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Author	Topic: The Economy
hecubus	posted 05-26-2000 10:34 AM Here's a brief summary of the economic news of this morning. It will be interesting to see what happens at the next Fed meeting. Some analysts are saying that the Fed has to raise come june because of its statements at the last meeting. But, some economic signals seem to be slowing down. I would think the best thing the Fed could do would be to do nothing and then wait for another month of data. It is so easy to overtighten, waiting couldn't hurt that much. One other thing I had thought about. Costco posted bad earnings and warned about the rest of the year...I wonder if this is a signal about consumer sentiment. it seems people have enough money that they are unwilling to go through inconvenience to save money. My thought is that consumers are still spending a lot and the economic slowdown hasn't filtered to the consumer yet. Personal income rose 0.7 percent in April, the Commerce Department reported Friday, the same pace as recorded in March and a shade higher than the 0.6 percent increase expected by analysts polled by Briefing.com. Spending rose 0.4 percent, as expected, after a revised 0.6 percent gain in March. ---- Orders for durable goods, meantime, -- long-lasting goods such as ovens, computers and airplanes -- plunged 6.4 percent in April, the biggest monthly decline since December 1991. That was well below the 0.2 percent decline expected by analysts.
InvestorGuide Daily Administrator	posted 05-25-2000 06:09 PM The vote to grant China permanent normal trade relations, drew plaudits from high-tech CEOs, unions and trade organizations. (source: E-Commerce Times) http://www.ecommercetimes.com/news/articles2000/000525-2.shtml
InvestorGuide Daily Administrator	posted 05-25-2000 06:06 PM The supercharged U.S. economy, powered by brisk consumer and government spending, grew at a robust 5.4% annual rate during the first three months of 2000, the Commerce Department said. (source: Washington Post) http://washingtonpost.com/wp-dyn/articles/A4452-2000May25.html
KeithG	posted 05-25-2000 11:25 AM People are clueless. There is a reason that government was created, and it is that people can't take care of themselves well enough. Now you and I might be smart enough to learn from things that happened in 1929 or 1970, but if 90% of the population is clueless we're going to get screwed no matter how smart we are. Only the government is able to maintain some level of control over the entire economy, individuals really can't control their own fate. Now, would you rather put yourself at the whim of the government or in the hands of the masses? I'll take the government, thank you very much. KSG
Machiavelli	posted 05-25-2000 10:29 AM You make some good points, but I really believe it is not the government's place to be my parents, to use your analogy. Sure, I would let my parents tell me to eat veggies so I am healtheir in the future. But I would not let the government let me do that. I do agree that we need to learn from history and past mistakes, but much of these decisions need to be made on an individual level. By the government taking control, individuals don't even get the chance to make those decisions or learn from their own mistakes.
KeithG	posted 05-25-2000 10:17 AM Hmmm, not going to slip this one by unnoticed. To argue that the wealth effect would offset the effects of inflation is presumptuous. First off, I am guessing you haven't really experienced inflation...we haven't seen it yet in this economy and REAL inflation hasn't been around since the 70's. I wasn't really conscious of the economy back then (too young), so maybe people with anecdotal evidence can describe what it was really like. Second--the growth of the past several years is unsustainable. I mean, seriously, all those dot-coms with lousy business models were going to fall, whether the Fed did anything or not. You have to agree that things were out of control--so the wealth effect was going to diminish at some point, and if inflation was there waiting, we would be in big trouble. Now, the real problem here is myopia--the government, in this case the Fed, is looking into the future. I'm looking for an analogy...Something about your parents taking away the ice cream and making you eat vegetables so you don't get fat. Sure, in the short run they are taking something away from you that you like (high flying stocks and the wealth it created) but in the long run, you are going to be happier and healthier than if they had let you do whatever you want (inflation eating away at your buying power AND a crumbling stock market). We've been through this before, and we've paid the price for it. If you never want to learn from the past, that's your problem. Maybe everything has changed with the internet...I don't really think so. I don't feel that the type of growth we saw in the past couple of years is sustainable for very long. The government is not trying to stop economic growth, only slow it down. They still might screw it up and overtighten, buthopefully not. Sometimes parents have to make their kids do certain things for the child's own good. Individuals, for example you, would never have the sense to slow things down to avoid big problems down the road. I'm risk-averse and not afraid to admit it. Let the Fed minimize the risk of inflation and let me handle the rest. KSG quote: Originally posted by Machiavelli: This is an extreme argument, but I have a real problem with the Fed trying to slow down growth to benefit everybody across the board through controlled inflation. My feeling is that the wealth effect created by the extreme personal gains in the market over the last couple years (ye olde bull market) would have outweighed any rises in inflation. Sure, not everyone is in the market. But it's what alot of people were excited about, and a real way to earn income. Now, it's being taken away, and it screams of socialism. Hands off!
Machiavelli	posted 05-24-2000 04:12 PM This is an extreme argument, but I have a real problem with the Fed trying to slow down growth to benefit everybody across the board through controlled inflation. My feeling is that the wealth effect created by the extreme personal gains in the market over the last couple years (ye olde bull market) would have outweighed any rises in inflation. Sure, not everyone is in the market. But it's what alot of people were excited about, and a real way to earn income. Now, it's being taken away, and it screams of socialism. Hands off!
InvestorGuide Daily Administrator	posted 05-23-2000 06:13 PM Many economists are raising their inflation estimates for the year based on expected CPI data, suggesting skepticism about the success of the Fed's campaign to restrain price increases. (source: MSNBC) http://www.msnbc.com/p/cnbc/411038.asp
wassup?	posted 05-22-2000 03:09 PM A nice, positive opinion of the Fed's move. Soemthing we all need after a morning like this one... http://cbs.marketwatch.com/news/current/kellner.htx
InvestorGuide Daily Administrator	posted 05-19-2000 06:23 PM America's trade deficit widened to an all-time high of $30.2 billion in March as a record foreign oil bill overwhelmed a rebound in American exports of farm products and autos. The deficit with China narrowed slightly but the trade gap with Japan rose to its highest level this year. (source: Boston Herald) http://www.bostonherald.com/business/business/econ05192000.htm
InvestorGuide Daily Administrator	posted 05-18-2000 06:30 PM America's robust economy is starting to show signs of strain and central bankers need to watch inflation closely, despite a recent report suggesting that there is no immediate danger, the president of the Fed of New York said. (source: CNNfn) http://www.cnnfn.com/2000/05/18/economy/wires/mcdonough_wg In brief: - Mortgage rates moved up to a five-year high, in line with the Fed's decision to raise overnight lending rates. - The number of Americans filing new claims for unemployment benefits fell to 276,000 for the week ended May 13 from 297,000 the prior week, according to the U.S. Department of Labor. - Treasury bonds ended sharply lower for the second consecutive day as investors expressed concern about higher interest rates in the months ahead.
InvestorGuide Daily Administrator	posted 05-17-2000 06:26 PM The dollar rose to its highest level in six years against the British pound, and neared record levels against the euro, as the global markets continued to adjust to the U.S. decision to raise interest rates. (source: MSNBC) http://msnbc.com/news/408815.asp In brief: -The Treasury Department will buy back $2 billion of the national debt Thursday, the latest in a series of debt reductions.
KeithG	posted 05-17-2000 05:37 PM Hmmm. You and millions of American's are wondering these things. It would be nice to think growth like those the economy has experienced are sustainable, but history has proven otherwise. Think about how monumental the industrial revolution was...but eventually inflation caught up. I think the idea is that Alan is minimizing the downside risk--that of depression proportions--by slowing down the economy. In the process, the upside has to be curbed too. That doesn't really explain, I would need to get the textbooks out to really be sure. KG quote: Originally posted by Joey Joe Joe: Can someone please explain to me why Greenspan and the Fed feel like they need to slow the economy down? I realize it's all about inflation, but does curbing inflation really outweigh the negatives of slowing down the entire economy? Sure, prices will be held in check, but less money will be made and productivity will slow down? Why can't things just be left alone?
wassup?	posted 05-17-2000 10:05 AM I think Ghostrider makes a good point--the lag in the impact of these interest rate hikes makes this a very scary game the Fed plays. Greenspan is walking a very fine line between slowing some of the growth and sending the economy into recession. The good news, if you buy it, is that some people believe the New Economy is recession proof for the time being. People are simply going to be more efficient than ever before, and the economy will grow, to an extent at least, no matter what. I must say, I hope so. With the lag, the really interesting thing is when this 50-point hike's affect will be felt. If the data doesn't react by June, will the Fed raise again, or give it another month? At some point, I think, the Fed had no choice but to raise 50 because the market expected it--Greenspan does watch the Market and did not want it to rocket--25 points would have gotten things moving...
Ghostrider	posted 05-16-2000 06:45 PM I think that Greenspan is misleading the public when he says he doesn't consider the stock market in his decisions. His comments about irrational exuberance and wealth effect are based purely on the super bull stock market we've had since 1995 and I think he wanted it to correct the way it has recently. I also don't like the way he's handling the interest rate situation. I would feel more confortable with spaced out interest rate increases. 6 in a row is too many to give it a chance to work. And that tightening bias statement was certainly Greenspan casting a disdainful glance at the stock market in case we got too excited about "only" a 50 basis point increase.

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