Wednesday, February 3, 2010

If it Quacks like a Duck

Greetings good citizen,

What do you suppose the consequences are for ‘bad information’? For the people dishing out the unreliable data, they lose credibility (first) but, if the bad information caused people to endanger themselves, the consequences could be quite extreme indeed.

Let’s suppose we take the middle ground and suppose the bad information only enabled the people who sign the information passer’s paychecks to make a fortune at everyone else’s expense…how dangerous would that be?

Not particularly, not at first anyway. Stock prices run ahead of an economic recovery and sometimes they even front run recovery’s that fail to materialize (sort of a ‘investors recovery’ if you know what I’m saying.) Now, who gets hurt by an innocent thing like that?

No one right? Well, let’s not be too hasty here…if the stocks are up, so are the prices commanded for the goods those stocks represent! So you’re making less and paying more…all because some conniving weasels are lying through their teeth about the true state of the economy.

Now the lie isn’t so innocent, is it? What do you suppose the effects are of the market gaining four thousand points while the economy remains stagnant?

No harm, no foul right; heck, the people who saw their 401k’s almost get wiped out made some of what they lost back! Everybody ‘won’, didn’t they?

No so quick again Slick! How about yesterday’s story about Blackrock filing 1,800 notices that they now own more than 5% of 1,800 NYSE listed firms? How do you suppose a publicly traded venture capital firm was able to afford that much stock?

Or to ask a more succinct question, what bank(s), in their right mind, lent Blackrock that kind of money? And since we aren’t talking tiddley-winks here, where did our freshly bailed out banks get their hands on that kind of money?

Banks snapping up stocks with public funds during an economic downturn…it blows your mind! These stocks are only worth a fraction of what Blackrock paid for them, what the fuck were they thinking?

I guess we’ll never find out because nobody in the government has the gonads to go after the people in the banking sector who are hijacking public funds.

Naturally, all of this is ‘crazy talk’…nobody would waste public funds never mind jeopardize our entire financial system (this is bad enough to ‘de-stabilize’ the dollar)…

That’s what everybody thought when Hitler threatened to invade Czechoslovakia.

No one believed Hitler would actually follow through and we have the same situation here, nobody actually believes that bankers would be reckless enough to destroy the world’s financial system, just to cover up their theft! (We aren’t talking small potatoes there either, a quadrillion dollars worth of credit default swaps!)

Can I prove it? Of course I can’t (although I think the Blackrock ‘revelation’ is more than a little damning…) Worse, we’ve been lied to so often it is almost impossible to tell fact from fiction, especially if it comes out of either Wall Street or Pennsylvania Ave.

So we arrive at tonight’s offering for another dissenting opinion on the ‘economic recovery’…

Rosenberg: Without The Consumer And Households, The Recovery Is Toast

In today's note, David Rosenberg gets at the real reason there's no economic rebound:


Hey — these two sectors combined account for only 75% of the economy. Who
needs ‘em? Below is the three-month moving average of the Chicago Fed’s
National Activity Index (CFNAI) — the personal consumption and housing sub-index
to be exact. [Click the link, then:] Look at Chart 1 and please tell us if it depicts an economy in recovery mode. This sub-index is still mired deep in recession terrain, with all deference to the latest set of GDP data. The other three components — sales, production, and employment to a lesser extent — have done virtually ALL of the heavy lifting to get us to where we are overall on the CFNAI, which is an economy barely going at all. [Did they omit the ‘R’ and the ‘W’ from ‘going’ on purpose?]

Absent a turn in this sub-component, the other three cannot carry us much further.
The bottom line is that if the personal consumption & housing sub-component
doesn’t start showing some signs of life, it’s game over as far as the recovery
story goes.
Exiting recessions, this sub-component sits, on average, at -0.09. It
printed at -0.48 last Thursday, and has not printed better than -0.43 since
December 2008. In other words, it is going nowhere fast, and the other
components can’t carry the ball forever.

Not that Dumb and Dumber wouldn’t have you think otherwise! In fact, I’m a little surprised we have already heard something along the lines of, ‘Who needs the consumer and dumb old housing anyway? Look at the stock market, the economy is doing fine!’

It’s like the morons who say “So what if unemployment is at ten percent; that means ninety percent of people are still working!”

Like unemployment encompasses all working aged citizens!

Sadly this is not the case. The ‘employed’ workforce is roughly 130 million (same as it was twenty years ago), the number of working aged citizens is roughly double that…so we’re actually staring a an unemployment rate that is close to fifty percent!

Let’s make it worse…out of those 130 million, over 40% of them are NOT employed full time! As off-shoring has made more people ‘redundant’, part-time work is often as good as it gets.

Where’s your ‘90%’ now, huh Chuckie?* (*short for ‘chucklehead’…)

If you know what you’re looking at the statistics are mighty grim and you can only wonder what the hell is going on between the ears of our self-professed ‘betters’.

Take a good look around you good citizen and you will find ample proof that money doesn’t equal brains…

Thanks for letting me inside your head,


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