Saturday, March 01, 2008

Singing the blues

By Capt. Fogg

Blues fallin' down like hail
And the days keeps on worryin' me
There's a hellhound on my trail
Hellhound on my trail

-Robert Johnson-
You'd think there was nothing going on if all your news came from CNN. Nothing but a rather polite discourse between the presidential candidates being promoted as a gladiatorial combat to the death. There may not be a 400 pound gorilla in the room, but that big thing with the antlers around the corner isn't Bullwinkle, it's Stagflation and the Supply Side prestidigitators are hoping the beast won't go on a rampage before November so they can blame it on "tax and spend" Democrats.

Of course the people who have been preaching the wisdom of the invisible hand have been the first to hop into the maelstrom with rebates and handouts and rate cuts trying to keep it all from going down the drains, but I'm afraid that once the chain is pulled, the toilet will flush and nobody can stop it.

Has nobody noticed that February was the fourth consecutive down month for stock indices? Profit estimates are lower, Losses higher, unemployment creeping upwards. Nine of 10 industries in the S&P 500 declined after reports showed the U.S. economy grew less in the fourth quarter than economists forecast and business activity fell to the lowest since 2001. Reports due next week are expected to show further contraction and higher unemployment. The Fed is likely to cut interest rates further and this has pulled the rug out from under the Dollar while the government spends and spends and borrows from the Chinese to do it. Large tracts of brand new houses sit empty like ghost towns. Homeowners are walking away and leaving their houses to the banks and banks are foreclosing at record rates. Boat builders are closing plants as the debt-ridden middle class has had to forgo such luxuries as boats and recreational vehicles. Consumers aren't confident and the rate cuts aren't helping. There will be bank failures, said Bernanke to Congress on Thursday.

Deja vu? All over again. Are we looking at another decade or so of big league inflation to pay for Bush's war - or longer if McCain keeps us there for the rest of the century? Some are predicting a recovery later this year, but then they always have seen prosperity around the corner. Many however, see inflation rising and a panicked return to high interest rates to counter it while the economy stagnates, bringing back those old stagflation blues to trickle down on us like hail.

Cross posted from Human Voices

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4 Comments:

Anonymous Anonymous said...

Recovery gets more distant every day. Here in the South,it's easier to see the declining economy as factory after factory closes down, leaving workers with un-needed skills and few options. Just last night, Tyson announced a clsoing of one of it's prepared food plants, eliminating over 400 jobs. Desn't sound like much, but in an area where similar closings have displaced thousands since NAFTA was signed, it really does hurt.

1:55:00 PM  
Anonymous Anonymous said...

I have been moving my money from stocks and cd's to gold, silver and euros. i'm hoping by the end of next week I will have zero left in dollars except like a little bit.

3:29:00 PM  
Blogger Capt. Fogg said...

Oh but Bush is optimistic. Optimism, you see, boosts economies and wins wars and makes dreams come true.

6:00:00 PM  
Anonymous Anonymous said...

http://www.bulliondirect.com/catalog/showProductDetail.do?id=175433586


I bought one of these two days ago for 980 and it is already 15 dollars higher. It's incredible. the cuplrit is the federal reserves insane rate cutting.

years and years of making things look good in the short term at the expense of the long term has comehow to roost.

10:31:00 AM  

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