Bill Quick is beginning to persuade me that a recession is close, very close. Of course, I’m one of the ones who believes the Fed is the real growth killer in the American economy. It certainly appears that the many, many rate increases in 1999-2000 had something to do with the death of the Clinton “boom”. Since 2004 the Fed has done the same to the Bush boom. 17 increase and the boom is dying? I think that may be correct.

There are other factors tugging at the economy. The price of oil certainly is playing a part. The three hurricanes that wiped out much of the Gulf Coast are another. I would also say that the war in Iraq is having some effect, by taking productive employees out of the civilian economy and into the Reserves and Guard for duty overseas.

The one are that has an immediate effect on the economy is the Federal funds rate and it is probably an entire percent higher than it need to be. Housing is looking like it is slowing. Consumer spending is falling. Consumer debt is extremely high.

There is no soft landing. Why? We’re no longer a manufacturing economy where production can stimulate growth. We’re a service and information economy and we sink or swim together. The vampire we call China has a big part to play in this but their crash will be much harder. War, civil war and anarchy will be China’s fate from an American recession.

The Fed needs to lower rates very soon. Rebuilding the Gulf must take priority since there’s enough work their to push the economy back upwards. And no more pussyfooting around with China. They have to float the yuan or face tariffs. I hate the notion, but their production is so underwritten by the state that it can in no way be called a free economy. So, we have to put the pressure on.