Investor Psychology: Delusional

US Q2 GDP up 1.9% vs 2.4% rise expected, fastest pace since Q3 2007
WASHINGTON (Thomson Financial) - Increased exports, a slightly less grim housing picture and higher consumer spending all caused the US economy to pick up speed in the second quarter, though not as much as analysts had expected, while overall inflation continued to rise, the Commerce Department said today.

The economy grew at a 1.9% annualized pace in the second quarter after rising at a downwardly revised 0.9% pace in the first three months of the year. Economists polled by Thomson Reuters IFR Markets had predicted 2.4% annual growth between April and June. Growth the second quarter is at the fastest pace since the third quarter of last year.

The department also revised lower its estimate for growth in the first quarter to 0.9%, slightly lower than the 1.0% pace released a month ago. And the fourth quarter of last year was revised lower to a 0.2% decline, the first negative quarter since the third quarter of 2001.
http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=66725df0-03c8-47e4-bc6a-822fe9bfe92f

Economic rebound not as energetic as hoped for
WASHINGTON (AP) -- The prospects for a quick economic recovery dimmed Thursday, with new data showing the economy grew at a slower-than-expected rate this spring despite some oomph from tax rebate checks -- and actually shrank late last year.

Democrats called for a second economic stimulus package, while the Bush administration said the growth was proof the checks helped.

Armed with government stimulus checks of up to $600 per person, Americans boosted spending on food, clothing and other items in the second quarter, the Commerce Department reported.
But the gross domestic product still increased at a 1.9 percent annual rate, up from 0.9 percent in the first quarter but less than the 2.4 percent economists were looking for.

Government revisions showed the economy actually shrank at the end of last year at a 0.2 percent annual rate. It was the first quarterly dip for the GDP since the 2001 recession.
http://biz.yahoo.com/ap/080731/economy.html

For the past two weeks Hanky Panky Paulson has been blowing smoke all over Washington, financial television, and Sunday Morning news programs about the "strong long-term fundamentals" of the US Economy. He's been blowing smoke up the asses of any Congressman or financial news talking head that will listen, that the stimulus checks Washington sent out early this summer would "provide the growth the nation needs going forward". Today Hanky Panky Paulson got a roundhouse right to the side of his lopsided noggin. The Flim-Flam Man has been exposed, his Confidence Scam revealed for the fraud that it is. How can anybody continue to believe the bald faced lies of this creature of deceit any longer? The Mother Of All Bubbles is about to burst. The Confidence Bubble.

It doesn't take a genius to figure out that if you factor in Inflation there is absolutely NO growth in America these days. Obviously the fourth quarter proves that as it has now been revised as negative even without factoring in Inflation. The only thing growing in America these days is the money supply and the noses of Bumbling Ben Bernanke, Hanky Panky Paulson, and George Bush.

A slightly less grim housing picture? What? Need proof that things won't be getting better anytime soon? Look no further than this observation: "Democrats called for a second economic stimulus package, while the Bush administration said the growth was proof the checks helped." Another stimulus package? LOL! Why? To keep the charade going a little longer? Where is the money for it going to come from? The checks helped? Mr. President, Sir, helped what? Perpetuate the illusion, I mean delusion, that the economy continues to grow, and everything will get better in the "second half"?

One month in the second half has fallen by the wayside already, and nothing is better than it was at the beginning of the month. In fact, despite all the lies, and pathetic attempts at instilling "confidence" in the economy, 1,978,000 NEW claims for unemployment were booked in the month of July. I can't wait to see what kind of fabricated jobs number the labor Department conjures up for Friday morning's non-farm payrolls report. I can only imagine the number of new jobs in construction, manufacturing, and banking were created. LOOOOOOOOOOOOOOOL! No doubt they will claim there were. But it won't be enough to offset the job loses last month. I boldly predict job losses in the month of July in excess of 125,000.

Weekly applications for jobless benefits soared to 448,000 last week, highest level since 2003
WASHINGTON (AP) -- The number of people filing claims for unemployment benefits jumped last week to the highest level in five years, reflecting in large part a new government outreach effort to locate people eligible for benefits.

The Labor Department reported Thursday that the number of applications for jobless benefits soared to 448,000, an increase of 44,000 from the previous week. That was far worse than the decline of 8,000 that economists had been expecting.

However, the government attributed much of the big jump to a special outreach program to notify people that they could qualify for up to 13 weeks of additional benefits because of legislation Congress passed in June.

When people came in to apply for the extended benefits, state claims officials discovered that many of them were eligible for another round of initial claims because they had held jobs for a brief period after exhausting their original benefits.

Labor Department officials said that these special factors played a big role in pushing claims higher last week. The jump was the biggest one-week increase since claims soared by 94,000 the week of Sept. 10, 2005, following a wave of layoffs in the wake of the devastation from the Gulf Coast hurricanes that year.
http://biz.yahoo.com/ap/080731/jobless_claims.html

Why is there always an "excuse" when there are shocking economic data released? A special outreach program to notify people that could file for unemployment? If that don't beat all. Sheese, they don't even count half the people in this country that are unemployed as "unemployed" because they don't qualify for benefits anymore. Now they make pathetic excuses like this to "explain away" a five year high in "new" unemployment claims. Puh-leeeeeez! Excuses, excuses, excuse, is that all this country has to offer anymore? "Here's an excuse and a band-aid. Run along, everything will be alright." No, it won't.

Oil falls to almost $124 on dour US economic data
NEW YORK (AP) -- Oil prices pulled back Thursday, wiping out some gains from the previous day's $4 a barrel rally, as traders bet that a cooling U.S. economy will continue to eat into U.S. demand for fuel.

...the poor readings rekindled fears of a recession, prompting energy traders to dump oil contracts on expectations that more belt-tightening lay ahead for Americans who are already skipping vacations, giving up gas-gazzling SUVs and cutting back on driving to cope with almost $4-a-gallon gasoline.
http://biz.yahoo.com/ap/080731/oil_prices.html

Yesterdays unexpected drop in gasoline supplies seemed to throw cold water on the theory that a slowing economy will diminish demand for Oil. Yesterday's EIA figures showed gasoline demand reached a yearly high of 9.47 million barrels a day. Though less than a year ago, demand for gasoline obviously remains. The fact that demand for Oil in Asia, India and Russia is growing rapidly seems to escape the America-centric analysts here that believe the world still revolves around America. For every percentage drop in American demand for oil, there is a corresponding rise in demand overseas. China and India are on major growth curves, demand for Oil there is NOT going to wane just because Americans cannot afford it anymore. As a matter of fact, Oil is cheaper everywhere in the world than it is in America because of the floundering US Dollar. Demand destruction is a lie. If it were true then a 3.5 million barrel shortfall in yesterday petroleum numbers would not have sent the oil market into a buying frenzy. There is no excess capacity in the Oil market. Therefore there is no demand destruction. Oil prices are consolidating there recent powerful gains. Dreams of Oil at $60-80 a barrel again are just that.

Stressed banks borrow record amount from Fed
NEW YORK (Reuters) - Banks borrowed a record amount of funds from the Federal Reserve in the latest week as the year old credit crisis took a persistent toll, while the commercial paper market continued to contract, signaling tough conditions for short term borrowers.

Banks' primary credit borrowings averaged $17.45 billion per day in the latest week, the second straight week this had hit a record and up from $16.38 billion the previous week, Fed data showed on Thursday.

"It shows there's a shortage of liquidity in the system," said Christopher Low, chief economist at FTN Financial in New York.

Secondary credit the Fed extended, which is usually taken out by banks in need of emergency cash, rose to $89 million in the latest week, from $34 million the week before. Although these numbers are still very small compared with primary credit, "What that tells you is that there's an increasing number of banks that the Fed is classifying as 'unsound' or inadequately capitalized," Low said.
http://biz.yahoo.com/rb/080731/markets_credit_banks.html

But, Hanky Panky Paulson told us just last week that the banking system was "sound". I guess that was just another lie intended to help the public "remain confident" in the banking system. Never forget, the first three letters in confidence are CON. The entire banking system is teetering on the edge of collapse. It continues to confound me that a MAJOR Gold Rush has not yet developed. But it will, and quite soon in fact. Unfortunately for many, when they go seeking Gold, it will be far too expensive for them. And that's why we also invest in Silver. The rise in the price of Silver in the months to come is going to be shocking.

How in the hell did the Dollar recover this morning? Gold is now $14 off its morning high. Why? Oil prices are down. Why does Gold continue to be lead around by the price of Oil? I saw an analyst claim that the Dollar was up because Oil was down. LOL! Now that folks, is amusing. There is NOTHING, NOTHING, NOTHING in the US or the World that lends ANY fundamental support to the US Dollar. It should be falling like a stone in the ocean. The only reason I can figure that this is not the case is because if it were "allowed" to happen there would be a panic. And if Hurricane Katrina proved anything, this country is ill equipped to deal with a panic situation...any panic situation. The Dollar's destruction is coming, rest assured on that. The clowns "in power" will keep it suspended in midair or rolling gently downhill for as long as they can in an effort to save as many of their kind first, before they allow the falling Dollar to crush the public when it falls from the cliff.

Gold was shot down right on cue today as it reach 925 and a 38% retracement of it recent decline from 975 on July 22. A lot of Big Money wants Gold. That's why the price was brought in to the 200 day moving average. The Big Money loves to buy the 200 day moving average. Wise investors follow the Big Money. If just 5% of all the money "invested" in general equities was pulled and put into Gold, the resultant rise in price would take your breath away. $1000 Gold is now less than five weeks away. $1200+ Gold is less than five months away. And $25 Silver is going to cause a panic somewhere this Fall.