Baseball91's Weblog

January 16, 2009

Stop the Bleeding!

“With stocks tied to bonds, bonds tied to housing, housing tied to the credit crisis, and everyone hitched to the government, this was all like the conga line to the poor house.”  -Craig Rappaport, wealth manager at Janney Montgomery Scott 


The sorry news today.  It would be the start.  Of the signs of deflation.  There seemed to be no place to hide.  The Labor Department reported Friday, U.S. consumer prices increased just 0.1% in 2008, the smallest increase in 54 years. 


Stop the bleeding.  Protect the wound.  Treat for shock.  Stop the bailouts.  The consumer price index fell 0.7% in December, the third decline in a row, led by an 8.3% drop in energy prices and a 0.1% drop in food prices.  That was why the layoffs had started. 



(MarketWatch) By Rex Nutting

January 16, 2009


Most economists expect inflation to ease for much of this year as global demand weakens. Federal Reserve officials say they aren’t especially concerned about deflation taking hold, and insist that they are ready to shrink the money supply once the economy begins to recover in order to prevent a bout of inflation next year.


“Our latest forecast shows the core slipping to 1% by the end of 2009, consistent with a growing output gap that is expected to reach 6%,” wrote David Greenlaw and Ted Wieseman, economists for Morgan Stanley. “Even with energy prices having flattened out of late, the deflation risk confronting the U.S. economy is real.”


Jan. 16 (Bloomberg) — Bank of Japan Governor Masaaki Shirakawa said companies are struggling to raise funds as markets deteriorate, adding to speculation the bank will start buying corporate debt. “It’s becoming harder for companies to raise funds through commercial paper and corporate bond markets,” Shirakawa told a quarterly meeting of the bank’s regional chiefs in Tokyo today. The credit squeeze has spread to larger companies from small and banks have become more reluctant to lend, he said


This was not a dance of jubilation. 


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