I was originally going to write a post about how we always hear about the “New World Economy” prior to any boom / bust period. This time I think the rules have finally changed as the United States is losing if it hasn’t already lost its status as the number one superpower, we are now the largest debtor in the world, and continuing to bail out thee who fails.
Whether or not this time is different and we will recover is debatable. What concerns me is the continuation of the Feds backing up private industry. Had the United States government let Fannie and Freddie fail what would have happened? Well, the stock market would have surely taken a tank, interest rates would have gone up versus dropping about .5%, and the dollar would have probably fallen dramatically.
So what do we get? – The Dow rises 290.04 points or 2.58%, the NASDAQ rises 13.88 or 0.62% and the S&P rises 25.48 to 2.05%. Wait a minute here… The taxpayers meaning you and I get to foot the bill for this. At a minimum the treasury is ready to pump in $100 billion into each company… oh wait are they really companies or departments of the government. I guess that is up for the next presidency to decide. Nothing like passing along the responsibility of the crisis.
So, I present a question about all of this. This being the cancer’s on the balance sheets of financial companies, a negative GDP that is still positive according to the gov’t, a extremely high CPI, and declining production and consumption.
– Is it possible that we are going to see extreme volatility in the markets until the elections? Probable, but as we have seen with every governmental intervention since 2007 there is a quick boom, and then continuation of the contraction. Contraction meaning declining stock market prices. The USG lagged in making a decion on the Fannie and Freddie debacle due to the upcoming election. The longer they take the closer the election takes place. Due to the recency effect people recall things closer to the present then the past. Let’s just say that the economy looks somewhat okay going into the election. What are the odds that McCain will have a better chance of winning over Obama? Considering the past two elections…
I didn’t mean for this to go into a conspiracy theory or that I believe there is manipulation in the markets, but nothing seems to make sense at the moment. What does make sense is that my dollar is losing its purchasing power, my condo is declining in value, prices are rising, and the US is bankrupt. Oh but wait we can continue to print dollars like in the
Posted in Debt, Economy, Federal Reserve, Finance, Investing, News, United States Dollar
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Tagged bankrupt, bill, conspiracy, Debt, economy, GDP, government, interest, manipulation, rules
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When the numbers emerged today I was shocked. After my initial amazement sunk in I started to wonder what was “really” going on here… My eighth grade science teacher (yes 8th grade was a long time ago) managed to prove through statistics that I and everyone else in the class didn’t exist. Fishy indeed! If I didn’t exist according to statistics, but was still sitting in the classroom with the other student and the teacher himself then one of two things were completely incorrect. One might have been an illusion (think The Matrix)… Well, we know it was the stats because I’m sitting at my computer writing this entry. So, if we can prove something doesn’t exist through statistics, which are really just a mathematical representation of data, can we manipulate our results through statistics? I highly doubt that the GDP is actually positive. Take a look at shadowstats.com, which undoes as much of the governmental massaging of the numbers as possible. At the moment we are actually at about a 9% annualized rate of inflation, and GDP is negative. Wait, GDP was just shown to be 3.3% annualized… again what does this all mean? We aren’t in a recession or at least that is the official figure. Of course we aren’t because to be in a recession requires two consecutive quarters of negative growth. Remember: We are in an election year! Interestingly according to shadowstats.com, we have had a negative GD since 2004. I’m just skimming the surface and attempting to draw to your attention that what you see isn’t necessarily what you get. We are in a recession, and have been in a recession for quite some time now. However, the government wants us to believe that everything is okay, and that the economy will recover. My fear is that all this manipulation will lead to an even larger bust. Look around you… are you seeing more for-sale signs of homes, more for-lease signs around town, people shopping less, more concerned about their jobs, etc…? These are not signs of economic growth, but fear. Let’s make a prediction as these are always fun. If I’m right I get to stroke my ego a bit, and if I’m wrong… well I’m wrong. The manipulation will continue as long as possible, but the market will prevail. Once it realizes the degree of major contraction in growth and productivity people’s sentiment will further shift as it is starting to now. Spending will dry up, credit won’t be lent, defaults will further, housing will keep falling, the US stock markets will free-fall, the dollar will resume its decline, and gold, silver, and commodities will eventually resume their bull market. Wow that is a mouthful. Might I be wrong…? Of course! If I could predict the future I would own an island and call it Gauntlett. I’m going to go as far as to say that our markets are severely manipulated NOT by speculators, but by various government officials and policy. Going into the election with a perceived strong economy will give the incumbent’s party an edge that just might help them stay in office. We will know in November. After November the Fed won’t need to have such a loose monetary policy and might start to think about inflation and raise interest rates if the market doesn’t demand it sooner due to the risk of inflation to your savings and purchasing power. (Note: I didn’t say higher prices because what is really happening is your dollars are becoming worth less as more are put into circulation by the Fed.) I’m pissed to say the least… First Bear Stearns and now the Macs. Why do I as a taxpayer get the privilege of helping these overextended companies stay in business? It is bad enough that the Fed keeps “printing” money, which keeps the interest rate low and provides liquidity to an illiquid financial industry. Each time they inject money into the system they are effectively stealing from each and everyone of us who holds US dollars. My original intent in this entry is to write about the gold standard… well, actually the lack of it. Ever since we have been off the gold standard interest rates have swung wildly, and the boom / bust of the economy much more severe. When the “tech bubble” popped in 2000 interest rates were lowered (money supply increased) and it did nothing to prop of the tech market, but went to the housing market, which is now in drastic decline. The fed is what we need to be talking about in the news. Instead people in the media are talking about speculators and manipulation of markets. Today the SEC is preventing naked shorts on financial stocks. Well, why do people short a equity in the first place? Answer: They think it is going to drop in value. Is there a reason financials are dropping in value? YES So, instead of looking at how we got to this point we are going to find a scapegoat (speculators) and continue what has been done over and over again. What new regulations will be in place after all this is over? Will the US gov’t now be in the housing and banking industries? So, if automakers start to fail is the fed going to open the discount window to them as well? As a taxpayer I’m excited to be loaning money to failing companies.GDP growth 3.3% annually? Up from 1.9%? Right…
GDP cries foul!
What recession?
So what?
The election…
Double Standards