After yesterday's 4.5% spill in the S&P, the S&P was down again today! No dead-cat bounce... (At least at the moment...)
This is crazy considering 1)Yesterday Obama signed the stimulus, 2)Put out a feeler that we may need another, and 3)Announced a much larger housing bill than most people imagined.
I see 2) and 3) as very positive signs that Obama gets it. Particularly the Housing bill strikes me as something that's not the least bit Summers-esque... As liberal as I am, I'm not a huge fan of large new housing subsidies, so I can't believe Summers wanted this... This is pure speculation, of course, but I kind of wonder if the the 20,000 job cuts, the $14 billion tax increase, and the $15 billion cut in spending in California wasn't one bit of information (along with the plunging market) that is hard to reconcile with the belief that Obama's stimulus is large enough to "create 3.6 million jobs".
I also saw this: "the Fed’s Open Market Committee said it expected that the economy would contract by 0.5 percent to 1.3 percent this year, that unemployment would rise to 8.5 to 8.8 percent and that inflation would remain under greater pressure."
Those numbers are, of course, pure fantasy. I'll bet anyone the economy will contract by more than 1.3 percent, and that the unemployment will be higher than 8.8%. I'd be willing to give out 10:1 odds unemployment is higher than 8.5% at the end of the year... I guess the Fed can't say things are going to fall off a cliff, but it also loses credibility...
In Defense of the Conventional Wisdom
38 minutes ago