Tuesday, August 11, 2009

Political maneuvering

Greetings good citizen,

A pretty ‘classic’ day in the markets today, complete with the now common place ‘tape painting’ in the last hour of trading as well as the pundits calling the (would have been larger) ‘dip’ in today’s markets as ‘profit taking’ in the wake of last week’s ‘run up’.

Perhaps more disturbing is the latest round of ‘bottom calling’ that predicts the ‘end’ of what they fondly call the ‘Great Recession’ sometime during the 3rd quarter.

I feel compelled to remind you that the punditry has been ‘predicting’ the end of the crisis for nearly two years now. It’s always just one more quarter away.

The ‘Great Recession’ will, without a doubt, ‘end’ someday…left to our imaginations is whether or not it will ‘end’ with our civilization still intact.

But naturally, no pundit is predicting that particular outcome. What they’re ‘speculating’ about is whether or not the markets will achieve what is known as a ‘technical recovery’.

Can the stock markets ‘recover’ while the banking system/credit markets are still being held together with bubble gum and bailing wire? I guess we’ll see.

So we have tonight’s offering which is yet another pronouncement that the crisis is all but over already…yet it (once again) may not ‘seem’ like a recovery for most of us.

U.S. Recession to End in the 3rd Quarter

Published: August 11, 2009

Filed at 12:43 a.m. ET

WASHINGTON (Reuters) - The worst U.S. recession since the Great Depression will probably end in the third quarter, but uncertainty exists over the speed and duration of the economic recovery, according to the most recent survey of private economists. [None of whom saw this thing coming…]

The Blue Chip Economic Indicators survey of private economists released on Monday showed about 90 percent of the respondents surveyed believe the economic downturn will be declared to have ended this quarter. [Hard to say how ‘hopeful’ one should be considering this is merely a ‘what do you think’ sort of survey…]

This upbeat assessment followed recent government data showing gross domestic product (GDP) contracted at a shallow 1.0 percent rate in the second quarter after sinking 6.4 percent in the January-March quarter. [Oddly, there was an editorial in today’s NY Times that gave the ‘kiss of death’ to the GDP model…]

Recent data, including housing and key labor market indicators, have suggested a bottoming in the recession and the economy close to turning the corner. The economy slipped into recession in December 2007. [Understand that the recent housing ‘improvement’ was month over month figures and the recent drop in the unemployment figures have been attributed to ‘seasonal adjustment’ factors that are way off base…but that doesn’t prevent them from abusing your ignorance.]

The Blue Chip survey's findings are broadly in line with a Reuters poll published last month, which predicted growth in the third quarter, though a brisk pace of expansion was not expected until late 2010.

"Debate now centers on the speed, strength and durability of the recovery," the survey said.

It showed nearly two-thirds of respondents believed the economy was set for a U-shaped recovery, marked by below-trend growth in gross domestic product before stronger growth took hold in the second half of 2010. [Um, I suppose nobody wanted to ‘speculate’ on what constitutes ‘stronger’…]

About 17 percent of the respondents anticipated a V-shaped rebound, where growth pulled back to its trend rate on a sustained basis, while the same percentage fretted that a W-shaped recovery could follow, the survey showed.

"In their view, GDP growth will pop higher for a quarter or two only to falter again before a lasting recovery takes hold," the survey said.


Growth in the second half was expected to garner support from a reduction in the pace of business inventory liquidation, marginal improvements in consumer spending and residential investment. The survey predicted that non-residential investment, however, would remain a drag on GDP. [Where do these ‘rocket scientists’ think the consumer is going to get the money for this ‘uptick’ in spending/’investment’? Under current market conditions there is absolutely zero ‘incentive’ to give workers raises…much less ‘restore’ wages/benefits that have been snatched away from them.]

Despite the improved economic picture, unemployment was expected to remain a problem, with the jobless rate predicted to peak at just over 10 percent late this year or early 2010, the survey showed. It was seen falling only slowly thereafter. [So, this ‘increase’ in consumer spending is actually a prediction of a broad increase in counterfeiting?]

Government data on Friday showed the unemployment rate nudged down to 9.4 percent in July from 9.5 percent in June, but mostly because many people dropped out of the labor force.

"About 70 percent of the panelists believe the jobless rate will not dip below 7.0 percent on a sustained basis until the second half of 2012 or later," the survey said.

However, job losses could fade late this year or early 2010 and payrolls start to expand as companies rebuild inventories, which should lengthen the workweek, according to the survey. [Are these people idiots or what, where is the ‘demand’ supposed to come from?]

The weak labor market, together with excess capacity in many business sectors were seen dampening inflation pressures.

"Consumer price inflation, excluding food and energy costs, will increase by slightly less in 2010 than in 2009," the survey said.

Uh-huh, and if you buy a word of that I’ve got a mighty fine bridge you may be interested in…

How many ‘contradictions’ did you spot in the above article?

Let’s start with the jobs market. The Autoworkers jobs aren’t coming back, neither are all of those traders and brokers jobs, not since the securitization markets collapsed. How about those mortgage brokers or real estate agents? Who the fuck can cough up 30% down on overpriced real estate these days?

How large is the pool of buyers for real estate these days now that banks aren’t lending to anyone? Worse, we all know the housing market is nowhere near ‘bottom’, not by a long shot!

So, what do you suppose these decidedly anonymous ‘bozos’ are smoking and why won’t they share?

Understand good citizen that there is a high likelihood that the ‘recession’ will indeed be declared over in the third quarter. But that declaration will have no basis in ‘reality’…the decision will be wholly political.

We’ve already witnessed how the stock market can be made to climb even while the economy is bleeding jobs and producing nothing.

If you can’t distinguish between reality and fiction then you are doomed to suffer unspeakable poverty while being told you are prosperous.

Thanks for letting me inside your head,


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