The Fed's game of chicken (CNNFN Looks For Bad News #5)

Clymer News Network, Finance Division ^ | 11/25/03 | Mark Gongloff

[Recovering_Democrat]

NEW YORK (CNN/Money) - With stronger-than-expected numbers coming in almost daily and the Fed sitting on its hands, some observers say the central bank is playing chicken with the economy, creating the risk of unnecessarily painful interest-rate hikes down the road.

But some other analysts see plenty of potential trouble spots for the economy and say the chances are small that the Federal Reserve will let inflation get out of control.

[Recovering_Democrat]

Once again, CNNfn works their damndest to find some bad news. What a surprise, its Gongloff writing. This is a TOP STORY on CNNFN.com, mind you. This is the most important story about the economy the editors at cnnfn.com could find this afternoon. I kid you not.

[Recovering_Democrat]

Other great, objective news from this "top story":

""The Fed is selling us a bill of goods," said Russell Sheldon, senior economist at BMO Nesbitt Burns. "The Fed has plenty of evidence that the economy is boiling. They don't care. 'Let it boil,' they say.""

What Gongloff doesn't tell us is that BMO stands for "Bank of Montreal", and that Nesbitt Burns is a CANADIAN firm.

Want more? Here's a subtitle in the article:

Is the Fed lying?

Essentially, this crank believes the fed is "artificially" keeping interest rates low. Can you imagine the DOOMSDAY that CNNFN would be predicting if interest rates were to RISE?? Give me a freakin' break.

[hc87]

Did you notice that nowhere did they identify any actual signs of nascent inflationary pressure? The unemployment rate is still two points above the levels of the late '90s, oil prices are dropping slightly, average hourly earnings are flat, consumer price index is flat, productivity is up and China is still a low cost producer of manufactured goods, taking the wind out of any inflation coming from domestic manufacturing. The only thing that is up is the producer price index. At best, the jury is still out on inflationary pressure. Realistically, it's not showing up yet in the data.

[martin_fierro]

CNNfn is such a turkey that Comcast doesn't even OFFER it in my area -- under ANY subscription plan.

[Bon mots]

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"A big lie repeated often enough, becomes the truth."
                Jozef Goebbels, NAZI Propaganda Minister.

“Apparently a tiger couldn't ever be downtown, but three people can turn a rumor of a tiger downtown into an accepted truth.
                Pang Cong (403 – 221 B.C., China)

[lchoro]

Anyone think inflation is understated?

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_baum&sid=azy53m7w77dQ

A rise in home prices isn't inflationary for the simple reason that they were taken out of the consumer price index some 20 years ago. Out of sight, out of mind. The Bureau of Labor Statistics currently uses a survey of rental units to impute the value of a home (the service that a home provides). If the CPI were computed the old way - using house prices instead of an imputed rental value - the June and July CPIs would have increased by an average of 0.9 percent each month.

Is this another case of rising asset prices flying under the radar of measured inflation? Asset price inflation is a symptom of overly expansive monetary policy. Money is the fuel. Sometimes it chases goods and services. Other times it chases assets, which is what it did in the late 1990s (stocks) and what it appears to be doing now (real estate) in response to super-low interest rates.

"Speculation can only occur when you have an over-expansion in money and credit," Carson says.

http://www.rockymountainnews.com/drmn/business_columnists/article/0,1299,DRMN_82_2255741,00.html

The large disparity in computation of the price deflator renders the comparison of the real GDP growth to that during Reagan's economic recovery false.