Saturday, August 05, 2006
RGE - Why a Fed Pause or Even An Easing Will Not Prevent the Coming U.S. Recession
RGE - Why a Fed Pause or Even An Easing Will Not Prevent the Coming U.S. Recession: "Today Yellen expressed similar serious worries. First, she worried about the downturn in the housing sector becoming disorderly: 'there is more reason to worry that house prices would fall sharply than that they would rise sharply.' Second, she clearly linked the wealth effects of a housing slump to the risk of a sharp fall in consumption. She argued that the flattening – if not falling - price of houses 'makes the chance of a sizable drop-off in consumer spending seem larger than the chance of a big surge.'
Given her statements today, and those by St Louis Fed President Poole suggesting that a tightening on August 8th is only a 50/50 chance now, it is clear that the Fed is really worried about the U.S. slowdown and much more worried about it now than the rising headline and core inflation. "
Given her statements today, and those by St Louis Fed President Poole suggesting that a tightening on August 8th is only a 50/50 chance now, it is clear that the Fed is really worried about the U.S. slowdown and much more worried about it now than the rising headline and core inflation. "
