Wednesday, September 28, 2005

KR Washington Bureau | 09/28/2005 | Forecasters thinking recession could be coming

KR Washington Bureau | 09/28/2005 | Forecasters thinking recession could be coming: "Economic forecasters and Wall Street analysts are quietly hedging their bets after months of rosy reports about a vibrant U.S. economic outlook. They're now mentioning the growing possibility of recession ahead.

"Why? Soaring gasoline prices, nightmarish home-heating costs this winter, plunging consumer confidence, rising interest rates and falling new-home sales.

"Similar energy-price spikes, rising interest rates and housing slowdowns played important roles in past recessions. While most forecasters caution that recession remains unlikely, they nevertheless are dusting off the R-word, which almost all of them brushed aside before hurricanes Katrina and Rita."

Bush's economic stewardship has been so irresponsible, it would be difficult to imagine a really rosy future. But, timing is everything. My own feeling is that the appointment of a successor to Greenspan might be a triggerpoint. Especially if Bush appoints a moron. I don't really know who Bernacke is, just that he has wanted the job all of his life and is well-prepared for it; Bernacke is the odds-on choice, but appointing a competent individual is so unlike Bush that we should wait and see. And, when I say I don't know Bernacke, I mean that I have no reason to either trust or distrust the conventional wisdom about him. Candidate number two is Martin Feldstein, who is a widely respected economist, and, also, something of an idiot. Some economists completely lose the ability to think in a detailed and objective way about economics, and Feldstein lost his ability to think and act wisely long, long ago. But, Bush could, conceivably, go into left field and pick a baseball player or a businessman or worse. Whoever is chosen is going to cause anxiety in the markets. Greenspan's own appointment triggered a market crash, and things were actually going fairly well at the time.

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