As if another curve in the road was needed, the ECB is not going along with the plan of world wide cuts in interest rates. Inflation in China was 11%, last month! Crude oil at $100 a barrel, with predictions of prices to the $120's along with other signs of inflations may give the Federal Reserve pause before its cuts rates again.
That is the last thing the housing and financial institutions want to hear. A major premise of their collective position is that low interest rates, easy monetary conditions and time will cure most of the problem. The spread is widening between short and long term treasury securities, indicating a concern about inflation moving into the future.
Lowering interest rates may have negative long term consequences that the Fed must overlook due to short term conditions. Is this really the type of enviornment you want to be a basic investor of equity shares in corportate America?
The fear about the economy has reached the state level, just look at the latest discussions about stalling property tax relief because of predictions revenue streams will be down in 2008.
Obama and McCain are both populist politicians, what type of investment climate might they foster? Many uncertainties lie directly ahead, the markets hate uncertanties. The path of least resistance is down.
http://www.msnbc.msn.com/id/23129556/
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=AP&date=20080213&id=8024968
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/HousingMessTooBigForAQuickFix.aspx
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