From: "Pedro Martori"
Subject: And as usual, the United States is the world's last, best hope
charset = "UTF-8"
Date: Mon, 30 Sep 2002 01:14:30 -0400
NNTP-Posting-Date: Mon, 30 Sep 2002 09:31:01 EDT
Organization: Bell Sympatico
time to start buying american products...
save on fuels, and power.
De: "ricardo a gonzalez"
Asunto: Not much business-as-usual. Japan,Brazil, Germany
Fecha: Sunday, September 29, 2002 10:04 AM
Larry Kudlow September 26, 2002
Not much business-as-usual
Japan is still sinking -- investors won't even buy their
bonds anymore. Germany has become the Japan of Europe. Latin
is a complete mess with Brazil about to swing left politically,
an already bad situation even worse. World stock markets are
Wealth is being destroyed everywhere.
And as usual, the United States is the world's last, best hope.
lately hope has been looking pretty thin on the home front.
A strong recovery at the start of the year has measurably
recent months, key indicators such as production, employment and
housing starts have all declined. The index of leading indicators
fallen in four of the past five months. The stock market is still
desperately looking for a bottom.
Eighty-five million shareholders grew hopeful this summer when
President Bush commented favorably on an investor-tax-cut package
might have relieved the double taxation of corporate dividends,
increased super-saver allowances, and improved the tax treatment
capital gains and losses. For a few weeks, 401(k) owners -- who
watched their retirement savings deflate to 201(k) status -- were
optimistic that fiscal policy might boost after-tax asset values.
But key administration officials put the kibosh on it. Office of
Management and Budget Director Mitch Daniels, normally a
advocate, has lapsed into deficit bean-counting austerity.
Secretary Paul O'Neill is missing in action. Political advisors
cold feet over demagoging Democratic threats of "tax cuts for the
Look again, fellas. Eighty-five million shareholders cannot all
rich people. Moreover, roughly two-thirds of them vote, and
vote for the party most likely to make them rich.
A pre-election contract with investors could have positioned Bush
Republicans with an exciting pro-growth message. But House and
leaders, like the administration, seem to have lost their nerve.
for Growth president Steve Moore believes the GOP keeps the House
the Dow Jones is above 8,500 by November. Well, don't hold your
breath. Today's Dow is around 7,850. That could spell Charlie
as the next Ways and Means chair. There's no flat tax coming from
Republican spokespeople think they have a strong growth message
includes terrorism insurance, the energy bill and homeland
Forget about it. Those add up to no sex appeal, no panache and no
That leaves Greenspan & Co. to right the economic ship. And
always a high risk.
Recently, economic Nobelist Milton Friedman said the Fed should
generous in creating money and it should err on the side of ease.
is totally right, but key liquidity measures that stalled last
must be significantly strengthened. The Fed must recognize that
creation of new money will halt the spread of deflation, support
growing dollar needs in Latin America and other parts of the
and relieve the lingering corporate credit crunch.
Right now, our businesses are forced to put their spare change
interest payments on outsized debt rather than create new jobs or
invest in new capital goods. Meanwhile, with businesses impaired
government, prosecutors and the threat of class-action lawsuits,
lenders are not likely to do much new lending. This is a vicious
that can be solved with fresh cash from the Fed.
Fortunately, a true double-dip recession is not yet on the
But a tepid 3 percent recovery rate is dangerously close to an
economic-growth pause. In fact, in an era of surging
percent growth today is roughly equivalent to only 1 percent
during earlier times of low productivity. Take a look at crashing
share prices among telecom, media and information-technology
that are signaling to the Fed that the recovery rate should be
A legacy-worried Alan Greenspan has been saying that he didn't
the bubble many blame for the soft economy and the
stock-market decline. Perhaps he's right. But the present matters
than the past: The blue-chip Dow and the broader S&P 500 sit at
five-year lows, and the technology-based Nasdaq has fallen to a
not seen in six years. Euro stocks have sunk to five-year lows
Japan to 19-year levels, as gloom deepens around the globe.
As economists and investors ponder uncertainties over the
war on Iraq, the importance of adequate money-adding should not
debated. Much more rapid money creation should be the order of
-- for the sake of a stock market rebound and the national
that comes with a strong economy.
Unfortunately, the Federal Reserve again missed a key opportunity
its recent decision to stand pat and do nothing. Big mistake. It
should have turned the cash spigots wide-open. The sooner it
this out, the faster the United States and the world economy will
produce real recovery.
Contact Larry Kudlow | Read his biography
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