Fiscal fables

- Macro viewpoint: Fiscal fables "The Obama administration has announced a series of proposals this week aimed at boosting growth. These policies, if enacted, will have a negligible impact on our forecast of a growth recession through the end of next year."
- Fed watch: Incomplete transition "Former Vice Chairman Donald Kohn’s retirement from the Board of Governors signals the end of an era. As he was close to Bernanke and other centrists on the FOMC, his dovish comments in a subsequent interview are noteworthy. The fact that his replacement has not yet been approved will be a challenge for the Fed."
- Housing watch: Despite low rates "Record low rates have done little to stimulate housing demand, leaving a growing imbalance between housing supply and demand. We expect the government to introduce more policies to address this glut of supply. One proposal gaining some traction is to facilitate the conversion of foreclosures into rental properties."
- The week ahead: Spending and production: not so bad "We expect a modest gain in retail sales, showing a decent back-to-school shopping season. Consumers are still spending, but are doing so conservatively. New information on the manufacturing front will also be released. We expect the industrial production to pick up with a solid gain in manufacturing output, but for the Empire State survey to point to an impending slowdown."

Merrill Lynch US Economic Weekly 20100910

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