Thursday, February 21, 2008


Who in their right mind could have predicted this?

For those who think a recession is the worst thing that could happen to the U.S. economy, the NYT and WSJ both front looks at increasing fears that the country could enter into a period of stagflation. The United States hasn't experienced this dreaded mixture of rising inflation and unemployment coupled with slumping growth since the 1970s, and the prospect raises big questions for the Federal Reserve because it can't deal with one problem without making the other one worse. "They are walking a very fine line right now," an expert tells the NYT.
Let's see. Protracted and very expensive war/occupation overseas .... check. No higher taxes to pay for said war .... check. Continued domestic spending like there's no tomorrow .... check. Oil prices going through the roof due to other than purely market forces .... check. Is it 1975 or 2008? Who could have ever predicted?

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