Stagflation May Return as Price Pressures Meet Credit Squeeze

Stagflation May Return as Price Pressures Meet Credit Squeeze

www.bloomberg.com

Dec. 17 (Bloomberg) -- The world economy is facing the risk of both recession and faster inflation.

Global growth this quarter and next may be the slowest in four years, while inflation might be the fastest in a decade, say economists at JPMorgan Chase & Co.

The worst U.S. housing slump in 16 years, coupled with a tightening of credit by banks, has brought the world's largest economy ``close to stall speed,'' according to former Federal Reserve Chairman Alan Greenspan. At the same time, rapid growth in China and other emerging markets is driving energy and food prices higher worldwide.

(visit the link for the full news article)

This is VERY alarming. Stagflation is a dangerous cycle for any economy, especially on the global stage.

Many, including myself, feel this credit squeeze is getting far worse than what the media is telling us. It will last beyond 2008.

www.bloomberg.com
(visit the link for the full news article)

The markets didn't react too kindly to this news today

U.S. Stocks Fall; Exxon, Freeport-McMoRan, Caterpillar Decline

Dec. 17 (Bloomberg) -- U.S. stocks posted their biggest two-day drop in more than a month, led by energy companies and miners, on growing concern that the U.S. economy will slow.

Exxon Mobil Corp., the biggest U.S. oil company, and Freeport-McMoRan Copper & Gold Inc., the world's second-largest copper producer, declined on slumping fuel and metals prices. Micron Technology Inc., the biggest U.S. producer of computer- memory chips, fell the most in 11 weeks after an analyst forecast a wider loss. Caterpillar Inc. slid to the lowest since Nov. 27 after Morgan Stanley said construction-equipment sales will slow next year.

www.bloomberg.com...

The sell off has continued again, Asian markets are starting opening up nearly 2% down

And...the Chinese stock market is starting to record daily drops of 2%, the bubble in the Shanghai Composite is about to burst me thinks (which will be VERY BAD for the world)

here is the five day chart, the decline staged after reaching record highs..




[edit on 17-12-2007 by infinite]

This all seems set up to me because the bankers who loaned those sub prime mortgages knew the people getting them could not afford the percentage increase on their loans down the road. Here comes the Federal Reserve to the rescue giving cash injections upwards of 60 billion and continuing. Guess what that does to the dollar? Guess who gets the house(asset) and a payment from the fed? The only people I see winning are bankers.

Didn't the President say today that there are "definitely some storm clouds and concern, and that the underlying economy remains in good shape" - all this with a declining US currency, increasing inflation, unsustainable national debt, and the massacre of the manufacting base. How fast can you say "PIE IN THE SKY"