Economics Update

Charles Plosser, President of the Philadelphia Federal Reserve, called for rate hikes to forestall inflation. Not surprisingly, the US dollar has risen as a result.

Meanwhile, the banking meltdown continues aplace, with Wachovia losing $9.9 billion dollars and exiting the wholesale mortgage business, meaning that they will no longer offer mortgages through independent brokers, and WaMu Lost $3.3 billion too.

I would also note that federal examiners auditing the GSE's books, though this is more a preparation for a US government bailout than it is any concern for wrongdoing.

Considering that U.S. home prices 4.8% from May 2007 to May 2008, I'd count a GSE bailout as likely.

Seeing as how tropical storm Dolly largely missed the offshore oil rigs, it's not surprising that oil prices have fallen, and it appears that retail gasoline is doing the same.

Still, this is mostly a symptom of a slumping economy, where less oil is needed, much as UPS's profit slump of 21% is clear evidence of a radically slowing economy.

It's also old home week at 40 Years in the Desert, because we have some news about another monoliner insurer in trouble, this time, it's Assured Guaranty, one of the two insurers left with AAA ratings from all three major agencies, that is taking a tumble, because Moody's is making noises about a downgrade.