Jackson Hole

The Jackson Hole conference of central bankers is over, and they throughly managed to scare themsleves as well as others. They all contemplate all of those Home Equity loans in the time of falling Housing Prices. Andrews at the NYTimes suggests the Import prices of Chinese Goods will increase, and apply pressures for Inflation. The Inflation rate is already over the Target rate of 2%, and all indications exists for even higher levels of Inflation. Disembodied Voices at the Conference whispered that horrid Word--Stagflation--in the Wings, while the Spectre of foreign undersubscription of Treasuries flickered in the air of the halls. Does the Fed fight Inflation, even if it turns a Slowdown to Recession?

DuPont elsewhere informs All they will cut Pension contributions by Two-Thirds, hoping to increase Profits some 3 Pennies per Share in 2007 and a nickel a Share in 2008. Why does this sound like an Act of desperation? Real Wages have not grown in this Cycle and Consumers are faced with the full brunt of the Energy crunch, combined with the Payments on those Home Equity loans coming due. Dupont may be abandoning the last Great Hope of their Employees.

Is the Economy slowing down? The Answer is Yes! I am reminiscent of the Stock Collapse of the late 1980s, where I sat with a University Professor who was the then Director of the University Pension portfolio. I attempted to assure him that Day that the slump was not a recurrence of the Stock Market Crash of 1929. I reminded him that We would all still be here on the following Day; it did not even equate to a Holocaust. Anything I relate Today will probably work as well as my platitudes did that Day. I will only state that if the Economy goes South once more, We will simply have to fix it. lgl