Daily Investment Interpretations
June 28, 2010
The markets closed today slightly below where they started. The NASDAQ
Composite lost 2.83
to close at 2,220.65, the Dow drifted down 5.29
to close at 10,138.52,
and the S&P 500
to end at 1,074.57, Stocks
can't find foothold. Oil ended up to $79.19 a barrel, while Gold
ended the day at $1,257. The VIX rose 0.46
There isn't much news or guidance tonight, so I'll stick to Paul Krugman's latest article: The Third Depression. In it, Dr. Krugman argues that conservatives continue to obsess over inflation, when all the signs point toward deflation: America's money supply plunges at 1930s pace. What is happening, he says, is that right-wing ideologues have wrested control away from the Keynesians, and are, as I would put it, aborting the takeoff, allowing the aircraft to crash into the woods at the far end of runway. "In the face of this grim picture, you might have expected policy makers to realize that they havenít yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy."
The RBS tells clients to prepare for 'monster' money-printing by the Federal Reserve. In this article in Telegraph, Ambrose Evans-Pritchard advances many of the points brought out by Paul Krugman, arguing the moves at fiscal stimulation last year were highly effective during that time frame, but observes, "As the Bank for International Settlements warns, sovereign debt crises are nearing "boiling point" in half the world economy." He also states, "The Krugman doctrine of perma-deficits is ruinous - and has in fact ruined Japan. The only plausible escape route for the West is a decade of fiscal austerity offset by helicopter drops of printed money, for as long as it takes."