Time to cage inflation tiger, say experts

Economy chugs along at good pace, but some red lights ahead

Even as China is set to achieve its targeted goal of 8 percent growth in gross domestic product (GDP) for 2009, economists have stressed that tackling high inflation should be the top priority for policymakers this year.

Inflation is likely to accelerate to more than 5 percent before the middle of this year and reach 8 percent in the second half, Erwin Sanft, head of mainland and Hong Kong equities research at BNP Paribas, was quoted by Bloomberg as saying yesterday. (more)

Shilling: Buy Bonds Before Home Prices Fall

Uber bear economist Gary Shilling thinks the financial crisis is still unfolding, and advises to buy Treasuries and the dollar and dump commodities.

First, the consumer is on a big saving tear and as long as that’s the case, we’re not going to see an economic rebound that amounts to anything, Shiller says.

It isn’t just that consumers are on a saving spree, it’s that they are reversing a 25-year trend, Shilling told Bloomberg. (more)

Taipan Daily: Caution Warranted by Lessons of 1932

So 2009 is finally over. A new year, full of promise and peril, stretches out ahead. Now what?

The Dow Jones Industrial Average (DJIA) – to use a commonly cited barometer – is up roughly 65% (as of this writing) from the ugly depths of the 2009 March lows. Going off that data point alone, it is no real surprise that investors are optimistic.

Trouble being, investors had even more cause to be optimistic in 1932, if stock market rallies are the measure du jour.

In a matter of months, the Dow rocketed a most impressive 94% – almost a clean double – off its 1932 lows. After a stunning, multi-year fall from the heights of 1929, some surely thought that rally to be the “all clear” signal. (more)

US housing starts unexpectedly fall in Dec

The Commerce Department said housing starts fell 4 percent to a seasonally adjusted annual rate of 557,000 units. Analysts polled by Reuters had expected housing starts to rise to 580,000 units. November's housing starts were revised upwards to 580,000 units from the previously reported 574,000 units. The drop in housing starts was likely the result of unusually cold weather last month.

Groundbreaking activity dropped a record 38.8 percent to an all-time low of 553,000 units for the whole of 2009. (more)

The Secret Bank Bailout

There's one method that the Federal Reserve has been employing to shovel money to the bank elite that is rarely mentioned, though I hear the sums that have been shoveled are in the billions and they are showing up on the books of firms like Goldman Sachs as pure profit. It's really pure scam.

Here's what went on for months, according to traders familiar with the situation.

When the Federal Reserve buys and sells Treasury securities it does so through primary dealers. Goldman Sachs and JPMorgan are among the select elite firms that, naturally, got into this club. (more)