Tag: federal reserve

News Flash #1: Economics of the Bizarros


Yesterday, Detroit, the city that throughout most of the twentieth century symbolized American industrial strength and economic power, filed for bankruptcy, becoming the nation’s largest public sector knocked to the ground by the weight of a multi-billion-dollar debt!

In a bizarro turn of events, right after these news came through, the stock market has closed for the day reaching new record highs!  Apparently the investors rallied (again!) on account of the second-quarter paper gains published by a few US giants.  One of them was Morgan Stanley, by the way  – the company that doesn’t produce anything, but their investment banking division (the one that does IPOs) did amazing! 

Yet, the major bit of information that pushed stocks to the record levels came from the Labor Department reporting “a drop in weekly claims for unemployment benefits,” which was readily misread by the “investing community” as a “signal of a healthier economy.”  This proves once again that this “community” consists entirely of the blind and the stupid unable to comprehend the simple truth that a drop in unemployment payouts doesn’t mean that the unemployed miraculously became employed.  What it actually signifies (assuming the numbers are not fucked with) is that a bunch of people has exhausted their unemployment benefits and now will move onto Welfare.

Of course, our Federal Reserve chairman, Ben Bernanke, played his role in furthering the stock market craze, by testifying in Congress that the inflation is not high enough yet to either curb the Fed’s $85 billion-a-month bond stimulus program (financed by the Chinese loans and our taxes), or raise the closed-to-zero interest rates.  What the fuck are you talking about, Bernanke?  In the past 12 months my personal cost of living has increased by 15% in every single category: residential expenses, utilities, transportation, food – everything went up!

Is it just me, or the world has gone completely bananas?  I don’t think it’s me.  I think the world is populated by the Bizarros now.  And, as the fearless leader of Sealab 2021 said, “I hate the Bizarros.”

Newsflash: Even NBC’s Economy Watch Finally (Somewhat) Wakes Up


Stuck in the Mud

Wow!  Like a fucking parrot I have been repeating the same thing for years now.  But it's okay, I can do it again:

People (not just the economists and market analysts, EVERYONE!), stop applying old concepts to current economic situation!  This was not a recession and we are not experiencing recovery!  This is our new reality.  Get used to it! 

Look at the graph above.  That historical +15.6% gain after severe recessions of the past – it's never going to happen again.  Moreover, even the 1.7% reptilian movement upward, we supposedly experience right now, seems to me miraculous.  And it is definitely not assured – we may start rolling down at any given moment.

The picture is so undeniably obvious, even the politically-controlled outlets, such as NBCNews.com, have no choice but to talk about it.  They are the ones, who published this morning the Credit Suisse's chart above in their Economy Watch blog's post cautiously named "Economy may be permanently stuck in slow-growth mode."  The more appropriate title would be "Economy May Be Permanently Stuck." Period. 

The article is basically a compilation of data and quotes obtained from various resources, including a number of "prominent economists" and the Federal Reserve Chairman Ben Bernake.  The blogger, John Schoen doesn't express his own opinion or adds any commentary.  Nevertheless, the piece as a whole leaves an impression that all cited contributors and the policy-makers are also stuck in a perpetual state of having no clue, of not knowing what to do. 

This doesn't surprise me at all.  These people have been in denial far too long, but they cannot hide from reality anymore.  And now fear seizes their beings, because they start realizing that it's only going to get worse.  It's beyond depressing, it's funereal.

Invariably, one particular tidbit of information puts me into a vile mood, whenever it catches my eye.  In this assortment of bad news Mr. Shoen mentions in passing that 70% of US economic activity comes from consumers.  To me this is a reminder of terrifying fact that our country predominately retails (largely imported goods) and creates services for end users instead of producing industrial products for domestic commercial market or export.  

And it's astonishing that not a single of the quoted "dignitaries," not even for shits and giggles, raises a voice of reason and demands that the politicians stop sticking crutches into the armpits of clay giants and let them fall; that the Feds stop buying long-term bonds with our social security contributions; that the Supreme Justices stop passing laws guaranteeing highest ever compensations for CEOs of health-management companies.  Is Lynn Tilton and I are the only people who understand that only by supporting smaller privately-held DOMESTIC businesses we may be able to revive the economy?  That if "the powers that be" don't start this process right away, the country will become more and more restless?