The Joke Is Getting Old

To begin with, The Fed Is NOT Going To Raise Interest Rates! Please, give that idea a rest. I don't care how horrific Tuesday's PPI numbers may be, the Fed will not raise rates in 2008, PERIOD!

Index: Weak economy may dodge a recession
NEW YORK (AP) -- Gas prices are high, food's more expensive and the job market's cold, but the U.S. may still avoid a recession.

That was the message Monday from a private business group whose index of leading economic indicators defied expectations and inched higher in April.

The New York-based Conference Board said its forecast of future economic activity rose 0.1 percent in April, matching a 0.1 percent increase in March. Economists had expected a 0.1 decrease in April.

The index is designed to forecast economic activity in the next three to six months based on 10 economic components, including stock prices, building permits and initial claims for unemployment benefits.

"These data certainly reflect a weak economy but not one in recession," said Ken Goldstein, labor economist at The Conference Board. The small increases in March and April, which followed five months of decline, could be a signal the economy may not weaken further, he said.

Six of ten leading indicators the Conference Board measures rose in April, including stock prices, interest rate spreads and housing permits. Those increases more than offset the sharp declines in average weekly hours worked and consumer spending.
http://biz.yahoo.com/ap/080519/economy.html

Yeah right... "...its forecast of future economic activity rose 0.1 percent in April..." 0.1%? Do these geniuses even have an inkling of how PUNY 0.1% is? 0.1% is ONE TENTH OF ONE PERCENT. IT IS A FRACTION OF 1%. IT IS 1/10! If 0.1% was any smaller it would be zero! Given a margin of error, 0.1% could just as easily be MINUS 0.1%. And these economic geniuses have the nerve to suggest that the economy "may not weaken further"? Yeah, and the price of gasoline dropped in April. Give me a freaking break!

Have these knuckleheads at The Conference Board [nice name by the way] checked the price of Oil lately? Oil closed at an ALL TIME high today ABOVE $127 a barrel. A snowball has a better chance of doubling in size in hell than the economy has of not weakening in the months ahead. What ever credibility The Conference Board [what a stupid name] had previously, it all evaporated with this ridiculous assertion this morning. 0.1%! LOOOOOOOOOOOOOOOOOL!

Just what is this Index of leading Indicators anyways. [Besides wishful thinking.] For the answers to that we go the to answer masters at Wikipedia:

The Index of Leading Indicators is an American economic index intended to estimate future economic activity. It is calculated by The Conference Board, a non-governmental organization, which determines the value of the index from the values of ten key variables. These variables have historically turned downward before a recession and upward before an expansion. The single index value composed from these ten variables has generally proved capable of predicting recessions over the past 50 years. Those who have an activist view believe in discretionary monetary and fiscal policy. They believe that the index of leading indicators can provide an early warning system so that policymakers can shift toward macroeconomic stimulus when the index fails.

One problem with the index of leading indicators is that the time lag between the signal of a recession and the actual recession has varied widely. Also, on a few occasions, the index of leading indicators has fallen, and no recession occurred. That is, the index has given a few false alarms. Hence, policymakers must react carefully to the changes in the index.


The 10 components of the Index include:

1. Average weekly hours worked by manufacturing workers
2. Average number of initial applications for unemployment insurance
3. Number of manufacturers' new orders for consumer goods and materials
4. Speed of delivery of new merchandise to vendors from suppliers
5. Amount of new orders for capital goods unrelated to defense
6. Amount of new building permits for residential buildings
7. The S&P 500 stock index
8. Inflation-adjusted monetary supply (M2)
9. Spread between long and short interest rates (the yield curve)
10. Consumer sentiment


While this index correctly forecasted each of the 7 recessions during the 1959-2001 period it also has forecast 5 recessions that did not occur.

This naturally brings to mind a famous saying by economist Paul Samuelson: "Economists have correctly predicted nine of the last five recessions."

Predictably unpredictable. 0.1%! Cancel the alarm. The economy is saved! Consumer sentiment is at an ALL TIME LOW. How could I ever think the economy might weaken further in the months ahead? The Index of Leading Indicators says it isn't so. I bow before thee... Your offering of hope is immeasurable. So what if Oil is $127 a barrel...

What's this?

No end in sight to market woes say Trichet, Buffett
LONDON/FRANKFURT (Reuters) - The end to the credit crunch is still not in sight, European Central Bank President, Jean-Claude Trichet and Warren Buffett, the world's most famous stock market investor, warned on Monday.

"These are demanding times, challenging times... It is an ongoing, very significant market correction," Trichet told BBC radio in Britain.

Buffett, whose years of shrewd investing have earnt him a fortune estimated at $62 billion by Forbes magazine and the nickname "the sage of Omaha," struck a similar tone at a news conference in Frankfurt.

"I'll talk about the United States. I don't think the effects of the credit crunch are far from over at all. I think there will be rippling secondary, tertiary effects."

Trichet and Buffett's comments come after U.S. Federal Reserve Chairman Ben Bernanke said last week the healing process from the credit crisis would take some time.
http://biz.yahoo.com/rb/080519/buffett.html


But, but, but...the Index of Leading Indicators has "indicated" that the economy may not weaken further. I saw the headline. It must be true. The Dow was up today. Maybe Mr. Buffet and Mr. Trichet have their facts mixed up. I swear I read at least a dozen times in the past 10 days that the credit crisis is all but over. These guys must be mistaken. I'm going to buy the Dollar just to prove them wrong!

Fed's Direct Loans to Banks Climb to Record Level
May 15 (Bloomberg) -- The Federal Reserve's direct loans of cash to commercial banks climbed to the highest level on record in the past week as money-losing lenders increasingly turn to the central bank for funds.

Funds provided through the so-called discount window for banks rose by $2.8 billion to a daily average of $14.4 billion in the week to May 14, the central bank said today in Washington. Separately, the Fed's loans to Wall Street bond dealers rose by $75 million to $16.6 billion.

Policy makers have increased the attractiveness of direct loans as they seek to alleviate the impact of the credit crunch. Fed Chairman Ben S. Bernanke said two days ago that while markets have improved, they remain ``far from normal,'' adding that the central bank is prepared to increase its twice monthly auctions of funds to banks.

``The Fed is providing an extraordinary amount of liquidity through various mechanisms,'' said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut. While ``credit markets are showing signs of improvement'' there is ``a long way to go,'' he said.
http://www.bloomberg.com:80/apps/news?pid=20601087&sid=aur2QcWbKf2U&refer=home

"A long way to go". I guess I better not ask Dad again, "Are we there yet?" Geeze, they just told us last week that the credit crisis was over. I'm so confused. We're in a recession, we're not in a recession. The credit crisis is over. The credit crisis is not over.

PEOPLE! THE WORLD FINANCIAL SYSTEM IS F*#!ED UP! IGNORE THIS NOISE. IGNORE THE BLATHERING NONSENSE. IGNORE THE LIES. IGNORE THE WISHFUL THINKING. The bad part of this mess hasn't even shown up at the party yet, and the ugly part hasn't even gotten dressed yet. Call your broker ASAP and buy some Gold and Silver. You'll sleep better at night knowing what few do. THE TRUTH!

This just in:

US to Peg Dollar to Rat's Ass
Fed chairman Ben Bernanke says "We were looking for a new stable pre-set intertemporally constant fixed asset to peg the greenback against, and the rat's ass was it".

The US dollar has been under siege lately due a combination of factors including the sub-prime interest scandal, declining house prices, soaring gold and oil prices and a commitment to fighting wars really far far away for reasons nobody can remember.

Bernanke surprised many by reverting from a fiat currency to one based on fungible assets. It seems that when the subject was brought up with the president Mr. Bush was reluctant to maintain a Fiat Currency while GM an Ford are not doing so well, "It just doesn't seem like the American thing to do."

Reverting back to the gold standard was not an option as the price of gold has increased as investors have flocked to it with the decline in the dollar. Pegging the dollar to it now would be disastrous. Defending the huge amounts of gold required in one location whether it's Fort Knox or elsewhere would simply be an open invitation for George Clooney and Brad Pitt to develop a devilishly clever plan to clean out the place and make US marines look foolish in the process. "I don't think we have a game plan to defend ourselves from those slick movie stars" admits Bernanke.

"The beauty of the rat's ass is that it is safely distributed in the streets and sewers of most cities. It is mobile, capable of evasive maneuvers, can defend itself when under attack on its own and right now its value is about as low as it can get.""The dollar can only go up from here." Bernanke announced smugly.
http://www.thespoof.com/news/spoof.cfm?headline=s2i35671