Years of Poems and Spirits

Verleger, FT.com, “US Suffers as Bush Gamble Fails” Sept. 25, 2005
1. Compare GWB to LBJ in the 60s. Tax Cut=Greate Society, War on Terror=Vietname
2. Raw material shortage due to government demand. “Classical Keynesian Stimulus”
3. +Katrina and Rita spending.
4. Natural gas/Petroleum production. Over-reliance on them. Ignore conservation policies (rejection of feul econ standard and gas tax)
5. Call for monetary policy change: higher interest rate!

Cecchetti, FT.com, “Why Federal Reserve Must Raise Interest Rates”, Aug. 7, 2005
1. Rising property values.
2. Speed up rate increase
3. Hard to tell if a bubble is forming: an excuse! See what happened to dot com! Rate from 6 to 1 in 2001
4. Equity value indicate future output growth/expension. Property values don’t.
5. An increase in housing wealth has about twice the impact on consumption of an equivalent increase in stock market wealth.
6. Consumption should not react to increases in housing wealth.

Wolf: FT.com, “How Oild Adds to the Economy”, Sept. 6, 2005
1. The US has lost about 10 per cent of its refining capacity b/c of Katrina.
2. IEA has oil research. Giving US 2m barrels a day for 30days. Large part is refined products.