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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (1373)	2/27/1999 10:39:00 AM
From: Freedom Fighter	Read Replies (1) \| Respond to of 1722

>>Yet, once past savings become the only basis for current investment, most of us better head back to subsistence farming on the ole plantation -- because that "cross of gold" will leave few of us with any money to exchange for food, clothing and shelter. << I think that is a subject that is open for debate. I wish I had the data and a more complete understanding of all the issues. Unfortunately, no one does. That's why there's still a debate. But the questions are simple. Does that portion of investment that does not come from profit and savings but "fiat credit creation" produce higher standards of living? If it causes busts, does the eventual use of those investments represent a vindication of "fiat credit" or just time passing and new real savings accumulating and growing into their use? (the only result of "fiat credit" then is inflation, the resultant miscalculation and recession) If it does contribute to some increase in overall standards of living, is it enough to make the business cycle of boom, inflation, bust worth living with for those who are always on the short side of that process? (which is most) Wayne

To: porcupine --''''> who wrote (1373)	2/27/1999 12:10:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

GDP Grows at 6.1 Pct. Annual Rate Associated Press Friday, February 26, 1999 3:34PM By MARTIN CRUTSINGER AP Economics Writer WASHINGTON (AP) via NewsEdge Corporation - Despite the global financial crisis, the U.S. economy grew at its fastest pace in nearly 15 years in the last quarter, closing out a year in which Americans enjoyed the best combination of rapid growth, low unemployment and low inflation in at least three decades. The nation's gross domestic product, the total output of goods and services, shot up at a sizzling annual rate of 6.1 percent from October through December, the Commerce Department said Friday. That was even better than the 5.6 percent rate the government originally reported a month ago. Updated statistics pointed to more strength in trade and consumer spending than originally believed. Even with the newfound growth, inflation was nowhere to be seen. An inflation measurement tied to GDP was up just 1 percent for all of last year, the smallest increase in 49 years. ''We had an incredibly good performance last year,'' said David Wyss, chief financial economist at Standard & Poor's DRI. ''How long can the United States survive as this oasis of prosperity?'' For all of 1998, the economy grew by 3.9 percent, the third straight year of above 3 percent growth, the strongest such stretch since the mid-1980s. The U.S. performance last year was all the more remarkable given the severe financial turbulence at midyear after the Asian economic crisis spread to Russia and threatened Latin America. U.S. stock prices went into a nosedive only to rebound after the Federal Reserve cut interest rates three times to inoculate the American economy from trouble overseas. The Clinton administration, the Fed and many private economists believe economic growth will slow markedly this year as pent-up consumer demand is finally exhausted and as the U.S. trade deficit widens further, reflecting that one-third of the globe is in recession. But recent reports have called that consensus view into question. Just this week, data showed that new orders for durable goods shot up in January at the fastest pace in 14 months and sales of existing homes and consumer confidence both climbed into record territory. Those stronger-than-expected reports caused a sell-off on Wall Street on Thursday as investors became concerned the Fed will soon reverse course and start to raise interest rates because of fears the economy is overheating. The bond market recovered some of those losses Friday as investors chose to focus on the exceptionally low inflation figure in the GDP report. Stocks, however, gave up further ground, losing more than 40 points by late afternoon. Federal Reserve Chairman Alan Greenspan told Congress this week that Fed policy-makers believe the economy will slow to between 2.5 percent and 3 percent growth this year, in line with private forecasts. But he pointedly signaled that if growth does not slow on its own, the Fed is prepared to start raising rates to make it happen. On Friday, Robert Parry, president of the San Francisco Federal Reserve Bank, said, ''Frankly, after three years of underestimating the U.S. economy's ability to grow, it wouldn't surprise me to see it exceed expectations for a fourth year.'' In December, the country's economic expansion became the longest in peacetime history. If growth lasts another year, it will be the longest recovery in history, surpassing the 1960s expansion during the Vietnam War. By many measures of growth, unemployment and low inflation, the country is already enjoying its best days since the 1960s, many analysts say. The good economic performance is one of the chief reasons cited for President Clinton's strong approval ratings even during the darkest days of the impeachment battle. A new poll by the Pew Research Center found that Americans' optimism about their nation is higher than it has been since 1964. For all of last year, consumer spending _ which accounts for two-thirds of total economic activity _ rose 4.8 percent, the fastest increase in 14 years. That offset the widening trade deficit, which subtracted 1.1 percentage points from growth last year. By quarter, GDP was up at a 5.5 percent annual rate in the first quarter, followed by increases of 1.8 percent and 3.7 percent before ending with the 6.1 percent rise in the fourth quarter. The fourth quarter increase matched the gain in the second quarter of 1996 and was the strongest performance since GDP grew at an annual rate of 6.4 percent in the second quarter of 1984.