The markets displayed disturbing symptoms of Fed-itis yesterday, spasming up and down even though the central bank did nothing even remotely interesting, let alone earth-shattering. Monetary policy was left unchanged, which is the only thing that could have happened. To say the markets overreacted begs an explanation as to why. We can only infer that there are still many investors who cling to the notion that the central bank can jump-start an economy in the throes of a debt deflation by encouraging more borrowing. They might as well put their faith in lunar cycles; for if easy money were capable of rejuvenating the financial system, then why has an estimated $13 trillion of stimulus produced no decisive upturn, nor barely even a blip in a still-deflating housing market?
Despite these glaring failures of monetary and fiscal policy, dreams of a recovery persist. We don’t want to come down too heavily on the optimists, since we’re going to need an exuberant army of them to get the economy rolling once debt deflation has run its course in perhaps another five to seven years. But judging from the way securities markets have been obsessing over every pathetic speck of bullish news, we would surmise that the optimists will need to experience disillusionment and even despair before they come to the born-again zeal that can work economic miracles for the rest of us.
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No such catharsis was likely, based on yesterday’s news, however. Although durable goods orders were up slightly, new-home sales fell 0.6% in May. The latter development was said to have come as a surprise, although it could not have surprised anyone who gets his or her information from “underground” sources rather from such mainstream panderers of statistical swill as the New York Times and the network news. The latter in particular like to report on all topics without an iota of reflection, as though the raising or lowering of interest rates should in fact determine how well Americans live. The odd thing is that the newsreaders themselves, even the ones who are sinfully overpaid, must see evidence in their own lives that more credit is not the answer. If such simple touchstones of reality play a role in the way the news comes out, they are overshadowed by a specter of hope as ephemeral as winged horses and wishing stars.
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You would think that the newsreaders themselves would see evidence in their own daily lives that runs totally contrary to what the news and media reports. You would think. But this is both the idiocy and the brilliance of manipulative journalism at it’s best.
Too many don’t want to think for themselves anymore. They want to be told. And they are more than prepared to pay for the benefit of reading lies and more damn lies to substitute for real thinking. It makes me crazy. Especially when my own family and friends spout the nonsense off the 6 o-clock news as though it were real facts. And then they go further by denigrating real informed opinion as though it is some kind lunacy or uninformed conjecture (and all because it is not discussed by the mainstream media)
Has anyone else had that frustrating experience?
The PM group IMO has discounted the negative news at this point. I feel like selling but the MACD and RSI tell me not to. With the normally positive towards the July 4th. I am not selling.
The reaction cameroni describes is the daily fare of just about anyone who actually takes the time–and has the inclination–to dig deeper than MSN headlines. And yes, it will drive you crazy unless you keep repeating to yourself, “Thus it has always been.” There is a reason why bodies were found at Pompeii, and why relatively few Jews got out of Germany while the getting was good. It’s because one has to go against the commonly accepted wisdom, and that’s always been difficult, even before mass media that submerges you in ‘feel good messages’ that must be composed from some remote dimension that doesn’t obtain in my neck of the woods.
A little advice: Don’t try to convince anyone of anything, it is an incredible drain of your emotional and physical energy. Focus your efforts on 1) understanding the real market so you can be anywhere but on the rails when the train inevitably comes down the track, and 2) spend time figuring out how you can have more assurance you’ll be able to keep the fruit of your earnings and learnings.
You’re not going to be able to convince them of anything until it’s too late to do much about it. It seems to be the nature of things that it works that way. For a quick refresher in how it all goes, look up ‘Cassandra’ on Wikipedia. Again, thus it has always been.
Almost daily, Cameroni.
@Cameroni — I have that experience all the time. Initially, it is what lead me to investing. I was looking around at the lives my friends and neighbors were leading, wondering what I was doing wrong. I was thinking about my family’s income and station in life, knowing that we have it pretty good, but not understanding how everyone around us seemed to have so much more. A decent basic understanding of math helps, and sadly, it seems most Americans don’t have that. Karl Denninger always writes that the numbers don’t lie, but if you don’t know how to interpret the numbers… I do most of the family shopping, so I knew that in ‘04 – ‘07, while the government kept telling us that we had little to no inflation, the prices of everything my family uses were going straight up. I suspected that much of the material goods of others were purchased with borrowed dollars, but I also feared that perhaps I was just rationalizing my own sour grapes. Then, I discovered the blogs like Mish, Calculated Risk, The Big Picture, etc It was life-changing to discover that there were others who thought the same thoughts, and had research to back up their opinions. I found the particular issue you describe to be very evident during the presidential campaign, especially with respect to the mainstream media’s treatment of Ron Paul. It was obvious that the media and the “main” candidates had decided what issues would be discussed, how they would be framed, etc., and every time Dr. Paul tried to reshape the debate he was marginalized. What’s that saying about citizens getting the government they deserve?
Me2Cameroni, Planet Mercury et al:
Beware Monopoly Media Mind Games hazardous to our wealth.
For instance, WEB slinger told CNBC yesterday:
BUFFETT: ” Well, I don’t worry about deflation at all. We won’t see deflation in any significant amount in your lifetime, which is more relevant than my lifetime.”
Really. What about GDP and (M-3) contracting over 12% the last three quarters so far? Next you’ll be telling BRK shareholders earnings impaired by weapons of mass financial destruction don’t matter. Oh. You did.
Media may hide or misrepresent, but Mr Price doesn’t lie, even if we are at the top of the food chain. Anyone who missed the exquisite House grilling of Ben Bernanke today simply cannot rely on monopoly media to report the inconsistent claims and inconvenient truth correctly. But Mr Price will, perhaps after he gets over 4th of July and Labor Day liquidity-driven nostalgia.
Meanwhile, Mr FAZ may retrace some of that decline from 198 as Iran, North Korea, China and Russia draw US into war yet again…
Regards*Rich
PS: Myke yesterday asked what the effect of deflation is on gold.
Thought we had addressed that before – it goes down like everything else!
The unholy Troika of BB, LS and HP/TG spent $13 T as Rick notes, and gold went down from 1033.90 highs in March 2008. Hardly inflation folks.
Widespread Homestake Mining Dow Charts show this except for the two years before gold was stolen from American citizens and repriced from $20 to $36 an ounce. At $42 an official ounce now, with no audit of Fed, Mint or Treasury holdings since Ike was President, do we dare think gold may be headed down to meet officialdumb somewhere in the middle?
Check the charts. They don’t lie about Mr Price:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3251493
Regards*Rich
BTW, $20 to $35 gold manipulated back when we had a gold standard with savings.
We have neither today and Mr Media is fine with that.
We’ll keep watching Mr Price, listening to Mr Media at turning points, thank you…
You guys make a good point about the Cassandra thing.
I believe it was Gary North who recently phrased it best, when he said (paraphrasing)
If you tell them all the time, and you are wrong, you will be mocked, and if you are right, you will be despised. And when they realize that you did what they should have done, they will call you heartless when you refuse to share.
Thus, its best to keep ones mouth shut, esp. as to the latter issue (to all those who will believe that you put your money where your mouth was).
Only perhaps for the most close family members may one deviate from this.
Plus, you will be seen as a downer by everyone else, people want ot hear the happy talk, and they don’t like feeling bad when faced with the truth. Because the manipulators merely tell most people what they know these people want to hear, they seem credible.
Who wants to be known as negative person?
Finally, just look at my state, NJ. With all the sheanigans, etc, there are plenty of supporters of the towns’ budgets, the school distructs’ budgets, the county budgets, etc, and fighting any of that is pretty quixotic. Apparently, none of these people are hurting enough yet to say enough is enough.
No WAY could you get a Proposition 1 on the ballot here, let alone get it passed.
From that point of view, one almost wishes for the real crunch, which must not be here yet…
cameroni said, “And then they go further by denigrating real informed opinion as though it is some kind lunacy or uninformed conjecture (and all because it is not discussed by the mainstream media)”
jskeelz said, “I found the particular issue you describe to be very evident during the presidential campaign”
Having volunteered for the RP campaign, and having become a state GOP delegate for RP, I can say that people don’t want to care. At the state GOP convention, one guy actually called my a liar after I said Bush admitted on TV there were no WMDs in Iraq. Some of this stuff is on mainstream TV, but it is done quietly and only once. Like the video of WTC7 free-falling into it’s own footprint, maybe people don’t want to know.
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