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

To: RealMuLan who wrote (70948)	11/6/2007 1:45:55 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

Dr. Peter Morici: US Economy adds 166,000 employees in October; While ranks of the Self Employed fall: Credit Crisis grows, Bernanke’s credibility suffers By Professor Peter Morici, Robert H. Smith School of Business, University of Maryland Nov 2, 2007, 16:29 ... In September another 465,000 adults chose not to participate in the labor force, and since February 2000, that number has increased by more than 10 million. Factoring in these workers raises the effective unemployment rate to about 6.6 percent. ... Unfortunately, this week’s Fed statement inferred that it is through cutting interest rates. This only served to further destabilize credit, stock and housing markets, and negate the potential positive effects of its quarter point reduction in the federal funds rate. Through this statement, Ben Bernanke reversed his recent expressions of concern about the consequences of the housing crisis for the broader economy. This was a dramatic flip flop and serves to seriously undermine his credibility. The increasing risk of recession will grow and pressure the Federal Reserve to cut interest rates further in December. The threat of recession does not emanate from some internal clock in the economy, as it did in the 1950s and 1960s. Rather, the risk at this time comes mainly from a structural crisis in credit markets. This was caused by reckless private credit strategies and ill-conceived federal regulations, and could be addressed by prompt and creative Administration and Fed policies. Some would include greater flexibility for Fannie Mae and other federally chartered banks, and Fed purchases of Treasury securities on the long end of the yield curve to pull down long rates. The Fed could be more creative and do a lot more, but Bernanke's Fed clearly has trouble thinking outside the box. finfacts.com