Greenspan Predictions
Stocks started out up, then went down 100 points, then recovered to positive territory and then ended down. That’s life. Bonds lost a little value (higher interest rate) in line with the stock market.
The Euro gained a half cent today.
Gold gained $13 today.
Oil and gasoline flew upward as speculators hit the market again.
In the news today……
CIT – could be on the verge of bankruptcy again. I reported about the importance of CIT to our economy in a previous economyguy. This company is the major source of small business loans. If it disappears, the growth of small companies (the most important growth to our economy) would stop overnight. Also, great dislocations would occur in the economy – for example, small businesses unable to make a payroll. This could be a hidden bombshell.
Ex-employee of Moody’s – have come forward to confirm that the “conflict of interest” inherent in a ratings company caused Moody’s to inflate ratings for some companies. My comment is – “DUH!!!” We knew this when the entire financial structure of the world melted down. There had to be company ratings that were just dead wrong. But, these employees are coming forward so our government can look like they are doing something about the problem – which they are totally unqualified to do. It’s just a political show.
Chicago PMI – (Purchaser’s Manufacturing Index) came in low today rather than rising. This caused the DOW to fall 100 points, but the market came right back on “irrational exuberance” and regained those losses. The Chicago PMI is a precursor to the SMI Industrial Index that should now show that manufacturing is not in very good shape. Is this why those “corporate insiders” are selling their stocks like drunken sailors?
Greenspan Predictions – the stock market will flatten out, and continue flat through 2010. The GDP for the 3rd &4th Quarters will be 3 to 4%, and will flatten out for 2010. Greenspan said there’s a longer-term risk that inflation will accelerate if the Fed fails to rein in the stimulus it has pumped into the economy, adding that the central bank’s $2 trillion balance sheet is “not sustainable.” He also voiced concern that political pressure would prevent the Fed from taking actions necessary to keep consumer prices in check. This last comment by Greenspan is truly concerning as the FED is “supposed” to be independent of the government, and acting in the best interest of the American public.
Here are the last numbers for today (about 40 min before closing):
Dow Jones 30 Industrial – 9712 (down 30 points)
10 Year Treasury Bond – 3.31% (up 0.02%)
Euro – $1.4629
Gold – $1007 (up $13)
Oil – $70.36 (up $3.65)
Gasoline – $1.73 (up $0.10)
