Commentary: Listlessness in markets corresponds to White House policy vacuum
BY LOU BARNES, FRIDAY, JANUARY 18, 2013.
Inman News®
Maze image via Shutterstock.
This week brought lots of minor reports but nothing to change the outlook.
A 12 percent spike in December housing starts got more attention than it deserved -- a dead-of-winter month is not a good indicator -- and pushed interest rates up a hair. But inflation remains completely under control, core CPI up only 1.7 percent in the whole of 2012.
Three long-runners contribute to frozen markets: first, misinformation and scare-mongering about the Fed's "quantitative easing" (QE); second, the European gap between wishful public pronouncement and weakening data; and third, the prospect of Japan trying to print its way out of deflation -- not contained QE, but a true, inflation-inducing print job.
The core hazard facing us all: how to get right the timing and magnitude of fiscal austerity before the Fed has to stop buying our debt. We may be making more accidental, near-term progress than we know.
The newest estimates of deficits since the Fiscal Anthill deal suggest we may already be trying to reduce the deficit too fast. Going from $1 trillion to $750 billion in 2013 alone is about all the reduction the economy can take.
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