US economy may have bottomed out

[Rob Schaap]

I don't know what the pollsters mean by 'consumer sentiment', but I do know
consumers now need stuff we didn't used to need (a linked computer, for
one) and  I also know that people, long bereft of their savings, will spend
when interest rates are low and the currency is high.  If inventory
clear-outs are responsible for keeping interest rates and inflation at bay,
and if those clear-outs are apparently over, then we'd be looking at some
push-inflation pretty soon, wouldn't we?

And what does it mean to say: "Only a few industries, like
telecommunications and computers, are still working off excess stocks"?
How does a telco work off excess stocks?  Cutting off subscribers?
Destroying competitors in markets with duplicated wire backbones?  There's
way too much bandwidth out there, sure, but people aren't paying up to get
telly on their computers or their mobile phones, and I don't think they're
about to.  I think we are talking natural monopoly here (as we are with
electricity) and 'competition' is either an illusion (colluding oligopoly)
or a transient phase (pre-remerger) - either way, these important chunks of
equity markets and real economy alike are in no position painlessly to
'work off excess stocks'.  Residential saving is still zilch, the CAD is
still stably beyond imaginable redemption, dotcoms still haven't found a
way to operate without unsustainably subsidising their customers, there's
still substantial excess capacity in the manufacturing sector, Latin
America is still on the precipice, China is still outrivalled by SE Asian
manufacturers, Japan is still wallowing and most Asian producers still
depend decisively on a continually slavering US maw and consistently strong
greenback.

Methinks stuff can still go very wrong while the US depends on credit and
the world depends on the US.

Cheers,
Rob.


>US economy may have bottomed out
>
>Experts say the US looks like it has dodged recession and is entering a
>period of slow growth.
>
>By Ron Scherer (ron at csmonitor.com)
>Staff writer of The Christian Science Monitor
>http://www.csmonitor.com/durable/2001/04/30/fp1s3-csm.shtml