SocraticGadfly: Economy stripping its clutch

July 15, 2008

Economy stripping its clutch

The Dow fell below 11,000 today, but then bounced back. The issues?

Ben Bernanke is still gloomy about housing.

Inflation hit its worst rate since the end of the Carter-Reagan recession, which in turn drove down spending by consumers.

The dollar continued to tank against the Euro, which threatens to offset any $10 drop in oil prices. That said, the inflationary push may drive the Fed to raise rates sometime before the end of the year — but, unless the pressure is huge, not until after the general election. Right now, I give 1-5 odds for such a rate hike in that time frame.

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