Monday, August 7, 2006
Ben Bernanke and colleagues at the Federal Reserve Commission may be wringing their hands tonight as to whether to raise interest rates a record 18 consecutive times - or to pause and do nothing. The fact is, it won't really matter to most Americans. We are all on a collision course with recession:
Housing sales are slowing down, home building and related industries feeling a crunch.
Consumer confidence waning, demand for durable goods in decline
Corporate financing for equipment has declined
Energy prices are already at an all-time high, and with news today of the BP/Alaska Oil Pipeline fiasco, a $100/barrel of oil is no longer an impossibility
More American families than ever before are "über-leveraged": having financed overvalued homes with adjustable rate loans, driving expensive inefficient vehicles for transportation, and at the same time trying to afford the sky-rocketing price of continued education for their children - all with a weakening U.S. dollar.
The rate of savings for the average American family remains at a negative, "minus 1% of disposable personal income" - from James Altucher column, The Underlevered American Household
We should take our medicine now, Mr. Bernanke. It's a big shit sandwich and everyone will have to take a bite!
Posted by Markus Arelius at 8/07/2006 10:52:00 AM