I fully agree that if the economy is too stagnant, that will hurt profits, and things are pretty dicey on several fronts. But, if they can keep aggregate demand from pooping out too badly, rising unemployment sure helps keep down those pesky wage demands. Do I hear anybody saying "reserve army of the unemployed"? Barkley ----- Original Message ----- From: "Doug Henwood" <dhenwood at panix.com> To: <lbo-talk at lbo-talk.org> Sent: Wednesday, June 04, 2003 5:09 PM Subject: Re: [lbo-talk] The Markets and Reality: What, If Anything, Is the Linkage?
> Barkley Rosser wrote:
>
> > The economy as a whole does not need to do well.
> >The tax cut helps capital incomes. The falling dollar helps
> >US exports and profits, as long as it does not get out of
> >hand, which it could. Also, still living in happy talk land
> >of post-Iraq "victory" (those polls show most Americans
> >don't give a hoot about the mess over there), and Big
> >Al is talking about an interest rate cut. Yields on bonds
> >suck right now compared to yields on stocks. And after
> >three years of a bear market, some upward momentum
> >can really feed on itself at this time.
>
> Hi Barkley - welcome back.
>
> You're right that the economy as a whole doesn't need to do well -
> for a while. But if there's no second-half acceleration, and with it
> a pickup in profits, then there will be a great disappointment upon
> the land.
>
> Interest rate cuts are nice, but if they come with a deflationary
> stagnation, a la Japan, then a 0.25% fed funds rate won't bring the
> bull back to life.
>
> As Dallas Fed president McTeer said earlier today, the economy needs
> to be growing faster.
>
> Doug
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