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Sat 12 Mar, 2005 09:24 am
Harbingers of Harder Times
Published: March 12, 2005
At $58.3 billion, the United States' trade deficit for January exceeded everyone's worst expectations. The huge mismatch reported yesterday between imports and exports just missed breaking the monthly record, set last November, and is all the more remarkable for occurring in a month when the price of oil actually declined.
The trade deficit is the single most important factor in measuring the extent to which the nation lives beyond its means. As such, it should force us to own up to the dangers of rampant deficit spending. But the White House is showing no sign of action, as if doing nothing might make the problem smaller.
In response to yesterday's trade deficit figure, the dollar weakened against the euro and the yen, and traders predicted further declines in the weeks and months ahead. That, in turn, contributed to a drop in stock and bond prices. Such gyrations are certainly not unprecedented. The dollar has been on a downward trajectory for three straight years and was going into a fresh skid even before the latest trade deficit figure was released.
That slump was largely in response to recent reports, some later denied, that Asian central bankers may begin moving their huge dollar holdings into other currencies. That would mean higher interest rates in the United States because the government would need to sweeten Treasury yields, and higher interest rates imply further declines in stock and bond prices. A declining dollar also risks higher inflation; more expensive imports give domestic producers an excuse to raise prices.
There may be more trouble to come. Next week, the government will release figures showing how much capital flowed into the United States from abroad in January. Those numbers were down by nearly one-third in December. If next week's report is disappointing, the logical response from the currency markets would be to sell dollars - again raising the threat of all the possible side effects.
Since the trade deficit is intimately connected to the federal budget deficit, the best way to reduce the trade imbalance is to reduce the budget gap. But President Bush is calling for more tax cuts, politically implausible spending cuts and costly Social Security privatization. Both parties in Congress must address the twin trade and budget deficits - or risk being forced to do so by events beyond their control.
Do you believe that the US may be approaching economic disaster? If so what can or should the administration and congress do to avert it?
au, you know better than to start another thread on this subject.
You're going to have timberlandko in here singing "Happy Days Are Here Again" and blaming any bad news on the Democratic Party in three, two, one...
PDiddie
He will not be alone. With the situation rapidly progressing downward I am indeed interested in their response. It can't be "Happy days are here again." Or all we need is a good five cent cigar and a chicken in every pot.
I don't know. I personally think economics are the stupidest thing to ever be invented...
However I have heard various people who are more interested in economics than I suggesting that there have been several economic warning signs occuring within America that generally tend to come before extreme economic difficulty.
Personally I'm going to just have to wait and see, but it is certainly a worrying concern.
The current economic situation, according to experts' advice, doesn't look the prelude of disaster, while some signs are certainly worrying, mainly the apparently unstoppable "twin deficit" (both the federal budget and trade balance are in red numbers), which is responsible for the plummeting of the dollar. But the undeniable problems have risen because of an economic policy which has managed to prevent an economic crisis which could have ranked as one of the worst in US history. When the prices of telecommunications, Internet and media companies plummeted in 2000, billions of dollars were lost, a disaster easily comparable to the 1987's crash or the dramatic end of the Japanese financial bubble in 1992.
The economic consequences in Japan were deflation and the beginning of a mass unemployment problem. Very similar to which we would have faced if aggressive fiscal and monetary policies hadn't been implemented. Some points are heavily discussed, for instance the effectiveness of tax cuts( a decision, however, due to classical conservative beliefs), while everybody agrees Greenspan's determined policy of low interest rates has prevented a demand shock, reinforcing the consumers' trust, and consequently reactivating economic activity. It has been a neoconservative economic policy- there is an article by Irving Kristol defining neo-conservatism which admits the convenience of temporal budget deficits. But such measures are meant to be temporary.
But now it's time to return to fiscal austerity, by the contrary, we'll experience the negative effects of this double edged policy, depicted in AU's post . And that's the matter: I agree with SS privatization plan, but this isn't the moment to implement it, as it entails massive government borrowing. And I think that making tax cut's permanent is too risky, while there is still plenty of uncertainty about our economic future. (The secondary effects of an intervention on Iran...)
Both South Korea and Japan riled the markets when the mentioned diversification. Specifically, diversifying some of their holdings by holding debt in other than the American dollar. Thinking better of it they quickly changed course.
However, were this to happen one can only imagine what the repercussions to the American economy would be. At the very least interest rates would skyrocket and inflation would be on the gallop.
Editorial NY Times
At $58.3 billion, the U.S. trade deficit for January exceeded everyone's worst expectations. The huge mismatch reported Friday between imports and exports is all the more remarkable for occurring in a month when the price of oil actually declined..
The trade deficit is the single most important factor in measuring the extent to which the United States lives beyond its means. As such, it should force America to own up to the dangers of rampant deficit spending. But the White House is showing no sign of action, as if doing nothing might make the problem smaller..
In response to Friday's trade deficit figure, the dollar weakened against the euro and the yen, and traders predicted further declines in the weeks and months ahead. That, in turn, contributed to a drop in stock and bond prices. Such gyrations are certainly not unprecedented. The dollar has been on a downward trajectory for three straight years and was going into a fresh skid even before the latest trade deficit figure was released..
That slump was largely in response to recent reports, some later denied, that Asian central bankers may begin moving their huge dollar holdings into other currencies. That would mean higher interest rates in the United States because the government would need to sweeten Treasury yields, and higher interest rates imply further declines in stock and bond prices. A declining dollar also risks higher inflation; more expensive imports give domestic producers an excuse to raise prices..
There may be more trouble to come. Next week, the government will release figures showing how much capital flowed into the United States from abroad in January. Those numbers were down by nearly one-third in December. If next week's report is disappointing, the logical response from the currency markets would be to sell dollars - again raising the threat of all the possible side effects..
Since the trade deficit is intimately connected to the federal budget deficit, the best way to reduce the trade imbalance is to reduce the budget gap. But President George W. Bush is calling for more tax cuts, politically implausible spending cuts, and costly Social Security privatization. Both parties in Congress must address the twin trade and budget deficits - or risk being forced to do so by events beyond their control.
Quote:A blend of risks makes dollar's outlook grim
By Daniel Altman International Herald Tribune
Monday, March 28, 2005
Traders' pessimism could bring sell-off
Is the writing on the wall for the U.S. dollar? Researchers at one big fund manager say it is, but the markets haven't read along just yet.
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Since the start of March, Bridgewater Associates, a manager of more than $100 billion of institutional and hedge fund money based in Westport, Connecticut, has been issuing warnings in its daily reports. One on March 11, titled "The Breakdown of the Dollar System," said, "As we often say, we've seen this movie many times, and we know the ending."
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There is indeed a volatile blend of risks surrounding the dollar.
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President George W. Bush's new budget proposal would substantially expand the government's debt burden in the next decade, potentially raising doubts about the desirability of its IOUs. Some Asian central banks have declared that they will diversify their reserves away from dollar-denominated assets. If China decouples the yuan from the dollar, it will not need as many dollar-denominated assets to keep its currency from gaining value, nor will its competitors for export markets. In recent times, long-term interest rates have stayed stubbornly low, making it difficult for American companies to attract new investment from abroad.
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These ingredients may just be waiting for the right catalyst. If enough people start thinking like those at Bridgewater Associates, the dollar will lose value rapidly. There is no point in buying dollars today, after all, if everyone thinks that they will be worth less in the near future. Fundamental economic factors need not worsen any further; in currency crises, perception very quickly becomes reality.
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Bridgewater says it believes that the dollar is already beyond the point of no return. To keep the currency at its current value, private investors will have to buy more American securities as central banks desert them, said Robert Prince, the firm's co-chief investment officer. Before private investors will act, they need to see a higher return from American assets, relative to assets carrying similar risks abroad.
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Prince said that those higher returns had begun to arrive through lower prices for assets. If an asset comes with a fixed interest payment, say 4 percent, buying it at a lower price will offer a relatively higher return. But these higher returns could cause problems for the economy. Borrowers in the competitive market for credit will have to offer higher returns, too, and interest rates may rise.
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"The Fed doesn't want that, because too much of a rise in interest rates will choke off the economy," Prince said.
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The alternative is for the assets' prices to remain the same while the dollar loses value. That way, foreigners will be able to buy assets at a discount, yielding a higher return, but without putting too much upward pressure on American interest rates. (The implicit assumption here is that the assets' future returns will not be harmed too much by today's lower dollar.)
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So, instead of allowing the economy to adjust purely through higher interest rates, perhaps causing another recession, Alan Greenspan and his colleagues at the Federal Reserve will have the luxury of allowing the dollar to do some of the heavy lifting. The numbers? Bridgewater predicts a further decline in the dollar of 30 percent, especially against Asian currencies, and a rise in American long-term rates of one-half to one full percentage point.
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Not everyone thinks that events will play out this way. "It's really too extreme to be talking about potential crises in the dollar," said Martin Evans, a professor of economics at Georgetown University in Washington.
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"Yes, we have seen a large movement in the dollar versus the euro in particular, but to say we're sort of on the edge of a precipice isn't really merited by the facts. The premise here - thinking that it's impossible for the dollar to come back - I also don't buy."
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Evans said the Fed's hand would be forced by the rising tide of inflation. "The Federal Reserve cares about inflation," he said, "and they're going to be very reluctant if they start seeing the inflationary effects of the decline in the dollar to just sit by and say, 'But we need low interest rates to support exports."' He predicted that the Fed would put the clamps on credit, leading to interest rates high enough to attract foreign capital: "We are going to see quite a sharp tightening in the United States, perhaps tighter than people are expecting."
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Drastic predictions for the government's fiscal position may not come true, either, even though the White House's budget plans would raise the debt-to-GDP ratio in 2015 to 37 percent, versus 29 percent under current law. "I don't think it's big enough to warrant the attention it's gotten," Douglas Holtz-Eakin, director of the Congressional Budget Office, said of the U.S. fiscal erosion. "A lot of the dollar's future will in fact be driven by the other determinants." That does not mean the budget can be ignored. Holtz-Eakin said he expected that the government would eventually have to move back toward a surplus.
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"It is unavoidable that we will rein in our spending," he said, "because we are unlikely to be able to tax enough to cover it."
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Though action by the Fed and a clampdown on government spending could spare the dollar, they would both be bad news for the economy.
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A cutback in government spending will, at least in the short term, create slack in labor and product markets. And one of the surest forecasters of recession is a tightening of short-term credit by the Fed.
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Congress and the White House have shown no sign that they are serious about controlling spending, but the Fed's policy-making committee may already be proving Evans right. After the committee opted to raise short-term rates another quarter of a percentage point last week, its statement acknowledged that "pressures on inflation have picked up in recent months" and asserted its willingness to act forcefully if necessary.
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Whichever way you cut it, we're in for a bumpy ride.
I'm wondering if any of this has anything to do with putting a "War" person in charge of the world bank...
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This guy knows more about it than I do; and he's a little worried.
http://www.dailykos.com/story/2005/3/28/62356/8105
Quote:
Greenspan's bubbles. No - his 'monster' (says Morgan Stanley)
by Jerome a Paris
[Subscribe]
Mon Mar 28th, 2005 at 03:23:56 PST
The text below has been linked to by Atrios, but I'd like to bring it to your attention again.
The author, Stephen Roach, is the chief economist at Morgan Stanley, so he is one of the top economists in the world in terms of who is listened to, and he has extra credibility in that his bank presumably invests and lends after having taking his advice into consideration.
He is a known pessimist, but I cannot find good arguments against his. His message, like mine (See my previous diaries on this topic:Greenspan's bubbles - more graphs and Greenspan's bubbles - a graph) is simple:
We are in a runaway train, heading for the big crash, and it is mostly Greenspan's fault
Jump in!
The Test (Morgan Stanley Global Economic Forum):
The US Federal Reserve is behind the curve and scrambling to catch up. Inflation risks seem to be mounting at precisely the moment when America's current-account deficit is out of control. Higher real interest rates are the only answer for these twin macro problems. For an unbalanced world that has become a levered play on low real interest rates, the long-awaited test could finally be at hand.
In an era of fiscal profligacy, real interest rates are the only effective control lever of macro management.
It's all there in a few sentences:
fiscal profligacy: unrestrained government spending at the same time as taxes are brought down
current-account deficit out of control: the US consumer is gorging on imports
unbalanced world: everybody is living off that US consumer spending
low real interest rates: cheap money allow everybody to borrow and spend like crazy
inflation is picking up again (from a combination of higher asset prices and higher commodity prices, and despite the China deflationary effect)
Roach then goes on to explain that interest rates will have to increase significantly - just to get back to a neutral policy stance, and as it is "real" interest rates (i.e. those after taking into consideration inflation) that need to increase, the interest rates need to increase significantly faster than they have.
And it's become a real footrace: The Fed tightened by 25 basis points on March 22, only to find that a day later the annualized core Consumer Price Index accelerated by 10 bp. In fact, the acceleration of the core CPI from its early 2004 low of 1.1% y-o-y to 2.4% in February 2005 has offset fully 74% of the 175 bp increase in the nominal federal funds rate that has occurred during the current nine-month tightening campaign. At the same time, America's current account deficit went from 5.1% of GDP in early 2004 to a record 6.3% by the end of the year -- a deterioration that begs for both higher US real interest rates and a further weakening of the dollar. The response on both counts has paled in comparison to what might be expected in a normal current-account adjustment. Behind the curve? You bet.
So what needs to be done? And can it be done?
So let's venture an educated guess: Say, for purposes of argument, that the neutral real federal funds rate is 2%. I didn't pluck that number out of thin air: It's approximately equal to the 1.9% long-term average of the inflation-adjusted policy rate since 1960. It makes some sense -- albeit far from perfect sense -- to define this metric as the average short-term real interest rate that, by definition, would be consistent with average outcomes for growth and inflation. But there's now a problem: Neutrality no longer cuts it for a Fed that is behind the curve with respect to the twin concerns of inflation and current-account financing. Having played it cute and waited too long, the Fed must now aim for a "restrictive" target in excess of 2%. Again, for expositional purposes, put this level at 3%. Then add in some upside to the core CPI of about 2.75% and, presto, the Fed needs to be shooting for a nominal funds target of around 5.75% -- or more than double the current reading. That amounts to another 300 bp of tightening. If the Fed stays with its measured approach of doling out the tightening in 25 bp installments, then it would finally hit that target 18 months from now in September 2006. Unfortunately, given the long and variable lags of the impacts of monetary policy, the twin genies of inflation and the current-account adjustment might be well out of the bottle by then. If that were the case, the 3% target on the real funds rate would translate into something higher than 5.75% in nominal terms. Little wonder that talk is now rampant of stepping up the pace of tightening.
So far, so good. After all, the US economy is picking up again, it has a good growth rate, and there is indeed some threat from imported inflation. A little tightening will help it go through this rough patch and maintain its amazing performance, right?
Well, except for one thing...
Lacking in support from labor income generation, America's high-consumption economy has turned to asset markets as never before to sustain both spending and saving. And yet asset markets and the wealth creation they foster have long been balanced on the head of the pin of extraordinarily low real interest rates. The Fed is the architect of this New Economy, and most other central banks -- especially those in Japan and China -- have gone along for the ride. Lacking in domestic demand, Asia's externally led economies know full well what's at stake if the asset-dependent American consumer ever caves. And so they recycle their massive build-up of foreign exchange reserves into dollar-denominated assets, thereby subsidizing US rates, propping up asset markets, and keeping the magic alive for the overextended American consumer.
The current apparent health of the US economy is not coming from "labor income generation", i.e. middle class working and getting paid for that work, but from cheap money, i.e. from debt. The wealth is an illusion, created by Greenspan, and encouraged by Asian central banks who initially thought that they could ride that tiger to their own wealth.
Asset markets around the world are now quivering at just the hint of an unwinding of this house of cards. And they quiver with the real federal funds rate barely above zero. What happens to these markets and to an asset-dependent US economy should the Fed actually complete its nasty task of taking its policy rate into the restrictive zone? It wouldn't be at all pretty, in my view. The main reason is that the Fed and its reckless monetary accommodation have fueled multiple carry trades for all too long. And those trades are now starting to unwind, as spreads widen in investment-grade corporates, high-yield bonds, and emerging-market debt
Even before interest rates have gone up, the market feels that the debt burden of a number of borrowers is unsustainable, with real life consequences on industrial actors (see bonddad's recent diaries on that topic: GM Near Junk Status after GE cancels 2 billion credit line and Ford, GM and Chrysler "Lumbering Toward Failure")
What Roach is saying is that (i) interest rates need to go up by a lot more than most people still expect, and (ii) even small interest rates will have nasty consequences. Not pretty indeed. And his conclusion is quite direct: it IS Greenspan's fault:
The equity bubble of the late 1990s and the property bubble of the early 2000s -- both outgrowths of extraordinary monetary accommodation, in my view -- changed everything. Now it is a very different animal -- the Asset Economy -- that must come to grips with monetary tightening.
Largely for that reason, I still don't think America's central bank is up to the task at hand. In the face of disruptive markets or growth disappointments, this Fed has repeatedly opted to err on the side of accommodation. I suspect that deep in its heart, the Federal Reserve knows what's at stake for the US -- and for the world -- if the asset-dependent American consumer were to throw in the towel. Unfortunately, that takes us to the ultimate trap of global rebalancing -- a realignment of the world that requires both higher US real interest rates and a weaker dollar. Should the Fed fail to deliver on the interest rate front, I believe that the US current-account correction would then be forced increasingly through the dollar. And that would redirect the onus of global rebalancing away from the American consumer onto the backs of Europe, Japan, and China. Call it a "beggar-thy-neighbor" monetary policy defense -- pushing the burden of adjustment onto someone else.
It didn't have to be this way. The big mistake, in my view, came when the Fed condoned the equity bubble in the late 1990s. It has been playing post-bubble defense ever since, fostering an unusually low real interest rate climate that has led to one bubble after another. And that has given rise to the real monster -- the asset-dependent American consumer and a co-dependent global economy that can't live without excess US consumption. The real test was always the exit strategy.
Read that again:
GREENSPAN'S MONSTER -- the asset-dependent American consumer and a co-dependent global economy that can't live without excess US consumption.
History will not be kind to him.
Cycloptichorn
4/4/05
By David Gergen
Will America slip from No. 1?
A dozen years ago, after the Soviet Union collapsed and the United States emerged as the sole superpower, historians began a guessing game. How long had it been, they asked, since anyone enjoyed as much sway as the United States? One hundred years, back to the British Empire? Five hundred years, stretching back to Spain? Yale's Paul Kennedy soon provided the right answer: America, he said, had more economic, political, military, and cultural power than any nation since ancient Rome some 2,000 years ago.
But, Kennedy added, there were already signs of American slippage, and that warning set off another debate. For a while, those who disagreed with Kennedy--"antideclinists" like Joseph Nye--had the better case: The United States actually enhanced its leading status during much of the 1990s. In this decade, however, there is reason to ask again whether we are in danger of losing our perch.We are so mismanaging our national finances that we now borrow nearly $2 billion a day from foreigners, mostly Asians. Last week Standard & Poor's predicted that unless we change course, our debt will be downgraded to junk bonds within 25 years. Our politicians go into emergency sessions to save poor Terri Schiavo (a questionable exercise of power at best), but they cannot bestir themselves to save Medicare and Social Security. Our research universities remain the best in the world, but our share of patents is declining while Asian universities are rapidly on the rise. Despite the noble efforts of our soldiers, sailors, and pilots, and a brightening outlook for democracy overseas, the way we have conducted ourselves has so offended others that America's reputation abroad has plummeted.School for scandal. All these trends are dangerous enough, but there is another that's even more alarming: the way we are educating our young men and women. Back in 1983, a national education commission famously concluded that our schools faced a "rising tide of mediocrity." Educators, governors, and CEO s quickly swung into action, and we have been trying to improve K-12 classes ever since. The most promising reforms have revolved around standards and accountability, culminating in "No Child Left Behind" under President Bush. Despite a quarter century of effort, however, we're still making uneven progress, and other nations are moving ahead of us.When the nation's governors gathered recently for a national "education summit," their partnering organization, Achieve, presented data showing that the high school drop-out rate has actually gotten worse since 1983! Of the kids who now reach ninth grade, 32 percent disappear before high school graduation. Another third finish high school but aren't ready for college or work. Thus, about two thirds of our students are being left behind, many of them low-income and minority kids. Only the upper third leave high school ready for college, work, and citizenship.Our competitors, meanwhile, are growing stronger. On a list of 20 developed nations, America now ranks 16th in high school graduation rates and 14th in college graduation rates. But wait, it gets worse. That list of 20 doesn't even include India and China because they're officially considered "developing" countries. Yet everyone in American technology knows that India and China are rapidly becoming our most serious competitors.
Bill Gates is among a growing number of CEO s whose concern is rising. "When I compare our high schools to what I see when I'm traveling abroad," Gates told the governors, "I am terrified for our workforce of tomorrow." Gates pointed out that in 2001 India graduated a million more students from college than the United States did, while China has six times as many university students majoring in engineering. Many of those students are now staying home to work, saying no to U.S. jobs. As a result, U.S.-based companies are finding it increasingly attractive to build not only their manufacturing plants abroad but their R&D operations as well. The CEO of a major technology company says that as an executive, he is pleased-his firm will pay less in salaries--but as an American, he is deeply worried.
What's needed now is public recognition that, as Gates says, "America's high schools are obsolete." We should be not only alarmed but ashamed. Our leading figures--the presidents, for example, of the Massachusetts Institute of Technology, Harvard, and Yale, along with the CEO s of Microsoft, Intel, and IBM--must rally Washington and the country to a revolutionary overhaul of public education. In our founding years, Americans were among the most literate people on Earth, and that put us on an upward path. The education of our young has always been a key to our greatness. Will we now rescue the next generation or condemn it to second place?
OP-ED COLUMNIST
A Whiff of Stagflation
By PAUL KRUGMAN
In the 1970's soaring prices of oil and other commodities led to stagflation - a combination of high inflation and high unemployment, which left no good policy options. If the Fed cut interest rates to create jobs, it risked causing an inflationary spiral; if it raised interest rates to bring inflation down, it would further increase unemployment.
Can it happen again?
Last week fears of a return to stagflation sent stock prices to a five-month low. What few seem to have noticed, however, is that a mild form of stagflation - rising inflation in an economy still well short of full employment - has already arrived.
True, measured unemployment isn't bad by historical standards, and inflation is in the low single digits. But inflation is creeping up, and it's doing so despite a labor market that is in worse shape than the official unemployment rate suggests.
Let's start with the jobs picture. The official unemployment rate is 5.2 percent - roughly equal to the average for the Clinton years.
But unemployment statistics only count those who are actively looking for jobs. Every other indicator shows a situation much less favorable to workers than that of the 1990's. A lower fraction of the adult population is employed; the average duration of unemployment - a rough indicator of how long it takes laid-off workers to find new jobs - is much higher than it was in the 1990's.
Above all, the weak job market leaves workers with no bargaining power, so they aren't getting ahead: wage increases have been minimal, and haven't kept up with inflation.
Underlying these disappointing numbers is sluggish job creation. Private-sector employment is still lower than it was before the 2001 recession.
Things could be, and have been, worse. But those whose standard of living depends on wages, not capital gains - in other words, the vast majority of Americans - aren't feeling particularly prosperous. By two to one, people tell pollsters that the economy is "only fair" or "poor," not "good" or "excellent."
Why, then, has the Fed been raising interest rates? Because it is worried about inflation, which has risen to the top end of the 2 to 3 percent range the Fed prefers.
What's driving inflation? Not wages: labor costs have been falling, because wages are growing less than productivity. Oil prices are a big part of the story, but not all of it. Other commodity prices are also rising; health care costs are once again on the march. And a combination of capacity shortages, rising Asian demand and a weakening dollar has given industries like cement and steel new "pricing power."
It all adds up to a mild case of stagflation: inflation is leading the Fed to tap on the brakes, even though this doesn't look or feel like a full-employment economy.
We shouldn't overstate the case: we're not back to the economic misery of the 1970's. But the fact that we're already experiencing mild stagflation means that there will be no good options if something else goes wrong.
Suppose, for example, that the consumer pullback visible in recent data turns out to be bigger than we now think, and growth stalls. (Not that long ago many economists thought that an oil price in the 50's would cause a recession.) Can the Fed stop raising interest rates and go back to rate cuts without causing the dollar to plunge and inflation to soar?
Or suppose that there's some kind of oil supply disruption - or that warnings about declining production from Saudi oil fields turn out to be right. Suppose that Asian central banks decide that they already have too many dollars. Suppose that the housing bubble bursts. Any of these events could easily turn our mild case of stagflation into something much more serious.
How do we get out of this bind? As the old joke goes, I wouldn't start from here. We should have spent the years of cheap oil encouraging conservation; we should have spent the years of modest growth in medical costs reforming our health care system. Oh, and we'd have a wider range of policy options if the budget weren't so deeply in deficit.
So if any of these things does come to pass, we'll just have to see how well an administration in which political operatives make all economic policy decisions, and the Treasury secretary is only a salesman, handles crises.
We need a businessman as president
We have a failed one in office now. That is while he got into politics where failure is the norm.
Does anyone else besides me realize that the Dow has fallen like 500 points in the last week? Not good....
Cycloptichorn
au the US has been headed towards being number 2 ever since we elected Bush the first time.
Cycloptichorn
Quote:Does anyone else besides me realize that the Dow has fallen like 500 points in the last week? Not good....
Yes and with tears in my eyes. But I not worried Bush says the economy is healthy. He must think he is president of China
Rising Consumer Prices Outpace Gains in Wages
By Nell Henderson
Washington Post Staff Writer
Thursday, April 21, 2005; Page E01
Consumer prices rose in March at the fastest rate since October, outpacing gains in most workers' wages, as households paid more for energy, clothing, hotel rooms, medical care and other items, the Labor Department reported yesterday.
The department's consumer price index, the most widely followed inflation gauge, jumped 0.6 percent last month, largely reflecting the 4 percent surge in energy costs.
Some economists were more troubled by the rise in prices after stripping out volatile food and energy costs. The so-called core CPI climbed 0.4 percent in March, the biggest increase in more than two years.
The increase in the core CPI was "worrisome," said Joseph Liro, an economist with Stone & McCarthy Research Associates. Its sustained rise "provides evidence that the spike in energy prices is beginning to pass through to other consumer prices."
Other economists cautioned against seeing the pickup in overall prices as primarily driven by energy costs. The stronger economy itself gives many companies more power to raise prices, said Robert DiClemente, chief U.S. economist at Citigroup.
"Inflation is still low, but there is some concern it's accelerating," DiClemente said.
Concerns about inflation helped drive financial markets down yesterday. The Dow Jones industrial average fell 115.05 points, or 1.1 percent, to close at 10,012.36, its lowest close since October. The average is now down 7.15 percent for the year.
Continued:
http://www.washingtonpost.com/wp-dyn/articles/A6010-2005Apr20.html?referrer=email
Good news and bad news in the stock market
The bad news is that even with todays rise, the stock market is trending down
The good news is that I dont have my social security in it.
We at least need someone as President who is able to count past ten without removing his or her shoes and socks.
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