Blue Chip economists trim U.S. growth forecast

Blue Chip Economic Indicators/Reuters ^ | May 10, 2003

[Starwind]

Blue Chip economists trim U.S. growth forecast

Sat May 10, 2003 12:00 AM ET

WASHINGTON, May 10 (Reuters) - Private economists trimmed their forecasts for U.S. economic growth still further and now regard even the second half of 2003 with pessimism after a slew of data showed the U.S. economy still struggling to recover.The closely watched Blue Chip Economic Indicators newsletter said its panel cut growth forecasts for each of the next three quarters, extending the steady erosion in the survey's outlook that began last summer.

Gloomier still, nearly two-thirds of the more than 50 business economists on the panel said risks to their forecasts for growth in the second half of the year were on the downside.

"In large part, our panel members grew a bit more pessimistic over the past month because most of the latest economic releases and private sector survey results signaled that recent economic activity remained quite subdued," said the May edition of the newsletter. Blue Chip said its panel forecast a second-quarter growth rate of 2.1 percent, down 0.1 percentage point from the 2.2 percent projection offered in April.

Forecasts for the third and fourth quarters of the year were also trimmed by 0.1 percentage point, to 3.5 percent and 3.7 percent, respectively.

"The paring of consensus estimates of GDP growth over the remainder of this year reflects diminished expectations of growth in personal consumption expenditures, business inventories, capital spending and industrial production," Blue Chip said in a summary of its latest survey.

Its May forecast pegged 2003 gross domestic product growth at 2.3 percent, down from 2.4 percent projected in April and the 2.4 percent growth achieved last year. This was the fourth month in a row the panel has cut the annual forecast.

Disappointing employment and manufacturing data in April show the economy likely began the second quarter on a sluggish note, following a weaker-than-expected initial estimate of first-quarter GDP growth of just 1.6 percent, Blue Chip said.

While most analysts still expect the quick, decisive military victory by the United States in Iraq will produce a rebound in the pace of consumer spending and business investment, the panel was scaling back just how soon and by how much the pace of overall growth is likely to accelerate.

"Business inventories are not expected to grow as fast as originally thought due to lingering cautiousness on the part of businesses about the likely strength of aggregate demand going forward," it said.

The U.S. economy lost 48,000 jobs in April, notching the third consecutive monthly decline after a 124,000 reduction in March and 353,000 loss in February. "Indeed, payrolls have dropped in six of the last eight months," Blue Chip said, adding the plunge in weekly hours worked to a cyclical low of 34.0 a week was "particularly discouraging".

While the return of mortgage rates to their recent lows likely signals housing demand will remain reasonably strong for a while longer, cool weather and a very modest improvement in vehicle sales will likely leave April retail sales little changed from March, the private survey said.

[Starwind]

"The paring of consensus estimates of GDP growth over the remainder of this year reflects diminished expectations of growth in personal consumption expenditures, business inventories, capital spending and industrial production," Blue Chip said in a summary of its latest survey.

[Starwind]

Something to digest alone with your bagels and scones...

[Moonman62]

It looks like government growth will outpace private sector growth yet another year.

[Ursus arctos horribilis]

I would think these economists whom portend to foresee and know all, would be the richest and closed mouth buggers on the globe. Why would they share 'this knowledge is power' tid bits with others.

I see the stock market gurus everyday take on the pathos of panic at the slightest breeze, that blows this way, or does not blow that way.

[Starwind]

would be the richest and closed mouth buggers on the globe.

Forecasting macroeconomic conditions and forecasting investor sentiment in a specific stock are vastly different crafts.

Why would they share 'this knowledge is power' tid bits with others.

It isn't power. They haven't said anything you couldn't glean yourself reading the news. They do it because they find it fulfilling and they paid for it - a job they enjoy, same as anybody. They put their pants on just like you and I.

[Starwind]

It looks like government growth will outpace private sector growth yet another year.

Like a tumor.

[RLK]

These economist are more optimistic than I am.

[Tribune7]

We need major tax cuts and deregulation.

(admin: I hope I'm allowed to post such a controversial suggestion)

[cpdiii]

The key to an economic boom is very simple. Massive tax cuts that are also offset by massive reductions in government spending on a dollar for dollar basis. This will shrink the roll of govenment (which stifles economic growth) and puts money in the hands of those that earn it an spend it and creat new jobs, new companies and reduce the power of Congress.

The enemy is CONGRESS, never never never forget that their power is derived from taxing us and buying votes with our taxes.

CONGRESS is a business that is very successful. They have created a market which is the transfer of wealth and their engine of transfer is the power to tax. They buy their votes with taxes.

When Don Corleon "The Godfather" made money he provided a product the people would hand their money over for, willingly. Those that handed their money over to him did receive a product or service. Whom is more honorable, Don Corleon or Congress?

[McGavin999]

These wouldn't happen to be liberal economists would they? Considering the lack of growth on "the continent" we're going great guns.

[Steven W.]

They're focused on the period during the war when the whole world - let alone the US economy - was largely on hold, literally!

Disappointing employment and manufacturing data in April show the economy likely began the second quarter on a sluggish note, following a weaker-than-expected initial estimate of first-quarter GDP growth of just 1.6 percent, Blue Chip said.

Looking forward economically with knowledge the war is now over and oil prices are down considerably, DOW Theory experts now confirm the DOW move sustaining bullish support above all the major moving averages with Monday's futures currently up 100.

[Fledermaus]

Since when did 2.4% growth become anemic? I remember after Clinton got elected that 3% was considered the miracle of the universe.

After a sluggish 2000, 9/11/01, Clinton's lies about growth in 1997-1999, the dot.com bubble, Enron hysteria, WorldCom lies, AOL lies, Tyco stealing, 6 months of doom and gloom talk about Iraq, a stalled Senate due to moronic Dems, a war, etc., I'll take a 2.4% growth for 2003 with only 6% unemployment (1996 level).

Heck, given Europe and Asia are in a tailspin, I'd take 2% and be happy. It's still growth.

Consumers are optimistic. Spending on durable goods is still hefty. Home sales and new home construction remain strong and will grow now that winter is over. Incomes are steady if not rising some. Consumer debt isn't exploding. Inflation is non-existent. Fuel prices are stable and falling.

In my opinion, the glass is more than half full. Are people being laid off? Yes. Mostly restructuring that gets rid of the corporate (and gov't) bloat of the 90's with overpaid, unproductive workers. Are some people "hurting"? Sure. And when Clinton "gave" us the greatest economy in the history of the universe (yes, that's a joke), I could find all kinds of horror stories of people that had bad times. That's the nature of a free people with a free market.

I'm not worried. The foundations are solid and if the govt's would just quit taxing everyone to death there would be more capital expenditures by business.

Where I live, businesses are building like crazy. A new Walgreen's is being built 1.5 miles from me to relieve me of the stress of driving to the one 4 miles from me. You can't get into the Home Depot down the street that is a year old and trying to get into a restaurant on a Friday night is nothing short of a 45 wait.

Economics is a local issue and a personal issue. Some places are always going to do better than others and some people will always be in dire straights regardless of the economic atmosphere.

But it's only the single mother of nine that lost her minimum wage job you hear about in the news.

[Starwind]

When Don Corleon "The Godfather" made money he provided a product the people would hand their money over for, willingly.

Willingly?

Don Vito Corleone: "I'm a gonna make a you an offer you can't refuse"

[kylaka]

When Clintigula got elected, growth was 2 percent for the first sex years, barely. The last two years kicked to 4 or so percent because nobody looked while the big boys cooked the books. W has had to endure a quadruple witching hour.

(1) 9-11. (2)Wall street meltdown. (3)Iraq. (4)SARS.

I'm confident W will make it right. Indeed, the last few days indicate that he is on the right path.

[Starwind]

Since when did 2.4% growth become anemic?

1.6% (where we're at) is anemic.

Consumers are optimistic.

And mercurial.

Spending on durable goods is still hefty.

No it isn't. It's below January levels. Just up from February which was an 'easy' comparison.

Home sales and new home construction remain strong and will grow now that winter is over.

Not likely grow. New mortgage apps have peaked and are declining. Re-fis are still strong.

Incomes are steady if not rising some. Consumer debt isn't exploding. Inflation is non-existent. Fuel prices are stable and falling. Incomes are not keeping pace with inflation which is definitley existent at 3%/yr. Fuel prices will rise as the dollar falls.

Consumer debt isn't exploding.

What planet are you on?

if the govt's would just quit taxing everyone to death there would be more capital expenditures by business.

If my grandmother had wheels, she'd be a wagon.

But it's only the single mother of nine that lost her minimum wage job you hear about in the news.

Yeah. All 448,000 of them in April.

[Starwind]

HTML correction:

Incomes are steady if not rising some. Consumer debt isn't exploding. Inflation is non-existent. Fuel prices are stable and falling.

Incomes are not keeping pace with inflation which is definitley existent at 3%/yr. Fuel prices will rise as the dollar falls.

[Moonman62]

Since when did 2.4% growth become anemic? I remember after Clinton got elected that 3% was considered the miracle of the universe.

Since government growth accounts for about all that growth. And clearly, not enough jobs are being created to replace the ones that are being lost to productivity increases and overseas outsourcing.

Coming out of such a protracted slump, it wouldn't be unusual to see growth as high as 8 percent.

[Moonman62]

1) 9-11. (2)Wall street meltdown. (3)Iraq. (4)SARS.

Dubya always uses 911 as an excuse, but IIRC, the economy was already tanking hard before 911, and the stock market was testing new lows at the time -- something which may have influenced bin laden's timing. The economy actually did fairly well right after 911, because of all the liquidity added as a response to 911.

I'm confident W will make it right. Indeed, the last few days indicate that he is on the right path.

He's starting to say some of the right things in his economic speeches, but he's also still saying all the bad things to the point of contradicting himself. He's now including just about every economic theory ever know to man. But as the old saying goes, he who stands for everything, stands for nothing.

[Fraulein]

The enemy is CONGRESS, never never never forget that their power is derived from taxing us and buying votes with our taxes.

Isn't it just great how our politicians are able to bribe us with our own money?

[buckalfa]

Well said, and who controls the Congress at this
vey moment? The GOP of course. Who will get the blame
in the 2004 elections? The GOP of course, despite the
root cause of our economic problems being 40 years
of government growth and giveaways. The GOP has prehaps
the last and best opportunity to tun back socialism
by reducing taxes and the scope of the federal
government. Will it happen? Probably not as getting
relected is job one for a Congressman instead of
doing the right thing.

[mewzilla]

So who are these so-called blue chip economists? Inquiring minds want to know before we get our shorts in a knot over this report...

[varon]

Whom is more honorable, Don Corleon or Congress?

Are you series? Don Corleon of course ;-)

[Starwind]

So who are these so-called blue chip economists? Inquiring minds want to know before we get our shorts in a knot over this report...

So, Blue Chip Economic Indicators is a monthly newsletter and they poll a panel of 50 economists whose composition varies, but are "in-house economists" employed at major financial companies. It's not a fixed set of names. Their work is widely quoted and relied upon.

A sample (.pdf file) from the publishers website is here from which I extracted the follwing list of companies from that issue:

*Former winner of Annual Blue Chip Economic Forecasting Award, sponsored by Charles H. Brunie and the Manhattan Institute, N.Y., NY.
**Denotes two-time winner.

Conference Board*
Bank One
Prudential Insurance Co.
Motorola
General Motors Corporation
Wayne Hummer Investments LLC*
LaSalle National Bank
Moody's Investors Service
Federal Express Corp.
Inforum - Univ. of Maryland
Merrill Lynch
Eaton Corporation
WEFA Group
Prudential Securities, Inc.
Ford Motor Company*
National Assn. of Realtors
First Union Corp.
National Assn. of Home Builders
ClearView Economics
Eggert Economic Enterprises, Inc.
Northern Trust Company
National City Corporation
Naroff Economic Advisors
Bear Stearns & Co., Inc.
Huntington National Bank
US Chamber of Commerce
Macroeconomic Advisers, LLC**
Credit Suisse First Boston
Nomura Securities
Wells Capital Management
Goldman Sachs & Co.
Kellner Economic Advisers
Evans, Carroll & Assoc.*
Fannie Mae
Mortgage Bankers Assn. Of Amer.*
Econoclast
SOM Economics, Inc.
Georgia State University*
DaimlerChrysler AG
Turning Points (Micrometrics)
Comerica
Chicago Capital, Inc.
Perna Associates
DuPont**
Deutsche Bank Securities
J P MorganChase
Banc of America Corp.
UCLA Business Forecasting Proj.*

[Nick Danger]

Southack posted an interesting theory on this thread. What I like about it is that there are facts to support it. His idea is that we went through a period of widespread adoption of productivity-enhancing technology, one side effect of which is that fewer people are needed to produce the same, or even higher, levels of output. That's the good news. The bad news is that people get laid off when that happens. Other companies then see a drop in demand, and they start laying people off. Next thing you know, we have a recession.

There is no fix for this in monetary policy. The only thing that cures this is time and economic growth. We have to fill the capacity that's out there now, and then grow beyond that so that companies need to hire again.

That's not gonna be quick, and right now there isn't anything jump-starting it. Growth sucks, so we're going to sit here with 6% unemployment while the economy slowly creeps back up toward full capacity. Only then will we see the hiring light come on.

Tax cuts are one thing that will hasten recovery. And they can't be cosmetic tax cuts, where the politicians move the pea from under one shell to another. All these lawyers in the Senate who want to "offset" the tax cuts with "revenue enhancers" elsewhere are just making sure the recession continues. They need to leave more money in the private economy, not just leave more over here while taking out more over there. That's a net zero as far as economic stimulus is concerned.

The other thing that will help is a weaker dollar. We'll sell more stuff overseas, and more domestic goods will be sold in place of imported ones. Both things will help absorb capacity, and get us closer to the day when companies start hiring again.

Bush is doing exactly the right things. I wish he would get more help from our supposed friends in the Senate. In their lawyerly ignorance, they are paving the way for more Democratic victories in 2004, and another year of human misery for the unemployed.

[Beck_isright]

Based on their recent record of "predictions" shouldn't that be renamed "Cow Chip" economists?

[Starwind]

we went through a period of widespread adoption of productivity-enhancing technology, one side effect of which is that fewer people are needed to produce the same, or even higher, levels of output.

Agreed, though, I would not restrict this truth to any particular 'period'. This is the story of civilization. From the wheel, to Gutenberg's printing press, to robotics, etc.

I would also agree that deflation is not bad. I see it as a valuation correction, but one must be careful to not be run over by it. People will not put off purchasing what they must have (food, energy, shelter, clothing, transporation, etc) waiting for a better price next month. They will diminsh the prolifigate wasteful consumption propagated by our tax & spend 'public group think' and buy what they need when they need it and get the best value possible.

The 'economy' is also more efficient in that SCM, JIT inventory and custom manufacturing means a ripple will travel through the economy much quicker than ever with fewer 'schock absorbing' buffers. It is more volatile.

But business closings, job losses and production cuts due to shifting production overseas is destructive because the playing field is not level. We undervalue the 'how to' and 'what to' intellectual property when we build up other countries to compete against us. A corporation would never setup a competitor, but it would license it's know-how to a partner. The horse is already out of the barn on this.

The playing field is unlevel as well. We burden US business with social engineering costs, but not foreign business. We pretty much force business off-shore to stay in business.

There is no fix for this in monetary policy. The only thing that cures this is time and economic growth.

Agreed, and level the playing field, one way or another.

Bush is doing exactly the right things.

Bush's foreign policy has been excellent. His domestic policies seem haphazard and ill-advised (literally bad advice from somehwere). Reappointing Greenspan for instance. We need someone more like Volcker, though I personally don't know who I'd nominate.

I wish he would get more help from our supposed friends in the Senate. In their lawyerly ignorance, they are paving the way for more Democratic victories in 2004, and another year of human misery for the unemployed.

Ann Coulter didn't call them "The Stupid Party" for nothing.

[Starwind]

There is no fix for this in monetary policy. The only thing that cures this is time and economic growth.

Agreed, and level the playing field, one way or another.

Meant to add, stopping bad monetary policy would fix some of it, but not without pain. We're in a 'pay me now or pay me later' scenario.

[David]

The central point of this article, whether you view it as positive or negative, is that economic growth in the second, third and fourth quarters of 2003 will be 2.1%, 3.5%, and 3.7% respectively. The forecast is wrong. Here is why.

Consumption spending is not going to increase, it is going to decline, for several reasons. An increasing portion of the existing income stream is devoted to payment of existing debt for spending in prior periods--spenders don't have additional liqudity to spend on new purchases beyond basic necessities such as food, housing, and energy.

With one narrow exception, business capital spending is obviously not going to increase because business is presently operating at somewhere around 70% of capacity--why would you buy more capacity when you are not useing what you already have? Further, business is not making any money--are you going to borrow or raise or commit capital to expend a business activity that does not make money? Why would you do that?

Government spending is going to increase? I don't think so. Yes, we are still seeing small budgeted increases however at the federal level, Congress has figured out that the deficits restrict future activity and is acting effectively to curtail increased spending; state and local governments can deficit spend only with bonding capacity which is limited or non-existent and under circumstances where tax revenues are contracting, actual spending is likely to decline also. Government would like to spend more; is trying to spend more; but its ability to spend more is being limited by real world events. Certainly increases in the near term are not going to be enough to provide any meaningful support for an increase in GDP to fulfill these forecasts.

And, as Starwind points out, there are some negatives--employment is going down, not up. Further, there is another bad employment statistic that is not accurately measured and reported--above the hourly wage earning levels, earned incomes are droping--big spenders are not able to support increased GDP either.

Is there an area of the economy where business spending is up? Yes. Domestic drilling for Natural Gas. Is that good news? Well there are some problems. The drilling is not finding enough additional gas to replace reserves that are being consumed on a current annual basis. What we do find cost a lot more to find that the reserves we are presently selling so the only reason we continue to drill is because we are pretty sure we can sell the new reserves for a higher price. In fact, Bloomberg has a report out suggesting that gas prices can be expect to see the $10.75-$12.50 range during the winter season (compared with $5.75 yesterday).

Natural gas is a really important source of domestic energy because it produces a large portion of our electricity as well as of our household energy.

Imported oil is going to be cheaper? Don't bet on it. The dollar dropped to historical lows yesterday and there is no reason to believe the decline is anywhere close to the lows--fed policy which is aimed at monetizing the reported asset value market is necessarily going to have the result of reducing the value of the dollar, increasing prices of imported commodities. We have some cushion because at this time, the dollar is the currency used to pay for oil--however there is a proposal to move to a half-dollar; half-euro payment scheme and if that happens, you should expect effective crude prices at around $42 a barrel.

Not only is there not going to be economic expansion at these rates, the economy is going to contract.

Stock prices are going up says Steven W? The fed is monetizing the stock market in accordance with its currency stabilization power--around 30% of our total investment market is owned by overseas investors; if the stock market and the bond market go down, overseas investors will sell US assets and convert the dollar to other currencies or gold which will cause the dollar to decline. The fed has sufficient legal power to support the stocks for this reason and is doing so.

However there is no investment merit in the stock market--none of these companies (with a few exceptions: Berkshire; maybe MSFT on Windows; a few others) is making money--so why would you want to own an investment asset that does not make a profit? If the fed runs out of intervention power in the stock market, real underlying values should see the Dow around 1000 and the S&P around 100.

The fed is also acting to support the dollar against the price of gold. Again, it has a fair legal argument that it has the power to do this. And, like stocks and domestic real estate, the fed has another advantage in the gold markets--it has the muscle to be effective because it can give away a lot of US taxpayer owned gold at below market prices.

On the other hand intervention against the euro and the yen has not had much success. In spite of the fact that the domestic economy in Europe and Japan is in worse shape than in the US, the world financial markets view those currencies as more stable than the US dollar.

George Soros once made the point that all interventions eventually fail--the fed has a lot of staying power but at the end of the day, it can be expected to have the usual result.

How do we get out of this mess? Well as cpdiii points out in #9, taxes are so high as to discourage capital investment; and as others point out, other forms of government interference in the economic system are adverse to economic expansion. But at this point, fixing that won't solve the problem for the reasons set out above.

The problem now is with our monetary system--we have way too much debt. Debt service on existing debt incurred to make historical purchases is so high that there is no more room for expanded economic activity. Shrinking the debt (liquidating it) contracts the economy.

In the normal course of events, it may take twenty or thirty years to restore a normal balance between debt service and income and the process will be very painful.

One possible way out is to simply declare the dollar to be worthless. The fed has declared that they are pursuing that goal but there are in fact legal restrictions that impair the process--maybe it will work; maybe it won't. And the result is likely to make a shambles of the international economic system at best. A better way out would be some form of legal reformed debt liqudation system (the National Bankruptcy Act); an elective debtor credtor liquidation arrangement where debts can be reduced to realization by an expedited process.

Creditors are going to take a significant hit, either as a result of a twenty year mark-to-market process or as a result of the government's destruction of the purchasing power of the dollar. Why not instead implement a smaller hit by a summary legal process immediately? Get it over with. Restore a reliable (gold) money system to be sure this never happens again; and get on with life?

That is a practical proposal to restore the economy that would guaranteed work. All it takes is recognition by Congress that we in fact have an intractable economic problem that is guaranteed to get worse. As long as you have these professional economists pandering to the fed, the media serves to limit recognition of how serious the problem here really is.

[Tribune7]

You make good points. Bummer.

[Always Right]

Low inflation and dirt cheap interest, 2 to 3.7% growth, 6% unemployment....what planet are you people living on, these are good numbers. Doesn't anyone remember 18% interest rates, near double digits unemployment and inflation. Granted, we could do better, but geez the numbers are good. The DOW will likely be well over 9,000 by years end. Get a grip people.

[Always Right]

Consumption spending is not going to increase, it is going to decline, for several reasons. An increasing portion of the existing income stream is devoted to payment of existing debt for spending in prior periods--spenders don't have additional liqudity to spend on new purchases beyond basic necessities such as food, housing, and energy.

I don't buy that at all. With how cheap money currently is, a smaller portion of peoples money is going towards debt service. Everyday people thousands of people are refinancing and saving hundreds of dollars on their monthly bills. Just because debt may be raising, doesn't neccesarily translate into less desposable income. In fact, there is more money available to spend, consumer and investor confidence just needs to return.

[arete]

That is a practical proposal to restore the economy that would guaranteed work. All it takes is recognition by Congress that we in fact have an intractable economic problem that is guaranteed to get worse.

You expect Washington politicans to do anything that is practical and works? I have a feeling that they are going to ride the bubble economy for all its worth right to the bitter end and then do their usual finger pointing routine at scapegoats in order to avoid accountability. I doubt it will be an orderly process.

Richard W.

[Always Right]

Chart shows disposable income is increasing in almost every month. Disposable income has shot up in 21 of the previous 28 months, disproving your premise.

[mwl1]

good post, and of course the media continue to deliberately talk down the economy... they despise this President.

[arete]

good post, and of course the media continue to deliberately talk down the economy... they despise this President.

If anything, the media has been reporting a too rosy a picture so as not to wake and scare the sheep. It's time the public took a good look at the reality and not all the flim flam recovery talk coming from Washington.

Richard W.

[kylaka]

I've never yet heard W or anyone in his administration use anything as an excuse, ever, even remotely. All I've heard is proposed solutions. OTOH McAuliffe and his merry gang have been very busy playing the blame and excuse game.

[ex-snook]

Thanks for the ping. Now a look at plans of the opposition.
--------

Pelosi: 'Republicans Have Not Led on Economy, Democrats Will'

Press Release Posted on Wednesday, May 07, 2003:
 

"Two years ago, Congress passed a $1.7 trillion tax cut for the wealthy that President Bush promised would create jobs and promote economic growth. Instead, 2.7 million jobs have been lost and the largest surplus in our history has turned into the largest deficit in our history. That is not leadership.

"Instead of responding with an economic plan that is fair, fiscally sound and creates jobs, President Bush proposed a package that shortchanges working families to help the wealthy, explodes the deficit and fails to make up for the jobs lost in the last few months, let alone the past two years.

"He has the set bar low. Republicans in Congress have followed his lead and proposed a plan that is not fair, not fiscally responsible and will not create jobs. That is not leadership.

"It is time for a new approach. It is time for real leadership. The Republicans have not led on the economy - Democrats will."

 

[Capitalism2003]

looks like it's time to buy a few natrural gas stocks

I like KMP and KPP...fat dividends

[Moonman62]

I've never yet heard W or anyone in his administration use anything as an excuse, ever, even remotely. All I've heard is proposed solutions. OTOH McAuliffe and his merry gang have been very busy playing the blame and excuse game.

Well, here's an excerpt from one of the president's economic speeches last week that I'll put in bold. You can find the entire speech here.

The American economy has faced one challenge after another over the past several years. The stock markets peaked in early 2000. The economy began to slow in the summer of that year. In early 2001, our economy was in recession. And then we got attacked by the terrorists, and that affected our capacity to grow. And we've endured the uncertainty of war.

Now, everything the president is saying here is true, but it's still an excuse. Remember, during the pre-911 time period, the president was constantly saying that the economy was in fine shape and that nothing needed to be done. Now he's saying the economy wasn't in fine shape. And regarding 911 impacting growth. Like I said, it had a positive affect outside the airline industry (although companies like Southwest and Jetblue are doing OK), as it caused Greenspan to pause his war on wealth and prosperity, and add significant liquidity to the system.

We've seen failures in corporate responsibility across America. Unfortunately, some of our citizens forgot what it means to be a responsible citizen of this country. They didn't tell the truth. (Applause.) They didn't tell the truth to their employees and their shareholders. They self-enriched at the expense of small investors and public interests. In every case, we've taken action to confront these challenges.

While this is also true, it's another excuse. What he's not telling you is that the government defrauds the people of more money every year than Enron or Worldcom combined. And the overwhelming share of the negative effect on our economy was caused by our government's burdensome overreaction to accounting fraud, rather than the fraud itself.

[Moonman62]

Stock prices are going up says Steven W? The fed is monetizing the stock market in accordance with its currency stabilization power--around 30% of our total investment market is owned by overseas investors; if the stock market and the bond market go down, overseas investors will sell US assets and convert the dollar to other currencies or gold which will cause the dollar to decline. The fed has sufficient legal power to support the stocks for this reason and is doing so.

Not really. Most of these investors are here for the safe haven and for influence with our government. They'll ride out any currency fluctuations, as they figure they'll even out in the long haul. Our economy is still the 800lb gorilla compared to any other, and there is no better place to put their money for what they want in return.

[imawit]

Very good. You have taken the time and put into words what I see also. Your solution is novel and unique. I don’t doubt that it would work.

Creditors are going to take a significant hit, either as a result of a twenty year mark-to-market process or as a result of the government's destruction of the purchasing power of the dollar. Why not instead implement a smaller hit by a summary legal process immediately?

Get it over with. Restore a reliable (gold) money system to be sure this never happens again; and get on with life?

All it takes is recognition by Congress that we in fact have an intractable economic problem that is guaranteed to get worse

The only problem I see is the ‘intelligence’, of Congress, of the electorate. From stupidity we find ourselves in the mess we are in now, unable to enact a solution, recognize there’s a problem, not act on fear and prejudice.

[dalereed]

the way the fed is flooding the currency market and devaluing the dollar daily I look for the foreign interests to pull their money and investments out of the US and when they do our entire system is going to crash and there won't be anything Greenspan will be able to do about it, when it happens it will be too big.

We will become a 3rd world country, exactly what they have been working for for the last 50 years.

[Moonman62]

Per capita income in this country is around $40,000. Our next closest industrial competitors are around $20,000. Our economy is sucking wind, but the others aren't doing any better. Foreign investments aren't going anywhere. A big part of the dollar's weakness is that the Bush administration wants it weaker to help boost exports. A very stupid policy. The rest of the weakness is due to his very poor economic policies as they relate to investment and economic growth.

[razorback-bert]

thousands of people are refinancing and saving hundreds of dollars on their monthly bills

Credit card debt is at all time high and so are the interest rates on them. Big ticket item sales are sucking wind. My inbox and mailbox are full of debt service company offers to help lower my payments, credit card offers have slowed to almost nil.