The markets were pretty dull yesterday, with the currency and metals markets trading within a fairly tight range. Data released yesterday morning showed that American consumers increased their spending by more than economists forecast in February. Purchases were up 0.7% for the month, the most since October of last year. But more than half of this gain in spending was due to higher prices as fuel and food prices continued to demand a larger percentage of consumers wages. Luckily incomes also climbed in February, though not as much as spending and below what economists had expected. Yes, the US consumer is going further into debt, just what the government wants, but not very good news for the long-term future of the US. Other reports showed that pending home sales increased just over 2% from last month, but were down 9.3% from a year ago. Today is pretty light on the data front, with the CaseShiller Home price index out this morning and consumer confidence numbers released later. Neither is expected to be much different than last month, and both will likely show that the US economy is still muddling along.
[Read more...]You say Obama; I say Ozawa! You say boom; I say ka-boom!
The Nobel Prize committee has never withdrawn a prize. It might want to consider it. In Tuesday's New York Times, prizewinner in economics, Paul Krugman reveals either that he knows nothing about economics…or that there is nothing worth knowing in it. We're beginning to think it's the latter.
[Read more...]More Stimulus?
Today has seen a return to risk aversion, after watching the currencies have their way with the dollar, yen (JPY), franc (CHF), and Treasuries on Friday. Remember on Friday when I told you that in the “old daysâ€? you could bet a dollar to a Krispy Kreme that if the Jobs Jamboree was bad, the dollar would get sold, and if it was good, the dollar would rally, but that had changed during the financial meltdown… And so it was on Friday… The labor report wasn't as bad as it was thought to be, but the dollar got sold.
[Read more...]Fed Vows to Maintain Public Financial Health
Extend and pretend…
That's the government's way of handling the crisis. Extend credit and cash to those who don't deserve it. Then, pretend that everything is okay…
But the problems don't go away. They just get stretched into the future…
What did the feds do for GM? They took over the company. They extended cash and credit. They put in place a “Cash for Clunkers� program to encourage people to buy cars. Then, they pretended that the problems were solved.
[Read more...]The Invaluable Work of Economic Scientists
Wolf, Stiglitz, Krugman – we love these guys!
They pushed the world's governments to undertake huge “stimulus� programs. Of course, the stimulus programs didn't work. They couldn't work. All they could do was to disguise the facts and delay the necessary adjustments.
But these fellows don't care about that. They are the technicians, scientists, and engineers of finance. They have measures of financial health – GDP, employment, inflation, etc. They may not be able to make anyone better off…but they can damned sure move those indicators. At least, they believe they can.
[Read more...]Why Stock Market Rallies Aren’t Worth the Hype
First, the good news: Stocks staged a mammoth rally yesterday. The Dow managed a 2.5% run, while the broader S&P 500 scooted ahead 3%.
What a wondrous achievement this must have seemed like…to anyone who spent the previous month on the golf course, far away from their computer screen.
[Read more...]Misguided Gratitude for Government Stimulus
Well, August washed up. It was the worst month for US stocks in almost a decade. And yesterday didn't help. The Dow couldn't manage a rally. It rose just 4 points.
The British newspaper, the Telegraph, has the story:
“It's pretty clear the US economy has hit a wall,� said Barry Knapp, head of US equity strategy at Barclays Capital. “The macro picture is dominating and, right now, it's not clear what's going to get the market out of this spot.�
[Read more...]Inflation Follows the Stimulus Boom
Peter Schiff of Euro Pacific Capital notes that the Federal Reserve, and the idiots like Paul Krugman who genuflect at the altar of Keynes, is not done with destroying the economy, but that “Bernanke and his supporters have said that their stimulus will be withdrawn as soon as the recovery takes hold in earnest.� Hahaha!
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Spend It Like You Stole It
QE2 is ending in June. But globally, QE3 has already begun. As usual, Japan is the pacesetter. As temperatures rose at its Fukushima reactor so did Japan’s monetary base – at the rate of 100% per week! What happens to all this new, hot money? No one knows, exactly. But today, at The Daily Reckoning, we have advice for everyone – central planners, politicians, and householders, too: if you have money, pretend you robbed a bank.
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