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GE consumer finance unit gives up on U.S. consumer
Putrid economic growth at home has sparked a search for growth opportunities around the globe
Stagflation requires slowing growth. I'm fairly sure putrid qualifies.
Fisher says Fed has more liquidity options
Fisher said the Fed had opened the monetary 'spigot' by lowering its benchmark overnight federal funds rate to shield the economy from a housing and financial market crisis.
Stagflation also requires stubborn inflation. The monetary spigot is currently open.
"If we turn the spigot up too forcefully, we will flood and kill the grass (of the economy) with inflation," he told a Dallas Fed community forum.
Since printing too much money and credit was part of the problem, it seems unlikely to me that printing even more money and credit will act as the solution. I will agree that there is an extreme risk it might flood and kill the grass though.
Jim Rogers: More Pain for the Greenback, and the Failure of the Federal Reserve
Rogers: Historically, nations that have gotten themselves into this kind of situation have only gotten out following a crisis or a semi-crisis, or some gigantic stroke of luck.
I have a hard time betting on the gigantic stroke of luck option. I guess that means I'm not an optimist.
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
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At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
11 hours ago
3 comments:
Man, when you pull all of those great quotes together in one piece, it sure starts to look grim for the consumer.
I guess we can still hope for the limited destruction and mayhem of a "semi-crisis," whatever that might be. (Half of a whole crisis, I guess!)
Stag,
The Fed & the government can certainly add more dollars to the economy. Unfortunately, we don't need more dollars, we need more output. The U.S. is being re-valued globally - just look at the falling value of the dollar as proof. More $ will only improve things on wall street spread sheets - temporarily at that. I suppose the optimist in me can take solace in the fact that it doesn't have to be a permanent devaluation though.
Here are a few thoughts to run through the "likely outcome" machine: What are the chances that all the excess dollars stay in financial assets and don't spill over into consumer goods? If import prices continue to rise, how likely is it that American producers won't also raise prices? Last time I looked, Exxon is following Saudi Aramco's lead. Historically high debt & asset levels of the late 1920s & late 1960s led to severe economic pain. What are the chances today's historically high debt & asset values won't also lead to economic pain? Worse still, what are the chances today's record leverage & financial black box, off-balance sheet voodoo don't magnify the problems.
Maybe I'm just a pessimist. And maybe Americans in the 1930s & 1970s were just incompetent. Same with the Japanese in the 1990s. Or maybe, just maybe, we're not as smart as we think we IS.
Another thought. I'd feel a lot more comfortable owning dollars if collectively we stopped looking to the government, the fed & wall street to make us prosperous. The bailout mentality and asset inflation expectations are symptoms of our something for nothing attitude. To echo your past statement - the likely outcome of something for nothing is nothing for something.
AHHHH! I did it again! Sorry for the rant. I blame Bernanke, he just won't allow deflation - even in my posts.
threetorches,
I guess we can still hope for the limited destruction and mayhem of a "semi-crisis," whatever that might be. (Half of a whole crisis, I guess!)
At the risk of painfully mixing metaphors, if it takes a decade or more to create the conditions necessary for a whole crisis, how long does it take to dig half a whole crisis to China?
In a related topic, just how much more worthless must our currency become before our "unexpectedly widened" trade deficit is gone?
Let's call those rhetorical questions. I'm not sure I really want to know the answers!
MAB,
The bailout mentality and asset inflation expectations are symptoms of our something for nothing attitude.
Here's a small glimmer of hope.
Ask an Expert: No, you can't get something for nothing
http://www.usatoday.com/money/smallbusiness/columnist/strauss/2008-04-07-free-money_N.htm
At a time of huge federal government deficits, an incredibly expensive war with no end in sight, and recession, you are looking for free government money? Think again.
That being said, the tax rebate checks are almost on the way! Woohoo! Let's party like it is 1999!
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