US: Wall Street - Main Street Disconnect

Published in Business Line on Oct 12, 2007

A better title for the article would have been "Dow 14000 - The Illusions of Inflation".

Essentially what is driving the Dow higher is the reduced value of the dollar itself. So inspite of the Economy not doing well (and the Index is supposed to reflect the state of the Economy), the units in which we are measuring this progress, i.e. the Dollar, is losing value at a greater pace and hence we are seeing the increased value of the Indices.

What is explained above would be very easy to observe in hyperinflationary environment but not so very obvious under other conditions. Readers could read an earlier piece i.e "Inflation - The Unusual Suspects" to understand this further.

US Economy: Is the Party Over?

Published in Business Line on Oct 02, 2007

The answer to the above question should not surprise regular readers of my column. In fact, if anybody had taken a keener interest in observing real-world data (instead of the Fed massaged data), it should have been obvious quite sometime back that the US Economy is in serious trouble.

What, however, is going to surprise most people is that depth of the Recession that lies ahead and the soaring consumer prices that is going to accompany the recession.