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Just another Liberal Political weblog

Impending Economic Slowdown – Are you prepared?

Many Economists are predicting this slowdown.  At this point the concern is more recession than inflation.  Another article from the AP:

Halloween brings more US data to spook markets

By John AuthersTue Oct 31, 1:25 PM ET

Here we go again. On Tuesday, disappointing data from the US spooked world markets, appropriately enough on Halloween. Once more, the betting is that the US economy is set for a sharp downturn. Graphs of the dollar against the main alternative currencies, and of Treasury bond yields, all show the trajectory of a jet heading for a hard landing.

Following last week’s drab gross domestic product figures for the third quarter, yesterday brought an outright drop in consumer confidence. Analysts had expected the continuing fall in gasoline prices to fuel an increase in confidence, so this was negative. Add the survey of Chicago purchasing managers, which showed its weakest reading since August of last year, and everything was set for a run on the dollar.

Events elsewhere are compounding the dollar’s problems. The Bank of England seems certain to tighten rates at its next opportunity, and a December tightening from the European Central Bank is also firmly expected.

The dollar is at its lowest level against sterling for the year – almost $1.91 at one point on Tuesday. The pound has gained 3.5 cents since the Federal Reserve’s meeting last week. The euro has gained 1.8 per cent, and the yen has strengthened even more, moving from Y119.36 to Y116.82 since the beginning of last week. The Fed Funds futures market puts the odds of a rate cut by next March at 50 per cent, having priced out any such possibility by the beginning of last week.

The 10-year US Treasury bond yield has given up a cool 21.5 basis points over the last six trading sessions, dropping from 4.83 per cent to 4.61 per cent.

The Halloween “tricks” could come for those making money from the yen carry trade – borrowing in low-yielding yen-denominated accounts to go “long” elsewhere. But more dollar weakness could be a “treat” for equities outside the US. The flood of US investors’ money into foreign markets is fuelled by the dollar.

According to Morgan Stanley Capital International, the world outside the US has grown by 9.4 per cent this year in local currency terms, but by 16 per cent in dollar terms.

Wake up America!  The only way to really bring down this country is economically and we are letting this happen.  Think about it.  Who owns most of our debt? Where are the jobs going?  How many corporations are now off-shore and pay no taxes? And how many countries own or are running businesses here?  Remember Dubai has bought but never sold back the running of our ports.  Wake up and question this government and every politician on this subject.

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November 1, 2006 - Posted by | Current News, Economy, Uncategorized

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