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By Lawrence Kudlow March 26, 2008 Page 2 of 2 Inflation remains a worry. And despite dissenting votes by Reserve Bank presidents in Dallas and Philadelphia, the Fed slashed its target rate by 75 basis points this week. But the Fed's statement put a greater emphasis on inflation -- which has risen to 4.5 percent -- and the inflation-sensitive gold price dropped $65 on the news. Big inflations cause deep recessions, and hopefully the central bank is moving back toward price stability. In fact, now would be a perfect time for the Treasury to publicly support a stronger dollar and to conduct some dollar diplomacy with the G7 nations to defend the greenback. On the housing-credit front, University of Michigan economist Mark Perry, using data from the Mortgage Bankers Association, points out that of the 46 million mortgages outstanding, only 2.04 percent were in the foreclosure process in last year's fourth quarter. And most of those were confined to Nevada, Florida, Michigan and Indiana. Meanwhile, commercial mortgage delinquencies ended 2007 near record lows. And get this: Over the past year, bank loans to businesses have grown by $250 billion. During the credit crunch of the early 1990s, these loans fell by $60 billion. Believe it or not, credit is still available, even to small businesses. In the stock market, the best-performing sectors since the Jan. 22 bottom have been transports (trucking and railroads), basic materials, energy and industrials. These economic-sensitive areas point to a solid near-term rise in economic growth. Even John McCain is picking up. New polls from Zogby and Rasmussen give him a 6 to 8 point lead over Hill-Bama -- a nod to Reagan-Bush pro-growth policies instead of high-tax, protectionist big government from the Democrats. So I'm glad President Bush is taking an optimistic view. That's called leadership. ---
COPYRIGHT 2008 CREATORS SYNDICATE INC. -------------------- Note -- The opinions expressed in this column are those of the author and do not necessarily reflect the opinions, views, and/or philosophy of GOPUSA. >> Back -- Page 1 2
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