'twixt Scylla and Charybdis

Stocks extend Tuesday's drop
By MADLEN READ, AP Business Writer
Wed Feb 6, 2008
NEW YORK - Wall Street pulled back for the third straight day Wednesday as investors still uneasy about the economy sold off after a Federal Reserve official suggested rising inflation could prevent the central bank from making further interest rate cuts.

My psychic powers are confirmed yet again! A previous post noted that the Fed's ability to respond to worsening economy was constrained by threat of inflation. My words are now borne out by "a Federal Reserve official":

Although the economic slowdown is a big concern, "we must not lose sight of the other part of the Fed's dual mandate — which is price stability," Federal Reserve Bank of Philadelphia President Charles Plosser said, according to Dow Jones Newswires.

As soon as Senate Republicans assert that the Dem's expanded stimulus package is "fiscally irresponsible" I'll again acclaim my psychic cred. (Maybe I should get a 1-900 number!)

W's wars and tax cuts have made a realistic fiscal response to the impending recession problematic. The threat of inflation constrains a monetary response.

This isn't looking good!

Time to dust off

It's the economy, stupid!

(note: I have an active interest in the market right now, and do NOT want to see it crash, however wonderful that might be for Dems!)

Hold on tight - this might be a bumpy ride!