May 20, 2013
Genetic copies of living people from embryos no longer science fiction
Jewz in the Newz by Nate Bloom :
The Kosher Gourmet by Cathy Pollak:
Jews Inducted into Rock Hall of Fame; Anton Yelchin co-stars in New "Trek" film; Kutcher (but not Kunis) visits Israel; Jewish TV Star Praises Jewish Rap Star
WARNING: This WALNUT CAKE WITH PRALINE FROSTING, perfect for afternoon coffee, is addicting
May 13, 2013
Rabbi Nathan Lopes Cardozo: Why the giving of the document that would permanently change the world could only be done in desolation
David G. Savage:
Church-state, literally? Supreme Court weighing public school graduation in a church
May 10, 2013
Rabbi Berel Wein: Be all that you should be
May 8, 2013
Peter Ford: Why China is welcoming both Israel's Netanyahu and Palestinians' Abbas
Obama administration quietly backs out of appeal over new contraceptive mandate
At Kerry-Putin meeting, US-Russia relations thaw --- a tad
The Kosher Gourmet by Leela Cyd Ross :
Almost too pretty to eat, this colorful salad with Sicilian inspiration will tickle the taste buds and delight your visual sensibility
May 6, 2013
May 3, 2013
Kids, kittens the Same?
With employee perks at struggling Internet pioneer Yahoo! it's hard to tell
Artificial kidney offers hope to patients tethered to a dialysis machine
April 29, 2013
Poland's new Jewish museum celebrates life, doesn't revisit Holocaust
Terrorism in America: Is US missing a chance to learn from failed plots?
Boston Bomber's 'Svengali' Revealed
Tiny satellites + cellphones = cheaper 'eyes in the sky' for NASA
April 26, 2013
Clifford D. May:
Defense in the Age of Jihadist Terrorism
Sharon Palmer, R.D.:
How to feel your best -- with plenty of energy, a healthy weight and optimal mental and physical function -- without driving yourself batty
April 24, 2013
Jewish World Review
Oct. 19, 2007
/ 7 Mar-Cheshvan 5768
The yellow-light economy
Who could have imagined that the stock market would hit record highs so soon after the credit crunch and the housing collapse? Or that the credit markets would already have begun opening up again, albeit with a much greater spread than in June between interest on private debt and interest on treasuries?
So where are we in the tug of war between bulls and bears?
The August panic seems like ancient history. It originated in the contagious fear that the pyramid of securities based on subprime mortgages of unknowable worth was wobbly and might collapse. The Federal Reserve came to the rescue by pumping more money into the banking system and lowering interest rates. They judged that the risk of an economic slowdown and a full-blown credit crisis was greater than the risk of inflation. This was the right assessment. The price index for personal consumption expenditures, or PCE the inflation gauge the Federal Reserve Board watches most closely rose a mere 1.8 percent in August when compared with a year earlier, well within the 2 percent comfort zone that the Fed looks for and the lowest PCE inflation rate since 2004. Prospects for restraining inflation are good because housing costs, which include rent and make up the biggest component of the inflation index, continue to decline.
The bears, looking at the glass half empty, see corporate America concerned by a still-real risk of contraction. The credit squeeze is eased, but not yet over. In the next 60 days, nearly $1 trillion of commercial paper will have to be rolled over, and nobody is quite sure where the money to refinance it will come from. If business can't access working capital for its daily needs, firms will have to shrink their operations. The business concern over the economy has also slowed payroll growth.
Consumer woes. Households, too, face a series of challenges: Adjustable mortgage rates are likely to cost more over the next 12 months, accelerating the rate of foreclosures; the job market will soften; consumer confidence is in for a decline, particularly as people confront diminished equity in their homes. The number of existing homes for sale at the beginning of October more than 4.5 million is twice as many as 2½ years ago, according to the National Association of Realtors. This means owners will have to ask for lower prices before the slump can end, entailing some reduction in all home values. House sales and prices will clearly have a few more quarters of sharp contraction.
The bulls, seeing a glass half full, focus on impressive growth in other sectors: high business profits; growing nonresidential construction; expanding business fixed investments; and soaring exports benefiting from the lower dollar. Inventories are low, and balance sheets are strong. The companies in the S&P 500 alone have $2.8 trillion in cash balances, and returns on equity are still running in the high teens. The corporate world is not coming to an end.
Neither is the consumer, but he's got a lot less in his pocket. The National Retail Federation is predicting the lowest growth in five years in retail store spending in November and December. Still, that's a rise of 4 percent. The bullish point is that in the past five years, household net worth rose $18.5 trillion. Some 80 percent of that came directly from stocks, bonds, mutual funds, pension funds, and insurance policies. The stock market is reaching new highs, so we can expect more spending by the top 20 percent of American earners who own most of the stock. They have a disproportionate influence on the direction of the economy: They spend more in a given year than the bottom three quintiles combined.
So the bears and the bulls are in rough balance. Most accept that the likeliest best outcome is that we will have a couple of quarters of subdued growth and then see a gradual strengthening next year, especially if the housing correction has worked through and doesn't unduly depress consumer spending.
The big unknown the fulcrum, maybe is that there is perhaps $500 trillion in outstanding derivatives contracts, some of them in instruments so complex that investor after investor has admitted to not being able to know the value of those newfangled assets. In other words, it will be several more months before the bear-bull tug of war can be resolved.
The Fed was right to be pre-emptive in showing that it will take powerful steps to maintain our economic momentum. The fear that replaced greed in the financial markets has in turn been replaced by caution. But anxiety about recession still lurks. The Fed must be on its toes, ready to move decisively again should the trend lines turn down and signal a broader weakening in output and employment.
Every weekday JewishWorldReview.com publishes what many in in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.
JWR contributor Mort Zuckerman is editor-in-chief and publisher of U.S. News and World Report. Send your comments to him by clicking here.
© 2005, Mortimer Zuckerman
Richard Z. Chesnoff
Frank J. Gaffney
Victor Davis Hanson
A. Barton Hinkle
Judge A. Napolitano
Cokie & Steve Roberts
Debra J. Saunders
J. D. Crowe
Ask Doctor K