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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (132428)	3/29/2013 9:33:44 AM
From: John Vosilla	Read Replies (1) \| Respond to of 149317

Markets Sending Unusual Signals: El-Erian The persistence of this unusual combination of bond, equity and gold prices speaks to how central banks around the world - and the Federal Reserve and European Central Bank in particular - have fueled risk taking in the face of rather sluggish economic growth, recurrent concerns about European disruptions and lingering worries about geopolitical risk. In the weeks ahead, we will get a sense of central banks' willingness to continue to support asset prices pending a stronger and more comprehensive recovery in economic growth. I suspect that, notwithstanding some internal opposition, they will signal continued resolve as a way to enhance - via the wealth effect and animal spirits - prospects for growth and jobs. Indeed, the willingness call is a relatively easy one. The much more difficult call relates to the sustained ability of central banks to maintain control over the range of competing and conflicting forces. Looking ahead, the validation of prices in risk markets needs the fuller engagement of healthy balance sheets and more robust economic activity, including what my PIMCO colleague Saumil Parikh refers to as the transition from "assisted growth" to "genuine growth." finance.yahoo.com

To: tejek who wrote (132428)	3/29/2013 10:50:39 AM
From: RetiredNow	Read Replies (1) \| Respond to of 149317

We are not experiencing inflation using the hedonically smoothed metrics the Fed uses. However, if you look at inflation on food, fuel, education, and healthcare, all of which represent a very sizeable portion of the average American's budget, then inflation is running at 5-8%. So yes, we are experiencing inflation and it will continue to get worse. As I said, I don't think we'll experience hyper-inflation, because I think we'll get another Volcker once inflation of the normal variety starts to rage. Before it becomes very apparent that Bernanke has wound spring up very tight, we'll have to see money velocity (M2) start to spike upwards. Right now, it is collapsing. Money velocity is now at a level that is the lowest recorded in all the years that FRED started tracking the metrics in 1959. Money velocity at those levels is recessionary. GDP readings below 2% are generally considered stall speed as well, because when we get readings like that, we've almost always been in a recession or about to start one. Q4 GDP final reading was 0.4%. Does that sound like a recovery to you? Lower GDP and trending down? Hmm. Not good. Anyway, inflation is tied to money velocity. We'll get inflation that even you and Bernanke will recognize, but we're going to need money velocity to start to trend upwards for that to happen. Usually, that happens when people run the banks and put their money in hard assets. Cyprus could be a catalyst for that, if it spreads, but I'm not certain that would spread to the US. Despite the banking corruption here, we still have a few safeguards left. But if Obama, Bernanke, and Geithner announce a tax levy on depositors, then we'll have utter pandemonium. That I can guarantee.