I put Middle Earth Journal in hiatus in May of 2008 and moved to Newshoggers.
I temporarily reopened Middle Earth Journal when Newshoggers shut it's doors but I was invited to Participate at The Moderate Voice so Middle Earth Journal is once again in hiatus.

Wednesday, May 17, 2006

I got some bad news and........

With news like this:
Confidence In GOP Is At New Low in Poll
Democrats are now favored to handle all 10 issues measured in the Post-ABC News poll. The survey shows a majority of the public, 56 percent, saying they would prefer to see Democrats in control of Congress after the elections.
The Republicans looking ahead to November didn't need this:
Dow Plummets 214, Nasdaq Declines 33
Wall Street skidded lower Wednesday after an upswing in consumer prices intensified investors' fears that the Federal Reserve will extend its nearly two-year string of interest rate increases. The Dow Jones industrial average suffered its biggest one-day loss in three years, and the Nasdaq composite index turned negative for 2006.

Investors were spooked by a Labor Department report that its consumer price index swelled 0.6 percent in April, topping forecasts of 0.5 percent. But core CPI — without food and energy — also gained 0.3 percent, ahead of estimates and adding to worries that soaring oil prices have begun to lift prices elsewhere.
Yes the price of oil is starting to hit home in places other than the gas pump. Increased interest rates are already impacting the housing market. My neighbor is a real estate guy and he tells me the housing boom didn't start to slow a couple of months ago it just stopped dead overnight. This so called recovery was never more than a bubble inflated by low interest rates and easy mortgage money. Well the bubble is deflating as inflation picks up. It is no longer a question of if there will be a slowdown but how fast it will come and how deep it will get. As Bilmon points out, this is not your fathers inflation.
What we have, in other words, is almost pure cost-push inflation -- instead of the wage-price spiral that made the '70s such an interesting time to live through, financially speaking. At some point, presumably when the extra disposable income derived from that last mortgage refi runs out, households are going to have to suck it in. Indeed it looks like it's already started -- retail sales are weakening and the Amazon-sized river of imports flowing in from points east (or west, if you live in California) has actually slowed a bit. Meanwhile, job growth has decelerated, jobless claims are creeping up and housing starts finally appear to be, well, stopping.
Of course all of this would change if the Madman in Chief decides to bomb Iran. Lets be honest, 150 dollar a barrel oil and 6 dollar a gallon gasoline are not going to help the economy or the Republicans.

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