Paul Kedrosky's Infectious Greed
Finance & The Money Culture
Good Bloomberg interview with ISI economist Ed Hyman. He says slowing, but no recession, and rates fall to 4 percent.
Quite interesting interview. I see why he is a Top economist. Because he thinks for and speaks like Fed. He also gives an A grade irrespective of critics.
I don’t agree with the second part though.
Goldielocks economics – four FF rate cuts of 200 bpts, inflation is well in hand for two years, or more, and The “CEO signal” the fed wanted (?), asking for an easying all leads to Ed calling for a 2008 and 2009 to be good years as the market looks ahead , in fact 1700 SPX by end of 2007.
Not so fast, have we overlooked the consumer who is both in debt and has a reset mortgage? They are 70% of the economy. Will they buy from industry? He admits it will be “close” but no recession. Ed is wrong not to recognize that the Fed can lower the rates all it likes but without a consumer nothing matters. 6 to 18 month lag from easing to spending. Too easy, too glib. JWC
I love Ed Hyman, but regretfully, I believe we are falling into what will be a deep and lengthly recession. Just as the Nasdaq bubble deflated and the housing bubble inflated, now the housing market will come down greatly causing negative consumer demand. Hold cash only.
I think former Mary Hartman, Mary Hartman star, Louise Lasser, is on the money. Greenspan should have regulated the mortgage industry when he lowered rates so far. It’s an unforgiveable oversight.
Paul Kedrosky‘s Infectious Greed
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