THE U.S. ECONOMY IS LIKE POND WATER IN THE MIDDLE OF AUGUST
Home prices are plummeting again nationwide, as there are few qualified buyers. Commercial real estate is being given away for any creative deal that unloads the seller. Yet, a crappy non-biodegradable fast food meal is $10-15 after the raft of national, state and local taxes. A decent car is $50-80K, a high end SUV will run you $75-$100K, and rolling coffin econoboxes are $30-40K. Gas is creeping back up as massive new national and state gas tax hikes bring it to $4-5/gallon even at $60 oil, $8-10/gallon if oil creeps back to $100.
The Dow is down 70% from year 2000 as measured in gold oz, or buying power.
This is typical pre-cataclysm price action. The United States of America is in its death throws.
THE MESSENGER AND THE MESSAGE … THE MEDIUM IS THE MESSAGE!
There’s a word that both the Federal Reserve and the White House didn’t mention Wednesday that has played havoc with the U.S. economy this year — the dollar.
Search the text of the Federal Open Market Committee’s statement, or the statement put out by the White House after the disappointing first-quarter gross domestic product report, and you won’t find any direct mentions of the strength of the greenback.
That doesn’t sound like much, but look carefully at the back part of that sentence — the reference to “decreasing prices of non-energy imports.” That’s another way to say that consumers and businesses can buy more stuff and services from abroad for less.
THE WAR ON POVERTY … BEGINS IN GREECE
And, why is that? Because the dollar is up 26% against the euro over the last 52 weeks, and about 17% vs. a broader set of currencies as measured by the WSJ dollar index BUXX, +0.03% .
The White House allusion to the dollar is even more subtle. Written by Jason Furman, the chairman of the Council of Economic Advisers, the White House statement does note that volumes of U.S. exports are sensitive to foreign GDP growth. This weak growth has of course helped the dollar to rise.
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| THE MASTER'S OF DOUBLE SPEAK … ALMOST TONGUE TIED … A FOOT LONG HOT DOG USED TO BE THIS SIZE … BUT NOW, WELL LET'S JUST SAY, "LOAD UP ON THE FIX'INS"! |
Part of that is down to politics and the mantra that only the Treasury speaks about the dollar. Because, without mentioning the dollar, the Fed pretty well describes what has happened.“Inflation continued to run below the Committee’s longer-run objective, partly reflecting earlier declines in energy prices and decreasing prices of non-energy imports,” the Fed said.
That doesn’t sound like much, but look carefully at the back part of that sentence — the reference to “decreasing prices of non-energy imports.” That’s another way to say that consumers and businesses can buy more stuff and services from abroad for less.
THE WAR ON POVERTY … BEGINS IN GREECE
And, why is that? Because the dollar is up 26% against the euro over the last 52 weeks, and about 17% vs. a broader set of currencies as measured by the WSJ dollar index BUXX, +0.03% .
The White House allusion to the dollar is even more subtle. Written by Jason Furman, the chairman of the Council of Economic Advisers, the White House statement does note that volumes of U.S. exports are sensitive to foreign GDP growth. This weak growth has of course helped the dollar to rise.
"THE U.S. ECONOMY IS DOING JUST FINE … WE STILL HAVE PAPER AND LOTS OF INK … AND THE PRESSES ARE ALL RUNNING JUST FINE!"
Furman has previously been on the record about the dollar being a headwind for U.S. growth. Whether the new tone is a result of pressure internally from colleagues at Treasury or more a political shift isn’t clear.
THE OXYGEN IN THE ROOM IS RAREFIED
THE OXYGEN IN THE ROOM IS RAREFIED
Either way, both the Fed and the White House are finding it hard to ignore the biggest elephant in the room.
