Archive for December 1st, 2010

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The Headlines Say It All

December 1, 2010

State Election Board votes to appeal Shariah law ruling


Inhofe refuses to participate in ‘holiday’ parade

The local High School holds an “All City Band Concert” every December. The name is secular – the content not so much. There is a local Muslim family with several kids in the school system. One of the girls played flute – with a big bow on it – pretty sporting I would say. A lot more class than “our” (maybe yours – not mine) Idiothof.

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Inflation? Nope

December 1, 2010

INFLATION STILL NOT A CONCERN
Many consumers still feel over-burdened by debt in
the wake of the housing plunge that began several years
ago. After three years of paying down obligations (or
shedding them), monthly debt service is back to sustainable
levels, but the total amount of consumer debt remains
high by historical standards. More importantly, those
who are “trapped” in their home by negative equity are
not about to give up their frugal habits any time soon.
And because there’s a large segment of the population in
this predicament, odds are the pronounced deflationary
bias in the economy will continue.
Why? Because the definition of inflation is too
much money chasing too few goods and services. What’s
going on now is almost the exact opposite. Money is being
used to pay off debt, leaving too many goods and
services competing in a way that drives down prices.
The core CPI readings are essentially unchanged
over the last three months, and we think 2011 will bring
more of the same. The Fed is pulling out the stops to fight
deflationary tendencies, but they can only lead consumers
to debt, they can’t make them “drink.” Reducing interest
rates in this kind of environment is somewhat like pushing
on a string – while some consumers might jump at a better
deal on a mortgage or a car loan, most don’t want to take
on any additional debt (or may not be able to qualify for it).
The implications? Short-term interest rates could
remain at near-zero levels for most or all of 2011, and
bond yields are unlikely to climb by much.

From a very middle of the road financial news letter I subscribe to.