It is still hard to find any articles discussing the economic impact of global warming, but if you keep your ears open, the "recession" word is starting to show up again. Which is interesting because most of the news lately has me thinking about dot coms stocks in 1999.
"It will never go down!"
"It's a new economy!"
"If you dont get in now, you will only miss out on the easy money!"
Housing and stocks have both been rallying for years but housing inventories are growing and people are questioning future corporate profits. The price of oil has gone way up but inflation has been tame. The Fed is finally raising rates back to something close to normal as household debt (credit cards and mortgages) has reached historic highs.
Not Too Fast, Not Too Slow...
Investors Hope the Fed Can Guide The Economy to a Soft Landing --
History Says That's a Bad Bet
August 21, 2006
Whether the stock rally fizzles out or keeps going will depend heavily on whether Federal Reserve Chairman Ben Bernanke can pull off a nifty trick, piloting the economy to what professional investors call a soft landing.
A soft landing is what you want, but almost never get, at the end of a boom. The idea is for the central bank to slow the economy just enough to prevent serious inflation, but not enough to choke off growth. Success brings another of Wall Street's favorite clichés -- a Goldilocks economy, in which growth is not too hot and not too cold.
Trouble is, although they get talked about a lot, soft landings rarely happen. Going just far enough but not too far -- and doing so during an election year and amid conflicting economic signals -- is one of the hardest things for monetary-policy makers to do. They almost never have succeeded.
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"We may get the soft landing, but the likelihood is that it will be harder than a lot of people expect," Mr. Kotok says. He also points to a survey by the National Federation of Independent Business that showed small businessmen plan to raise prices, another inflationary pressure.
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The money manager has sold some of his stock holdings, turning about 25% of them into cash. He figures that with money markets offering returns of around 5%, cash could be as good as or better than stocks in the days ahead.
