other words, they either changed their spending and borrowing habits or went broke. At some point their debts were in essence cleared from the books. In the recent recession of 2000-2002, however, many cash-strapped households managed to stay ahead of creditors by borrowing even more money. This is directly attributable to Fed easy-money policies, which greatly expanded the money supply and caused banks to lower creditworthiness standards. As a result, many Americans are overextended rather than bankrupt. Someday, however, they simply won't be able to borrow another dime. All the Fed has done is make the bubble bigger and postpone the day of reckoning. This hardly makes for a strong economy, which must be based on savings and investment. It's not enough to question the wisdom of Mr. Greenspan. Americans should question why we have a central bank at all, and whose interests it serves. The laws of supply and demand work better than any central banker to determine both the correct supply of money in the economy and the interest rate at which capital is available- without the political favoritism and secrecy that characterize central banks. Americans should not tolerate the manipulation of our economy and the inflation of our currency by an unaccountable institution.

To: TH who wrote (5077)	4/26/2004 8:26:56 PM
From: mishedlo	Respond to of 116555

Northwest's pilots, represented by the Air Line Pilots Association, on Friday offered $200 million in annual concessions over the next two years, which is less than half of what Northwest has said it needs. thestreet.com Not a sign of a booming industry.

To: TH who wrote (5077)	4/26/2004 10:03:43 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

In swing state, Kerry rails against China trade policy - Monday, April 26, 2004 10:50:50 PM WASHINGTON (AFX) -- Bringing world trade issues to a key battleground in the presidential campaign, John Kerry pledged Monday to aggressively pursue China for creating what he called an illegal advantage over U.S. workers and companies "I will launch a no-nonsense effort to stop the illegal currency manipulation that's going on in countries like China and Japan," the Massachusetts Democrat said in prepared remarks to a group of workers in West Virginia. President Bush narrowly won West Virginia in 2000, but analysts say the heavily Democratic state is up for grabs in November. China has fixed its currency at roughly 8.3 yuan to the dollar since 1994. American manufacturers complain that the fixed exchange rate provides an unfair cost advantage to China's exports, therefore costing thousands of U.S. jobs The U.S. manufacturing sector has shed 2.8 million jobs over the last three years, and the issue has become politically sensitive during this presidential election year But Kerry and his team stepped short of saying that he would definitely lodge a formal complaint against China with the Geneva-based World Trade Organization "It ought to be looked at, and that's what I think Senator Kerry as president would do," said Mickey Kantor, who was U.S. trade representative under President Bill Clinton and now advises Kerry. "It is a very complicated subject, but I think the idea that you can't use the WTO is not acceptable. I think we ought to look at it. I think it's possible that it could be an illegal subsidy." Kantor told reporters in a conference call arranged by the Kerry campaign that he has "not personally looked at" the legality of bringing a case before the WTO and it "would be up to President Kerry at that point" to decide whether to bring a case Steve Schmidt, a spokesman for the Bush campaign, called Kerry's speech "completely disconnected from the reality of his record." "John Kerry's rhetoric today is completely at odds with his long voting record and at odds with his actions in the Senate," Schmidt said, noting Kerry's long-standing support for expanded trade Bush's top trade negotiator, U.S. Trade Representative Robert Zoellick, has said that the nearly decade-old trade body is not the place for currency disputes "It would strike me as very hard to see how you would be able to incorporate that effectively in the WTO system as it currently exists," Zoellick said last fall And just last week, when Chinese Vice Premier Wu Yi met with Zoellick and Commerce Secretary Don Evans in Washington, a senior trade official told reporters that currency matters are not part of the USTR's portfolio and are handled by the Treasury Department Kantor said the Japanese intervention in currency markets to prop up the value of the dollar "amounts to an illegal subsidy." "When you don't allow your currency to fluctuate properly," Kantor said, "you are giving an illegal subsidy to your exporters." In a meeting with Chinese central bank Gov. Zhou Xiaochuan on Friday, Treasury Secretary John Snow urged China to continue Beijing's banking reforms aimed at allowing the Asian nation to loosen its peg to the dollar down the road After that meeting, a senior Treasury official told reporters the Bush administration wants China to move to a flexible currency as soon as possible, but no timetables were discussed Snow earlier this month tapped Paul Speltz, the U.S. representative to the Asian Development Bank, to be his financial envoy to China to advise Beijing on its currency policy But the administration concluded in its semi-annual report on currencies in mid-April that none of the nation's major trading partners have manipulated their currencies in a way that would require retaliation Rep. Sander Levin, D-Mich., said the administration has not pushed the Chinese forcefully enough. "Talk is cheap," Levin said. "What's needed is action." fxstreet.com

To: TH who wrote (5077)	4/27/2004 3:18:24 AM
From: Haim R. Branisteanu	Read Replies (12) \| Respond to of 116555

I find it interesting that no one on this tread analyzed the last Retail Sales report compared to the latest CPI report. Retail Sales were reported +1.8 MoM with Garden supplies and Fertilizers up over 10% CPI was reported +0.5% MoM This leaves us with an actual 1.29% or so growth in real retail sales including the various aberrations. Removign the aberrations will result in a even lower retail sales increase. My suspicion is that actual retail sales were even lower if they would be inflation adjusted and I think that this figure is the one that matters as an evidence of the health of the US economy. Wonder how those inflation adjusted retail sales would compare to EZ were inflation is well below US inflation. Any remarks are welcome.