Monday, March 16, 2009


Actually, the title of this post has nothing to do with stocks. We have been on the air for a year and have used a free recording service. This morning I had one of the best interviews yet with Mesirow Financial Chief Economist Diane Swonk and while the audio file downloaded---it had no sound waves. So instead of hearing the interview, for now we will have to rely on my notes. I have complained and hope the issue can be fixed. I must say that in addition to being one of the best economists in the world, Diane Swonk is genuinely a very nice person who cares about people.

I have been very worried about inflation and Diane actually made me change my thought process. She argues that while the Fed has increased its balance sheet tremendously--it has done so in a fashion that can be reversed quickly and without a lot of fanfare (or political grandstanding). She contends that they can not renew some of the loans that they have creatively made while holding risky assets as collateral. As the economy improves, they can make fast contractions of the money supply through this method. She contends that the Federal Reserve can and will be successful fighting inflation in this manner.

Diane was definitely not a gold bug and seems to believe that the Chinese have no chance to walk away from our debt. I agree and to some degree it seems that the Chinese have been trying to grandstand by asking for assurances about the safety of our debt.

Diane acknowledges that fluctuations in the U.S. Dollar are extremely difficult to accurately predict in terms of direction, but does not see the value of the dollar being totally destroyed.

I must admit that after my conversation with Ms. Swonk, I felt much more encouraged about the overall state of our economy---not that she by any means painted a rosy short-term picture---but she did make me believe that we are going to see improvements and will return to a normalized state in the years to come.

We have part the audio file and hope to recover the rest soon.

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