From the front page of tomorrow’s WSJ, comes this charming article:
"The U.S. faces an unwelcome combination of looming recession and persistent inflation that is reviving angst about "stagflation," a condition not seen since the 1970s.
Inflation is rising. Yesterday the Labor Department said consumer prices in the U.S. jumped 0.4% in January and are up 4.3% over the past 12 months, near a 16-year high. Even stripping out sharply rising food and energy costs, prices rose 0.3% in January, driven by education, medical care, clothing and hotels. They are up by 2.5% from the previous year, a 10-month high.
The same day brought news that sparked worries of a deepening recession. The Federal Reserve disclosed that its policymakers lowered their forecast for economic growth this year to between 1.3% and 2%, half a percentage point below the level of their previous forecast, in October. They blamed a further intensification on the slump in housing prices, tighter lending standards and higher oil prices. They warned that should the economy’s performance differ from its revised forecast, it would be more likely to fall short than outperform."
Of course, none of this is news to any one who has been paying attention (i.e., regular TBP readers). Over the past few years, we have taken to calling the current condition demi-stagflation. Not nearly as bad as the 1970s, but certainly worrisome enough.
The Journal also asked readers: Is the U.S. in a period of stagflation? I found the poll results surprising: Its a full 180 from what we had been hearing from the politicos and pundits: We went from a rather robust denial of inflation, and steadfast defense of growth, to this:
(Let’s see if this changes when more votes come in . . .)
Tonite’s open thread question: Is Stagflation really back? How much worse is it going to get? Will it be anything like the 1970s (only without the polyester and disco)?
What say ye?
Fears of Stagflation Return As Price Increases Gain Pace
Fed Cuts Outlook For Economic Growth As Credit Tightens
WSJ, February 21, 2008
Interesting new site coming from Frank Cioffi, the PR and media relations guy, and former tv news journalist: Tech Investor News.
Its been quite a while since our last edition of Blog Spotlight: Tonite, I am pleased to present Yves Smith’s naked capitalism.
Yves is a refugee from a big Wall Street iBank, and has put serious time into a well known consulting firm. I have been particularly impressed with Yves coverage of the monoline insurers (Ambac (ABK), MBIA, FGIC). As you will see, her thoughtful post below reflects both his sharp wit, worldly banking experience and insight into this sector.
This is part of our ongoing short list of excellent but somewhat overlooked
blogs that deserves a greater audience. I hope you find it as illuminating as I have . . .
Posted by Yves Smith at 8:55 AM, Feb 19, 2008
Ever since Eliot Spitzer threatened the troubled monoline insurers
that he’d break them up, everyone has acted as if that’s a viable
But this talk of a split reminds me of movies about Hollywood, where someone buttonholes a producer with his pet idea:
it’s like Flashdance, except you reverse it: the girl is a Hispanic
ballerina who started stripping to pay her student loans…."
Like the film proposal, the break up notion is still at the high
concept stage, little more than, "let’s separate the muni operations
from the rest."
And while admittedly Ambac has had only the long weekend to work on its plan, the update as of Monday evening via the Wall Street Journal suggested that the group is flailing around.
Category: Blog Spotlight