If ever words were spoken that will quickly be eaten here they are:

Paulson says “Absolutely” no recession.

Treasury Secretary Henry Paulson said he’s talking with Wall Street leaders on Tuesday about how to strengthen the U.S. economy and capital markets. Paulson commented in an interview on CNBC television ahead of a public speech at Columbia University. Paulson made no changes in U.S. policy, saying that a strong dollar is in the national interest, and calling on China to embark on structural reforms that would create more flexibility in its currency and allow for greater domestic consumption. He said the fiscal deficit is improving, but its long-term stability depends on reforms in entitlement spending. Asked if the economy faces a recession in the near term, Paulson declared, “Absolutely not.”

I find it interesting that Bush has managed to find yet another shill willing to say that “a strong dollar is in the national interest” while prodding China float the RMB in hopes that the dollar will sink.

As for a recession, the treasury market has a different opinion as I noted earlier today in CPI Tops Fed Target.

An inverted yield curve has only once failed to predict a recession.
Right now we have not only had our second inverted yield curve in a year, but housing is collapsing by any reasonable measure one looks at.

One can either believe shills like Paulson or one can believe the yield curve and housing. It’s your choice. Believe what you want.

Mike Shedlock / Mish/