economy
That's up from 9.9% in May and 7.1% in April from the monthly Cleveland Fed analysis of yield curve spreads. It also projects 1.0% real GDP growth over the next year, much less than the consensus forecasts of just under 3%. An inverted yield curve has preceded each of the last seven recessions by about a year, but there have been two false positives, in 1995 and in 1998. How much predictive power yield curve analysis has is in dispute among economists, as the Cleveland Fed notes here.
This CNBC report from midday yesterday is as good of a summary as I've seen in a while in print, audio, or video on the state of the economic debate.
My one question: How does Steve Liesman always get to report with mountains in the background?
I'm not sure how many people these days remember the movie "Dr. Strangelove," the 1964 Stanley Kubrick directed/Peter Sellers tour de force that was a take off on another movie of that year, "Fail-Safe."
Dr. Strangelove's full title was "Dr. Stangelove or: How I Learned To Stop Worrying and Love the Bomb" and the basic joke was how the dropping of an atomic bomb (they didn't call them nuclear weapons back then) might not be such a bad thing after all. It was as funny as "Fail-Safe" was frightening.
Matt Miller, a deficit hawk long before the phrase was commonly used, has now adopted the Dr. Strangelove mentality when thinking about the atomic bomb-like deficits that are about to occur. As I wrote in my "Fiscal Fitness" column this week, and as Matt has now put out there for all to see. previously unimaginably high federal deficits are now not just a fait accompli, but something we all need tio learn to love.
I just got back from winning third place in the U.S. Tennis Association's national doubles tournament for 3.5 Senior (over age 50) men in Palm Springs, CA. It was a great getaway from the woes of Wall Street, but not from those of Main Street.
The first headline that greeted me in The Desert Sun was about home foreclosures. I didn't expect foreclosures in Palm Springs, but they had 190 foreclosures in the third quarter of this year. A friend threw us a celebration party Sunday in a tony gated community in Indian Wells -- next door to a boarded up foreclosed home.
We ate at a fancy restaurant in downtown Palm Springs Saturday night. They gave all 21 of us our own room. I saw five other customers there the whole night.
The next day's headline was about increased fees for water. As we drove to the Indian Well Tennis Garden, we passed over a huge dry riverbed. If we make it back next year, there won't be any more grass here.
How does a lame duck president with little or no credibility on economic issues and overall very low job approval ratings make a nationwide speech that dramatically changes public opinion on the Paulson Plan?
How does a president with few rhetorical skills find the words and delivery to be convincing to a skeptical nation?
How does a president with little credibilty on economic issues rescue the plan proposed by the one person in his administration who has some credibility on economic issues?
How does a Republican president get GOP members of Congress to validate what he says after the speech even though they are the ones who appear to be the most skeptical about the plan?
Update: After The Speech
The Paulson plan may be one of those initiatives that, the more scrutiny it gets the less likely it is to be enacted.
I've heard from lots of people on Capital Hill that the plan is in trouble. The combination of skeptical markets, growing questions about some of the initial provisions and subsequent revisions, and the cost is making the folks in the House and Senate feel better about slowing down the process and considering alternatives.
The fact that the economic community also seems to have some severe issues with the plan -- also on a bipartisan basis -- is also making it easier for members of Congress to ask questions. How often do Paul Krugman and Bill Kristol agree on policy issues?
Unlike some of the others you see on TV, Steve Liesman, the economist-in-chief at CNBC, is an excellent reporter (Full disclosure: I know Steve and for years have had the opportunity to talk with him in front of and behind the camera).
The LA Times this morning has what has to be taken as a gloomy report about the economy, citing an UCLA study that says a recession is possible in the not too distant future.
The story talks about falling housing prices and declining new home starts as reasons for the economic troubles. Here's are the two key sentences:
Does anyone else think that Treasury Secretary Paulson is doing everything possible not to be involved with domestic economic issues?
News reports this morning said that the price per gallon for regular gasoline had risen 6 cents in the past two weeks.
I like low prices on things I buy as much as anyone, but here's the most basic question no one ever seems to ask when discussing energy prices: If consumers keep paying higher prices for gasoline, why should the oil companies do anything other than raise them?
