Amid reports of better GDP, the dollar is still in trouble and there is a troubling inflation in housing prices.
Clearly, the Fed is BEHIND THE CURVE on interest rates. Greenspans attempt to "cut the dog's tail off one inch at a time" is having markent consequences.
With gold and oil on the rise, Greenspan should take a page from the older playbook and shock the markets with a 50 BP hike at the December Fed meeting.
By taking all "surprise" out of the Fed Policy Greenspan has sought to placate his Bubble Buddies on Wall Street; but apparently, foreign central banks are not amused.
Greenspan's dip-dip-dip approach to rates could leave us with HIGH RATES! HIGH INFLATION! A WEAK DOLLAR! AND $500 GOLD AND $60 OIL!
Part of the problem is that the Greenspan's Bubble Buddies are still awash in liquidity. And what we are seeing now is not DEMAND INFLATION BUT EXCESS LIQUIDITY INFLATION.
OR, IF YOU PREFER, TOO MANY DOLLARS IN THE WRONG HANDS!
THE RICH, AS TRUMAN CAPOTE HAS NOTED PREPARE VEGETABLES DIFFERENTLY;
BUT, MORE IMPORTANTLY, THE RICH SPEND THEIR MONEY DIFFERENTLY!
With money now hermetically sealed off from the working classes, and with the rich awash in dollars, you need only "do the math" to see where this entire house of cards breaks down.
Too many dollars chasing hard assets, even as China exports deflation in manufactured goods.
BUT SADDLY, THE CHINA SYNDROME WILL NOT SAVE GREENSPAN FROM HIS EXCESSES FOREVER!
AND THAT IS EXACTLY WHATS HAPPENING NOW. THE US ECONOMY HAS BECOME A TOXIC SOUP OF CONTRADICTIONS. BUT THE FINAL RESULT IS STARTING TO BE SEEN BY MANY INFORMED PERSONS.
The best way to describe it is A NEW STAGFLATION, THAT IS, HIGHER PRICES FOR HARD ASSETS EVEN AS THE REST OF THE ECONOMY SLOWLY GRINDS ON.
BAD FOR MAIN STREET AND BAD FOR WALL STREET
