Another Gloomy Analysis of the Economy (Is Greenspan worse than Bush?)

[Centre_Left]

My god, I hope he is exaggerating. The Fed and our overborrowing may eventually ruin us all...

http://www.financialsense.com/stormwatch/oldupdates/2004/0618.html


If alarm bells are starting to go off in emerging markets, they are also starting to ring here in the U.S. Higher oil prices and an insatiable appetite for foreign goods is driving U.S. trade deficit higher. With the U.S. importing more expensive oil, our trade deficit will be heading higher in the months ahead. A 30% drop in the dollar since 2001 has failed to put a dent in our trade imbalance. This means the U.S. will need to attract a prodigious amount of foreign capital to help fund its twin deficits. Without that foreign capital, the dollar heads lower. The only way to attract more capital is to raise interest rates. However the higher interest rate rise, Greenspan and Co. risk bursting America’s multiple bubbles in mortgages, real estate, bonds, and equities.

(snip)

Companies, consumers, and investors are going to have to cope with higher inflation rates. This also implies collapsing values for anything associated with credit from autos and luxury goods to real estate. While there remains many similarities of today’s markets to the 1970s, there are also differences. One is that the U.S. imports more energy than it did during the 1970s. We are also heading towards peak oil production. The higher oil prices of the 70’s were a geopolitical concern. Today they are geological as well as geopolitical. There is less aboveground stockpiles of commodities. Our energy and commodity infrastructure, the basis of a modern industrial society has been ignored and allowed to go into disrepair. New energy and alternative energy sources will take time to find and develop. That is why commodity prices will only head higher in the years ahead. It is why Pimco has started a commodity fund. It is why investors such as Steve Leuthold is buying commodities and storing them in warehouses. It is also why the smart money has been moving into gold, silver, commodities and foreign currencies and hard assets. The Fed is behind the yield curve and so is Wall Street. It is time to get real as in owning real assets. The time is now before the stampede begins or the unraveling unfolds.

[NMDemDist2]

1. heavens, i can only concentrate on one crisis at a time

can i defeat Bush first, then deal with this ???

[Centre_Left]

2. We have no direct control over this one; so go right ahead (nm)

nm

[myopic4141]

3. Credit Market Debt (CMD)

About half way down the article is a segment on CMD, only the article refers to it as Total America Debt. The "Grandfather Economic Report" link should be looked at to understand just how bad things are debt wise although I cannot find out what constitutes the "National Income" used to determine the ratios. I suspect the number is unadjusted GDP via the hedonistic inflation indexes; but, do not hold me to it. I mention this only because the rations are lower using the GDP found it the "Statistical Abstract of the US" published every year.

[indepat]

4. Did not the Russkies lose the cold war for two main reasons: the Gipper

and the fact that no one would buy their paper/fund their deficits? Of course the force of Gipper's personality alone was ample to topple those Commie B's.

[swinney]

5. Greenspan a Republican no rate hike this year

He gave Clinton 13 interest rate hikes with most coming in an election cycle.

He gave Bush rock bottom rates and is hiding true pic of inflation.