Uh-oh, Economy May Be Slowing Down!

By Number Six

Monday, June 05, 2006 at 03:12 PM

More smoke, more mirrors: Seems the Fed is "wary", signs that the economy may be slowing down........

Wellllllllllllllllllllllllll.....guess what! Another piece, here says that conditions are approaching the fabled 1987 "crash"!

A report by Barclays Capital says the run-up to the 1987 crash was characterised by a widening US current-account deficit, weak dollar, fears of rising inflation, a fading boom in American house prices, and the appointment of a new chairman of the Federal Reserve Board.

All have been happening in recent months, with market nerves on edge last week over fears of higher inflation and a tumbling dollar, and the perception of mixed messages on interest rates from Ben Bernanke, the new Fed chairman.

Think fast, WTW fans, who was in the White House in 1987? Ronnie "Supply side" Reagan. What were his financial policies like? Spend, spend, spend, spend, spend, spend, spend, baked beans and spend.

"We are very uncomfortable about predicting financial crises, but we cannot help but see a certain similarity between the current economic and market conditions and the environment that led to the stock-market crash of October 1987," said David Woo, head of global foreign-exchange strategy at Barclays Capital.

Apart from the similarities in economic conditions, during the run-up to the 1987 crash there was a sharp rise in share prices worldwide and weakness in bond markets, Woo pointed out. "Market patterns leading to the crash of 1987 resemble the markets today," he said.

Again, and for emphasis sake:

"We cannot help but see a certain similarity between the current economic and market conditions and the environment that led to the stock-market crash of October 1987."

Oh, and the Dow closed down 170 today.

Lee and I have been tracking the coming economic, oh, dare I say it? I must, I must!...coming economical meltdown. Tax cuts for the wealthy, spending money like there is no tomorrow, high oil prices, and few good-paying jobs, coupled with a housing market that's already showing signs of the brakes kicking in...well...good news this is far from, eh?

And if major money folks see "signs" similar to the last time the economic fecal matter smacked the rotors, hoo boy, indeed.

Gee, aren't you now so glad you voted Republican? After all, history proves again and again: Republicans are bad for your wallet!