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  • Is this an error? Dow futures down 300pts?? And why low rates doesn't mean low growth [Edit or Delete]1 comment
    Sep 22, 2011 10:06 AM
    Am I seeing things correctly? Why the dow futures down 300 pts this morning based off what? No was seriously expecting Operation Twist fix all of the problems facing the financial markets, but rather provide a small boost until the overblown European debt situation blows over. The blogs, the politicians, the media continue to ignore the strengths of the economy;  profits, earnings, exports, liquidity, consumer spending, technological progress and productivity. Somehow, what's happening 6000 miles away in some tiny Mediterranean country supersedes this. For all the talk of recession, my home still keeps going up and companies like facebook, linkedin, apple, priceline, amazon and twitter are booming.

    People continue to fall for the low rates =low growth fallacy.
    "And though the Fed wants rates lower, this is a bad sign. That kind of dramatic Treasury buying (especially coupled with the heavy selling in stocks) is a pretty clear sign that growth and inflation expectations are declining, which is exactly the OPPOSITE of what the Fed wants to see."

    This is wrong. Falling rates and falling growth are not mutually inclusive. The 10 year is down 10% but are profits and earnings down 10% for S&P 500 companies? How about consumer spending? No way..Those things keep rising quarter after quarter. Yes, inflation expectation s are declining, but growth is still strong. Nowadays, falling rates is a good sign. They will keep falling (or remain historically low) even if stocks and commodities begin a new rally.

    Low rates = cheap money; not low growth, not a deflationary spiral. It means it's time for more aggressive intervention, and to stop sweating over the deficit or inflation. Unlike two decades ago, we have China  to provide necessary liquidity to buy high-end real estate, precious metals, US institutions (universities, parks, landmarks, companies), luxury goods, and European debt to help stabilize the market while at the same not NOT creating inflation. That's why it's imperative we elect in 2012 a politician like George W. Bush that embraced and utilized globalization to make America stronger rather than the current spate of GOP contenders that would prefer to shutout the rest of the world, and in the process make America weaker. The libs, the fiscal conservatives, the libertarians want a balanced budget, 'buy America' and 'reigned in spending' while seemingly oblivious to the wealth destruction that would ensue if such policy were implemented.


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    28 Sep 2011, 11:06 PM Reply Like
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