April 28, 2004

Gasoline isn't the only thing going up

The price for premium, which my porky vehicle swills by the hogshead, hit $2.26 at my local gas station yesterday, leading to a $51.65 fill-up tab – a personal best for me. But at least predictions of $3-a-gallon gas appear to be tapering off a bit. However, gas isn't the only thing going up. Interest rates are, too. Soon. Alan Greenspan, overseer of short-term interest rates, has indicated as much. The question is how soon they'll go up and by how much. There are some straws in the wind that indicate the increases could begin quite soon (at the Federal Reserve Board's interest committee meeting in June) and that they could eventually move higher than many people seem to expect. Right now, short-term interest rates are at 1 percent. Anyway you look at it, this is free money. It's lower than the rate of inflation, which has been running at an annual rate of around 2 percent. While there has been no big surge yet in prices at the consumer level, commodity prices have been inching up and it's probably just a matter of time before the prices we pay edge up too. Hence Greenspan's alert, which has given the stock and bond markets the jitters. When interest rates do turn up, it will affect everything from auto prices (those 0% loans will gradually vanish), to credit-card rates, bank prime-interest rates (which affect a variety of other rates) and adjustable-rate mortgages. At Bloomberg News, columnist John Berry says market analysts and policy makers forsee rates ranging from 2.5% to as high as 6%. One of the underlying questions in the various calculations is what would be a reasonable "neutral" short-term interest rate, one that neither stimulates nor restrains economic activity. Berry reports that Robert T. Parry, the retiring president of the San Francisco Federal Reserve Bank, offers this bit of noodling: Based on inflation and productivity trends of the last several years, "… the range for the nominal natural rate would be between 3.5 percent (2.5 percent real and 1 percent inflation) and 5.5 percent (3.5 percent real and 2 percent inflation).'' The problem, as Mickey Levy of Banc America Securities told Berry, is that no one really can say for sure what the "neutral" rate is. So the likelihood is that the Fed will begin to jack up rates soon in small increments and see what happens. It does appear, though, that we're going to be seeing higher rates soon, and when we do they will quickly work their way into the fabric of the economy. The free-money ride is just about over. It is unlikely, though, that anything more than incremental increases will occur before Nov. 2.

Posted by tbrown at 12:20 PM

Spooks may track blogs for intelligence

Who says the feds are out of touch? " … some analysts say U.S. intelligence and law enforcement officials might be starting to track blogs for important bits of information. This interest is a sign of how far Web media such as blogs have come in reshaping the data-collection habits of intelligence professionals and others, even with the knowledge that the accuracy of what's reported in some blogs is questionable."

Posted by tbrown at 12:17 PM

Iraq blog roundup

Jeff Jarvis has done one, so I won't. It's here.

Posted by tbrown at 12:16 PM

Soldiers who would have died in previous wars are living

That brings its own hope and despair. "At the door to the busiest hospital in Iraq, a wiry doctor bent over the worst-looking case, an Army gunner with coarse stitches holding his scalp together and a bolt protruding from the top of his head. Lt. Col. Jeff Poffenbarger checked a number on the blue screen, announced it dangerously high and quickly pushed a clear liquid through a syringe into the gunner's bloodstream. The number fell like a rock. " 'We're just preparing for something a brain-injured person should not do two days out, which is travel to Germany,' the neurologist said. He smiled grimly and started toward the UH-60 Black Hawk thwump-thwumping out on the helipad, waiting to spirit out of Iraq one more of the hundreds of Americans wounded here this month. "While attention remains riveted on the rising count of Americans killed in action — more than 100 so far in April — doctors at the main combat support hospital in Iraq are reeling from a stream of young soldiers with wounds so devastating that they probably would have been fatal in any previous war. "More and more in Iraq, combat surgeons say, the wounds involve severe damage to the head and eyes — injuries that leave soldiers brain-damaged or blind, or both, and the doctors who see them first struggling against despair." Read it all here.

Posted by tbrown at 12:15 PM