If none of us will allow our currencies to appreciate against the others, ... then they'll all depreciate against something else. Gold, copper, oil.
Since central banks aren't letting their currencies appreciate against the dollar, that implies that all the currencies will depreciate against gold and commodities in general.
You're going to see good profit growth over the next several quarters, but it's not going to be as strong as it's been of late. Still, it will be better than a poke in the eye.
We should get a little better growth in the second half -- but not enough. By the end of the year, maybe we will have enough to stabilize the unemployment rate, but I think we will probably see a further drift up in the unemployment rate.
O'Neill was like the offensive line of the Green Bay Packers playing in a dome -- they can't hear signals. O'Neill couldn't hear the signals the White House was sending, and they got rid of him. Presumably, Snow has better hearing.
OPEC doesn't suffer from money illusion. It decided they want an honest dollar for an honest barrel of oil.
All the data suggest the labor market is improving -- perhaps not as fast everyone would hope and want, but it's better than deteriorating.
If the Fed pauses here, rates will come down, the house ATM machine will get filled up again, and we can all go back and do more refinancing. But if they keep going, like some people believe they will, then we will have a recession in the second half of 2005.
Rising bond yields would hurt the housing market. Unless incomes pick up to offset higher financing, you're going to have a problem.
Housing has gotten very expensive relative to income.
In 1987 we had a sharp increase in long-term interest rates and a stock market crash when there was a run on the dollar. While a lot of people think a weaker dollar is a good thing, it essentially makes us poorer and turns out not to be a good thing.
This reflects the low interest rates we saw earlier in the summer. While I wouldn't say that a major contraction is imminent yet, I suspect this is close to being the last hurrah.
The problem is that labor has basically priced itself out of the market. We had a very sharp run up in compensation costs in the late 1990s. People got too expensive and they're still too expensive.
When you print money, it's going to inflate some asset price. Maybe we'll revert to the late 1990s and buy stocks with it.
What'll happen is you'll see bond yields spiking higher, the dollar spiking lower and the Fed then having to raise rates. At that time, housing will probably start to weaken, stocks won't do well, and our standard of living will go down.
Every time we think the bond market is acting irrationally, we usually find out a month or two later that it was rational, that some people participating in the bond market knew more than most of us economists did -- which is not really a great feat.
At the intermediate and crude goods levels, we continue to see pipeline pressures toward higher inflation. Next month, I suspect we're not going to see the tobacco offset, but maybe it will be something else.
In most periods throughout history, households were net suppliers of money to the economy, ... Today, by a record amount, they are net borrowers from the rest of the economy.
The Fed is clearly not in the mood to preempt inflation. They're going to wait, and that ultimately will have some unpleasant ramifications.
The only reason they won't cut is because Alan Greenspan suggested he wasn't yet in the mood to cut, ... He's probably a Cubs fan as well -- they always say, 'Wait 'til next year.' In this case, Greenspan says, 'Wait 'til the second half.'
This is a warning signal ... that we are on recession watch now.
Nobody wants a strong currency, and since the U.S. currency is fundamentally weak, foreign central banks need to buy up dollars to keep their currency from appreciating.
Nothing seems to be going quite right. We're not seeing mass defections. The weather has been bad. Frustrations are starting to build that this might be going into a less antiseptic phase.
We really don't want to give Greenspan a grade yet. You want to wait a year or two to see whether the seeds turn to weeds.
Up until 2000, households in the post-War period had never experienced a decline in their net worth on a year-end to year-end basis, ... But they did in 2000, they did in 2001, and they're on course for it again in 2002.
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