I would like to read Mark Wignall's

[Jawge]

columns now. I'm sure they would now be an interesting read. I wonder what discpline would be up for mockery now.

[MdmeX]

I would like to read some of Dennis Morrison's columns too

[Assasin]

I wonder if the economy is still on the verge of taking off

[Karl]

I would like to read some of Dennis Morrison's columns too

The challenge facing the US Federal Reserve
Dennis Morrison
Wednesday, September 19, 2007


International financial markets are experiencing another round of turbulence as the effects of the crisis in the sub-prime mortgage business show up in more institutions. Given the interconnectedness of these markets, problems that arise first in US-based institutions quickly spread to entities in Europe and Asia. In short order, central banks in the different regions are forced to intervene to bring about some measure of stability.

Huge sums have been made available by these banks, primarily the European Central Bank [ECB], the Federal Reserve Board, the Bank of England and the Bank of Japan, as liquidity support in recent weeks. Yet the crisis is continuing, and indications are that the financial markets will face more difficulties in the short term. Some easing of monetary policy can therefore be expected or, put differently, further tightening of policy which was anticipated may be delayed.

The European Central Bank has already put off an interest rate increase because of the unsettled state of financial markets, although it is concerned about inflation pressures.

In the USA, market watchers are predicting that the Federal Reserve will cut its key interest rate in a bid to lessen the fallout in the sub-prime mortgage market. This is being proposed because of the sharp reduction in activity in the housing market and the construction industry which have been drivers of the US economy in recent years.

While US exports have been showing substantial growth and the manufacturing sector has maintained a positive direction, these have not been sufficient to offset the depressing effect of the problems in the financial markets. Indeed, consumer sentiment has declined sharply, and this is reflected in the index of leading economic indicators.

Since consumer spending accounts for more than two-thirds of US economic activity, it is therefore understandable why there would be moves to shore up the financial markets. To allow a credit crunch to spread would be to further weaken consumer confidence to the point where a recession would be triggered.

But even as the fear of an economic recession appears to be uppermost in the minds of some policymakers in the USA, the importance of controlling inflation cannot be ignored. Thus the Federal Reserve must assess the risks associated with these two factors in its actions on monetary policy. This is moreso the case as there are real threats to price stability from the spike in oil prices.

Having slipped to the US$50s range in the early months of the year, oil prices have climbed sharply in recent weeks, breaking the US$80 level a few days ago. The all-pervasive effect of oil prices on other energy sources means that inflation pressure from this vital commodity should be monitored closely in coming weeks.

The fact that world oil consumption continues to rise even as US consumption is slackening adds to the complexity of policymaking. Before the advent of the China economic miracle, which is the primary factor driving most commodity markets, a slowdown in US economic activity would have been sufficient to cool demand for oil.

The effects of the combination of financial market turbulence and oil price pressures on the leading economies will determine the actions of policymakers in the near term. Because of the economic momentum of China and other emerging economies, particularly in Asia, the overall global situation is likely to be stronger.

But economies in Latin America and the Caribbean, which are heavily dependent on US markets, could feel the impact of a slower US economy more directly.

In Jamaica's case, we will have to be watchful of any spillover effect on the US travel industry. So far this year, stop-over visitor arrivals from that market have declined substantially because of the introduction of the passport requirement. This should be less of a problem in the coming months as the backlog of passport applications is now being reduced. Indeed, over 1.5 million passports are being issued per month.

The strength of the Canadian dollar and the euro could also offer some compensating positive effect on visitor arrivals from those markets. But the heavy dependence on the US market still means that special attention must be paid to that market at a time when the US economy is under pressure.

[Karl]

I wonder if the economy is still on the verge of taking off

Definitely!
...as has our football!

[Gamma]

wait...nuhbaddy neva tell yuh? it took off......took off like how omar davies "tooks" off in the observer cartoon, in the wrong direction!!!!

[Assasin]

"In Jamaica's case, we will have to be watchful of any spillover effect on the US travel industry. So far this year, stop-over visitor arrivals from that market have declined substantially because of the introduction of the passport requirement. This should be less of a problem in the coming months as the backlog of passport applications is now being reduced. Indeed, over 1.5 million passports are being issued per month."

I remember certain people on here was talking bout the passport requirement would not hurt our tourism and act like people who talked about it hurting us was just vindictive against the ruling PNP.
Aaah Laaaaa

[Mosiah]

And where is the evidence that the new passports requirement has hurt our economy?

[Gamma]

funny....burell was seen as a jlp man and boxhill as a pnp man....but to burrell's credit and the government at the time, they were able to work well together for jamaica's football...that would have been portia simpson's ministry (was it at that time? mi nuh memba).

burrell's fallout had little to do with the government and more to do with him...let's see how it will go now....

[Assasin]

the drop in tourist arrival doesn't hurt our economy?

I said many people can't bother and if you have a family of 4 who want to travel that is about $1000.00 in passport charge so this will definately be a road block. Plus people who owe child support can't get a passport. You know how many potential visitors that include, that bring in much needed foriegn exchange?

[Karl]

funny....burell was seen as a jlp man and boxhill as a pnp man....but to burrell's credit and the government at the time, they were able to work well together for jamaica's football...that would have been portia simpson's ministry (was it at that time? mi nuh memba).

burrell's fallout had little to do with the government and more to do with him...let's see how it will go now....

Boxhill is a PNP man unless he has recently changed...and, Burrell is a JLP man unless he has recently changed. I hope you do not have a problem with a JLP man being in charge of the JFF?!

[Jawge]

sure just show me where he is making mockery of
a discipline.

[Gamma]

i would if he's effing up! karl...mi nuh think like unnuh y'nuh! yuh nuh realise that yet?

[Mosiah]

the drop in tourist arrival doesn't hurt our economy?

JEZAS CRISE, Assasin! I did not ask you about that! I asked you about evidence that the drop was caused by the new passport requirements. If you don't have that evidence, fine!

I said many people can't bother and if you have a family of 4 who want to travel that is about $1000.00 in passport charge so this will definately be a road block. Plus people who owe child support can't get a passport. You know how many potential visitors that include, that bring in much needed foriegn exchange?

For your information, assasin, there has been a similar drop in arrivals for countries where American tourists still don't require passports. That is fact.

[Assasin]

So are you implying the passport has no effect on tourism which is the number one earner of foriegn exhange?