Has the massive Obama stimulus plan put us on a collision course with virulent inflation?

It sure looks that way.

Let me explain …

When the U.S. Commerce Department on Friday said the U.S. economy contracted at a 1% annual pace in the second quarter, the report was actually seen as good news: It was a slower decline than in each of the two prior quarters, and economists had expected a contraction of 1.5%.

“This is good news,” Nariman Behravesh, an economist with IHS Global Insight Inc. (NYSE: IHS), told The San Francisco Chronicle.

But here’s the wild card: Although government spending did increase during the April-to-June quarter, only about 7.7% – $60.4 billion – of U.S. President Barack Obama’s stimulus package had actually made its way into the U.S. economy by June 30, the quarter’s official conclusion. Of that total, the largest component went to U.S. states to …

Has the massive Obama stimulus plan put us on a collision course with virulent inflation? It sure looks that way. Let me explain …

When the U.S. Commerce Department on Friday said the U.S. economy contracted at a 1% annual pace in the second quarter, the report was actually seen as good news: It was a slower decline than in each of the two prior quarters, and economists had expected a contraction of 1.5%.

“This is good news,” Nariman Behravesh, an economist with IHS Global Insight Inc. (NYSE: IHS), told The San Francisco Chronicle.

But here’s the wild card: Although government spending did increase during the April-to-June quarter, only about 7.7% – $60.4 billion – of U.S. President Barack Obama’s stimulus package had actually made its way into the U.S. economy by June 30, the quarter’s official conclusion. Of that total, the largest component went to U.S. states to help defray the jump in

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The markets enjoyed a late rally to send the three major indexes up for the day, as the Dow Jones closed up 1.15%.  The NASDAQ and the S&P 500 were both up closing at 1774.33 and 919.14 respectively.  Prices on the 10 year treasury once again rose over a dollar as the yield declined to 3.465%.  Oil and gold were both up today,  with August gold settled at $980.30 and crude settled at $66.31. 

Tiffany & Company [TIF: 28.37, +0.24 (+0.85%)] reported a 62% decline in first quarter profit, as they announced earnings of $24.3 million, or $0.20 per share, declining from $64.4 million, or $0.50 per share the same period the year prior.  Tiffany saw sales decline 22% falling to $523.1 million, with sales dropping 21% in stores who have been open less than a year.  Sales would have fallen only 18% but the high end jewelry company was hurt by currency

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Krugman: U.S. in Danger of Lost Decade; Trichet Sees First Signs of Recovery; Plavix Could Have Serious Competitor; Intel Could Face Record Antitrust Fine; GM Open to Leaving Detroit; Microsoft in First Bond Offering; Dish Network Beats Expectations; Nortel Blows a Fuse

Nobel Prize-winning economist Paul Krugman said the United States needs to take aggressive economy-stimulating action or risk facing a lost decade of growth a la Japan in the 1990s. “We’re doing half-measures that help the economy limp along without fully recovering, and we’re having measures that help the banks survive without really thriving,” Krugman told reporters in Beijing, Reuters reported. “We’re doing what the Japanese did in the 90s.” European Central Bank President Jean-Claude Trichet said he and fellow policy makers are ...

We've written before on this blog about the Russian government's declaration of "strategic sectors" in the economy, which is another way of saying that they are open game for state intervention, and foreign participation will be limited.  There are certain areas where this is logical - such as sensitive defense technologies.  There are other areas which make much less sense, such as energy, media, and internet.  The strategic sectors legislation has very little to do with the logic of reciprocity - Gazprom has snapped up assets across Europe, but foreigners aren't allowed controlling stakes in energy projects.  Even Alexander Lebedev has a newspaper in the UK, but no foreign company can get involved in disturbing the Kremlin's carefully managed flow of information to its citizens (how ...

The markets were up today, as they benefited from good earnings reports with the Dow Jones up 1.19%.  The NASDAQ and S&P were also up, closing at 1670.44 and 865.30 respectively.  Prices on the 10-year were down, closing with a yield of 2.838%.   In commodities, crude oil was up, settling at $49.98, while gold contracts were down, settling at $879.80. 

JP Morgan [JPM: 33.24, +0.68 (+2.09%)] was up over a  2% today as it posted a decline in profit of 10% in the first quarter, but beat analyst estimates.  JP Morgan reported earnings of $2.1 billion, or $0.40 cents a share, compared to analyst expectations of $0.32 cents a share.  JP Morgan was able to beat the Street’s estimates by an increase in debt trading and underwriting in their investment banking unit.  JP added $4.2 billion to credit reserves and had a Tier 1 capital level of 11.3%, which CEO Jamie Dimon says

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The market had a down day as investors sold out of equities to lock in the weeks gains, the Dow Jones closed down -1.87%. The NASDAQ was down -2.63%, while the S&P was down -2.03% to close at 815.94. Yields of the 10-year rose to 2.761% as prices fell. Both oil and gold contracts were down, settling at $52.38 and $925.30 respectively.

Technology led the downward trend in the market as big names Amazon, [AMZN: 70.52, -3.17 (-4.30%)] Google, [GOOG: 347.70, -5.59 (-1.58%)] and Accenture [ACN: 27.66, -4.30 (-13.45%)] all were plagued by bad news. Amazon confirmed that they were closing three of their distribution centers, and this caused investors to worry about a slowdown in sales. Amazon says that they are realigning their distribution network and that they are expanding other existing facilities. Analysts are not worried

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Google Inc. (Nasdaq:GOOG) is well established as internet search-engine champion. And its rapid expansion into other technologies means the company is poised to bounce back strongly when the financial crisis is over. Money Map Report editor Horacio Marquez says the current market downturn provides the perfect opportunity to buy Google stock at a bargain price.

More from Horacio in this piece from Money Morning:

When – on August 22, 1851 – schooner-yacht America defeated 15 other yachts representing the Royal Yacht Squadron, racing around the Isle of Wight in England to win the renamed “America’s Cup,” Queen Victoria asked who was second.  The famous answer was: “Ah, Your Majesty, there is no second.”

Similarly, in the search-engine category, Google Inc. (Nasdaq:GOOG), has run away with the trophy, leaving its competitors so far behind that they’re actually still over the horizon. Today, Google controls at

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On Tuesday, Deutsche Telekom AG unveiled the first smart phone that will use Google’s new Android operating system.  The device is called the G1, sold by Deutsche Telekom’s subsidiary T-Mobile, and it looks a lot like the iPhone and other competing smart phones (well, except for the Google logo on the back).  But its the software, not the hardware, that T-Mobile and Google hope will set this new product apart. It will need to be special to crack the dominance of RIMM’s Blackberry and Apple’s iPhone in the smart phone market.  Those two companies controlled a combined 65% of the market in 2008, ahead of a long list of competitors that also includes PALM, Motorola, LG, and Samsung.

But smart phone users are savvy folks, and they’re looking for devices that will make life more efficient, and more enjoyable.  That’s where the cache of Google’s

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Health Discovery Corp’s support vector machine technology is the driving element in a new licensing agreement with Smart Personalized Medicine, LLC. Its patented technology is based on pattern recognition, which the company states also has potential in other sizable commercial markets such as oil exploration, Internet search and spam, and other areas where analysis of large volumes of complex data is required.

The licensing agreement will push work on a new breast cancer prognostic test in collaboration with the MD Anderson Cancer Center at the University of Texas. It sets up Health Discovery Corporation (OTCBB: HDVY) with a 15% equity position in Smart Personalized Medicine, LLC and it will receive royalties based on net proceeds from the tests.

Smart Personalized Medicine, founded by Dr. Richard Caruso, chairman and founder of Intergra Life Sciences, has a $5 million initial investment. “Shareholders should greatly benefit from (Dr. Caruso’s) experience and determination as he sets

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