The Economy Guy

Issue: 9/24/07 Monday

I took the day off last Friday because the markets – all the markets – were boring. Nothing much happened last Friday, and nothing much happened today either. The only little move today in the markets was that oil came down a little because the storms in the Gulf of Mexico blew away. The stock market continues to churn. It was down a little Friday and down a little (61 points) today. The bears and the bulls are locked in their titanic struggle trying to decide if there will be a recession or inflation. Winner take all.

Former Federal Reserve chairman Alan Greenspan said Sunday the US economy has a better than even chance of beating a recession but warned that a housing slowdown could hit spending hard. “We’re heading for a slowdown,” he said on NBC in the latest television appearance to publicize his new memoirs, “The Age of Turbulence: Adventures in a New World.” “My own guess is the odds are less than 50-50 that we’re heading to a recession, but there is no question we’ve got significant pressure on home prices, which I expect to move down quite considerably lower,” he said. “And that will curtail the net housing wealth of the American household, and history tells us that causes some weakness. It’s too soon to call this one really.”

Well, let’s look at Greenspan’s quote. “50/50.” Well it wasn’t more than a week ago that he said it was 30% chance of a recession. I guess the chances of a recession is getting worse as time goes on.

Education is the best investment not only for workers but also for the economy in a time of continuing competitive strain, Federal Reserve Chairman Ben Bernanke said Monday. “Education—lifelong education for everyone—from toddlers to workers well advanced in their careers—is indeed an excellent investment for individuals and society as a whole,” said Bernanke. He spent most of his professional life as a teacher and is married to one.

Why would Bernanke stress education? Probably because it is clear to him that if we don’t improve the educational skills of the population as a whole, we just won’t compete in tomorrow’s world. We could make lead based paint toys for the children in China. There ‘s always a treasure at the end of the lead based painted rainbow.

Here are Today’s closing details:

DJ30 – 13,759 (Down 61 points)

10 year US Treasury Bond – 4.62% (Down 0.01%)

US Dollar - $1.4088/Euro.

Gold closed at $739 per ounce.

Oil Closed at $80.95 Gulf of Mexico improving weather keeps that oil flowing.

Gasoline is $2.08 Gasoline is following oil down.