Wednesday, Oct 18, 2006

Stagflation on the way?

Daily Telegraph: Black day on both sides of Atlantic

...Janet Yellen, head of the San Francisco Federal Reserve and a leading property expert, warned on Monday that the housing bust was creating "ghost towns" in the worst-hit regions. Mrs Yellen said over 80pc of all homes in pockets of Phoenix and Las Vegas were up for sale. "The market has seized up to some extent. It may not recover for several years," she said.

Stephen Roach, Morgan Stanley's chief economist, said the property crash would override the effects of a $120bn shot-in-the-arm for US households from lower energy costs. "There is a much greater chance that global growth will surprise on the downside in 2007 rather than on the upside," he said.

The Federal Reserve appears split between monetary hawks and doves, unable to agree whether the greater risk is incipient inflation or a sharp downturn caused by over-tightening. Mrs Yellen said the full effect of 17 rate rises since June 2004 was in the "pipeline".

Posted by midlandred @ 09:25 AM (1476 views)
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3 Comments

1. bidin'matime said...

Good news from across the pond..

Wednesday, October 18, 2006 08:40PM Report Comment
 

2. Nohpc said...

How can you think that is good news unless worldwide financial misery is good news? I think it is pretty slimy to say that is good news.

Thursday, October 19, 2006 04:26AM Report Comment
 

3. waitingfor hpc said...

it is good news nohpc as we this is not real money people are playing with based on affordability and common sense needs to return to the markets and this is how it will happen.

Thursday, October 19, 2006 09:18AM Report Comment
 

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