Are we now, at long last, faced with a long, slow slump a la Japan? There’s a whole ocean of difference between an island nation with huge savings, a thrifty population and an enormously positive trade balance, and a stretched-out empire, possibly in decline, running record deficits in its external trade and internal government finances, with an aging, over-paid, over-indebted workforce.

Upcoming, ISM Manufacturing may give an insight into the direction of the U.S. economy as its prices paid and employment components are leading indicators for future CPI data and Nonfarm payrolls.

Annualized inflation numbers (PPI, CPI) show how bad inflation is right now. The irony here is that the Fed continues to ease policy and provide accomodative conditions.

The dollar can’t seem to catch a break. The beleaguered currency marked yet another momentous drop against most of its liquid counterparts, chalking up its biggest three day sell-off in four years.

An oil shock on top of a crunch on credit and a housing collapse. As anticipated, consumers are doing the only thing they can do; they’re spending less money. What happens to a consumer society when consumers stop consuming? Ah, dear reader, you know the answer to that, too – it shrinks.

The upcoming personal spending and income numbers may confirm concerns of the Fed, which still sees considerable downside risks to the U.S economy and signaled that future rate cuts are forthcoming.

The Dow rose 114 points yesterday. The feds are trying to keep the party going, of course, by refilling the punch bowl as fast as they can. The U.S. money supply is increasing about five times faster than the economy itself.

With the US dollar plunging to record lows against the Euro, it is very clear that bearish sentiment on the US economy is winning out in the markets.

Professional system trader Art Collins shares his daily biases in the index, bonds and currency futures markets for February 27.

Inevitably, politicians pander to the living in order to get votes, and inevitably the next generation gets the bills.