Green[span] Means "Go"

The National Association of Purchasing Managers (NAPM)’s main index for the service sector is down 25% in just the last five months. What’s worse, productivity was down 1.2% in the first quarter for the first time in 6 years. Just a year ago productivity was purportedly growing at over 5%.

Evidence to the contrary, Greenspan remained steady this week. “As best we can see, there is little evidence of emerging inflation,” he told us this week. “Higher costs (i.e. Energy) are not following through as pressure on prices.”

Greenspan has interpreted the lack of “price pressure” as a green light to print money with impunity…

Still the markets have hardly noticed. The Dow was down 113 for the day Friday to 10,977. The S&P 500 lost 12 to close the week at 1264 and the Nasdaq shrank back 48 to 2215. For the year the Nasdaq and S&P remain off the start, down 10% and 4% respectively. The Dow has gained a smidge. It’s up 1.8% YTD.

ADD’L PRICES FOR THE WEEK: all but nowhere, this week

Gold: $274.50

Crude Oil: $28.33

Natural Gas: $3.92

CRB Index: 211

Dollar Index: 119

The Sad, Sad Euro: $.85

British Pound: $1.38

Japanese Yen: $.82

DR BLUE HOTWIRE – Investor’s Intelligence From Around The Globe

Keep Your Eye On The Money Supply

“The nation’s M3 has expanded this year,” says Sean Corrigan of, a London-based economic consultancy, “at a pace roughly equivalent to the whole output of the Italian economy in the same period.” …

Feeding money to consumers at the same time only exacerbates the problem…allowing them to buy what they have neither earned nor saved for. And giving rise to not just a stock market bubble but a “lifestyle bubble.”

From Blue Team member David Tice: “This ‘lifestyle bubble’ has left the economy with a tremendous double-edged sword. It is painfully clear that it is in the best interest of the individual to retrench and start building up savings once again, however, if all consumers put the breaks on consumption the economy would definitely be thrown into recession.”

The US savings rate has dropped consistently from a high of nearly 6.5% of disposable household income in 1995 to a negative 0.5% in May.

Addison Wiggin
Paris, France
June 9-10, 2008

The Daily Reckoning