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

To: mishedlo who wrote (48196)	3/16/2006 11:43:51 AM
From: RealMuLan	Respond to of 116555

CNBC this morning was calling on people should give more credit to President Bush for the excellent US economy<g>.

To: mishedlo who wrote (48196)	3/16/2006 12:21:34 PM
From: Bucky Katt	Read Replies (2) \| Respond to of 116555

They did it>> $9 Trillion!! The Senate voted Thursday to allow the national debt to swell to nearly $9 trillion, preventing a first-ever default on U.S. Treasury notes. The bill passed by a 52-48 vote. The increase to $9 trillion represents about $30,000 for every man, woman and child in the United States. The bill now goes to President Bush for his signature. The measure allows the government to pay for the war in Iraq and finance Medicare and other big federal programs without raising taxes. It passed hours before the House was expected to approve another $91 billion to fund the war in Iraq and provide more aid to hurricane victims. The partisan vote also came as the Senate continued debate on a $2.8 trillion budget blueprint for the upcoming fiscal year that would produce a $359 billion deficit for the fiscal year beginning Oct. 1. The debt limit will increase by $781 billion. It's the fourth such move _ increasing the debt limit by a total of $3 trillion _ since Bush took office five years ago. The vote came a day after Treasury Secretary John Snow warned lawmakers that action was "critical to provide certainty to financial markets that the integrity of the obligations of the United States will not be compromised." On Thursday, Treasury postponed next week's auction of three-month and six-month bills pending Senate action, though the move was likely to be quickly reversed given the Senate's vote. The present limit on the debt is $8.2 trillion. With the budget deficit expected to approach $400 billion for both this year and next, another increase in the debt limit will almost certainly be required next year. The debt limit increase is an unhappy necessity _ the alternative would be a disastrous first-ever default on U.S. obligations _ that greatly overshadowed a mostly symbolic, weeklong debate on the GOP's budget resolution. Democrats blasted the bill, saying it was needed because of fiscal mismanagement by Bush, who came to office when the government was running record surpluses. "When it comes to deficits, this president owns all the records," said Minority Leader Harry Reid, D-Nev. "The three largest deficits in our nation's history have all occurred under this administration's watch." Only a handful of Republicans spoke in favor of the measure as a mostly empty Senate chamber conducted a brief debate Wednesday evening. Senate Finance Committee Chairman Charles Grassley, R-Iowa, said Bush's tax cuts account for just 30 percent of the debt limit increases required during his presidency. Revenue losses from a recession and new spending to combat terrorism and for the war in Iraq are also responsible, he said. As for the $781 billion increase in the debt limit, Grassley said: "It is necessary to preserve the full faith and credit of the federal government." Before approving the bill, Republicans rejected by a 55-44 vote an amendment by Max Baucus, D-Mont., to mandate a Treasury study on the economic consequences of foreigners holding an increasing portion of the U.S. debt. At present, foreign countries, central banks and other institutions hold more than one-fourth of the debt, but that percentage is growing rapidly.

To: mishedlo who wrote (48196)	3/16/2006 4:10:17 PM
From: maceng2	Read Replies (1) \| Respond to of 116555

Arab investors aren't the only ones feeling nervous telegraph.co.uk Anyone who remembers the implosion of the South-East Asian tiger economies in the late 1990s will view the spectacular meltdown in Middle Eastern stockmarkets like Dubai's with trepidation. Even as calm heads dismiss the freefall as an overdue correction of a local speculative bubble there is a nagging concern that this could be the start of something nastier. Bull markets always climb a wall of worry and so investors should not panic because a few Cassandras are calling the top. There is plenty of evidence that the economic upturn, now into its fifth year, still has plenty of legs, with Germany and Japan finally picking up the baton after years in the doldrums. But facts are sometimes less important than perceptions in financial markets, and the slump in the Arab stock markets is symptomatic of a growing unwillingness to take risks in a less friendly world. That has been reflected in sharp declines in the past week or so in emerging markets from Turkish shares to Icelandic krona. The Egyptian market, which had risen 14-fold in three years, has lost about a fifth of its value this year. Investors are nervous for several reasons. First, inflation has risen up the agenda with interest rates expected to rise further and more quickly than previously thought, even as growth expectations are being reined in. A bad combination. The end of Japan's easy money policy has raised fears of a flight to safety for the cheaply borrowed hot money which has chased returns in ever more exotic locations around the world. Then, the realisation has grown that gains in leading emerging markets such as Russia and Brazil have been unsustainable. Russia is still up more than 20pc year to date, while India's shares trade on 23 times earnings, dearer than US shares and much more so than those traded in London. Finally, the furore over DP World's takeover of key US ports has focused attention on the role of free trade and globalisation in the world growth story. The protectionist tide in America and Europe could be a disaster. Money is always taken off the riskiest tables first. As the FTSE 100 nudges 6000, we must hope that caution is not catching.