U.S. storm clouds - benign neglect? (fg)

Personally, I am really annoyed about the daily incoming news on increased upside risks to U.S. economic outlook. We all took note of the housing downturn, re-pricing of credit risiks, above-average core inflation (alhtough slightly decreasing to 2.5%), depreciation of the greenback and lasting balance-of-payments imbalances. Nonetheless, FED governors still try to uphold the optmistic scenario, i.e. smoothing-out of these economic risks. Governor Mishkin reaffirmed on the latest H.P. Minsky Conference at Levy Economics Institute of Bard College that he is upbeat in delivierung price stability and bringing back both core inflation and inflation expectations to 2% in an era of solid growth. For most economists, this statement neither sounds suprising nor convincing. FED has a vested interest in spreading good news in order to appease financial markets. At the same time, as FT Associate Editor Wolfgang Munchau confirmed, nearly nobody believed Mishkin's economic outlook since hard facts are hard to irgnore.