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Some 4th Quarter Questions

October 1, 2007

Ready or not, here we go. There are a plethora of things on the table to be considered and even more, under the table waiting to jump up and surprise us. Most of the questions for me are economic or therein related. Questions like how high can the price of crude oil and gasoline go before serious consequences are revealed? How really serious is the housing credit crisis? How low will home prices go, how many foreclosures will there be, and what kind of impact will this have on all other credit markets, not to mention all those manufacturing jobs that go into the building of a house.

Who Wants Cheaper Auto Insurance?

The consumer (who is 2/3rds of the American economic engine) is slowing down, and business is cutting back on its spending. It now falls on our government to keep up the spending. Richard Koo in his book, “The Balance Sheet Recession,” warned about this. With the massive amount of debt in this country hanging over us, with the monster current account deficits being run up every year, these are forces for deflation. To keep the US economy moving, there has to be BIG spending — and an expanding Gross Domestic Product (GDP). If the consumer isn’t going to do the spending, if business isn’t going to do the spending, then the government will have to do the spending.

So far Bush has done a good job of keeping spending high. :-(

Then there are the unknowns with names such as Iraq, Iran, Osama bin Laden, Pakistan, Afghanistan, and all thsoe nations trying to wipe Israel off the map.

Most importantly though, thanks to political greed and miscalculations (my thoughts), we’ll know by the end of the 4Q who the Democrats and Republicans will have chosen as their party’s nominee. I halfway expect to see the first primary in late December and a slew of them the first ten days of January. Then the political wars really begin.

And by the way, over the next few days, all political candidates will release their 3Q fund raising results which should end some campaigns.

Written by Ernie · Filed Under Daily Commentary 

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