The Long Hot Summer, the Long Cold Winter

Over the weekend Barron's ran an interview with two hedge fund managers and dedicated short sellers, Lee Mikles and Mark Miller, who argued that we were at a dangerous juncture vis a vis the economy and stock market. Since short sellers benefit from falling stock prices, they're prejudiced to the down side, but that doesn't mean they're wrong.

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The Shoestring Economy

Never in modern history has the world’s leading economic power tried to do so much with so little. A saving-short US economy has long pushed the envelope in drawing on foreign capital to subsidize excess consumption. But now Washington is upping the ante as it opens the fiscal spigot to cope with post-Katrina reconstruction at the same time it is funding the ongoing war in Iraq. Could this be a tipping point for America’s shoestring economy?

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  thanks to The Agonist

Katrina, an Economic Tipping Point

By any measure, Katrina is a shock to an economic ecosystem already seriously out of balance. It has reduced national wealth by several hundred billion dollars, displaced hundreds of thousands of citizens, aggravated bloated budget and trade deficits and reduced the political odds for permanent tax cuts on capital. And with so much still unknown, the risks, as they say at the Fed, are on the downside.

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