Posted by
rycK on Sunday, May 10, 2009 12:21:46 PM
Feelgoodism and the Hokum and Blow
of Socialist Economics. We are Saved from Depression!!
All the good news and fluff from the
Oval Office seems to have convinced us that the good times are gonna roll if we
merely have the right attitudes and believe in the new system. We are in
recovery and Obama must get the credit! We are saved!
A recent book postulates the
existence of an attitudinal vector that can apparently modulate economic metrics
and perhaps reverse the massive inflation we are going to receive from the gargantuan
debt we are now mired in. We can be positive and influence the economy for the
better:
“An influential Democrat who was also one of the world’s top-ten,
highest-paid hedge fund managers last year thinks he knows which book is at the
top of the White House reading list this spring: Animal Spirits, the powerful new blast of behavioural economics from Nobel prize-winner George
Akerlof and Yale economist Robert Shiller.”
“Judging by the upbeat economic message we have been hearing from the White House, the Treasury and
even the Federal Reserve over the past six weeks, that is a shrewd guess. The
authors argue that “we will never really understand important economic events
unless we confront the fact that their causes are largely mental in nature”.
Our “ideas and feelings” about the economy are not purely a rational reaction
to data and experience; they themselves are an important driver of economic
growth – and decline.””-- What a
feeling: how emotions may yet save the economy by Chrystia Freeland Published: May 7 2009 20:35 | Last updated: May 7 2009. [Emphasis is mine in
all quotes.]
FDR tried that
for nearly a decade and then chose to plunge us into an economic wartime system that might have bankrupted our
society for generations. We are lucky he was mistaken as he thought that we would never recover after
consulting his economic advisors. His thirst for power was so great that he
willingly wasted 400,000 soldiers and risked the utter collapse of our economy.
He was that sick. Many wonder if Obama
is also that sick.
The ploy:
“But, like Washington, Wall Street really does want the scheme to work and the markets
to recover. Over the next few weeks the administration will be hoping those feelings are powerful
enough to drive the economic data.”-- Chrystia Freeland
This is so phony
as to defy imagination. The new ‘science’ of behavioral Economics is
fraught with difficulties like describing the problem of risk aversion. People have a different
view of risk and this view forces them to buy bonds rather than common stocks
even though the reward is greater. Behavioral
economics is helpless in describing this phenomenon.
The focus of this idea:
The focus here is
on the rising stock markets since March 2009 and the
salient fact that we have some kind of a ‘rebound’ since then. Yes, some folks
are buying some stocks and the averages are moving up and that is driven by
supply and demand. But, we need to factor in the detail that many corps has
already shed their excess fat, cleared off bad debt and retooled for new
business opportunities. Many will make higher profits from lower costs on the
same sales. Some companies are in a position to excel in this new market
environment and investors know that.
Thus, if true,
this is not some kind of goody-goody feel good social behavior—this results from some serious analysis and some risk taking. The
economy has not improved as the tax returns for 2009 will surely tell. We are
still in deflation and negative growth. We also have to factor in the
unbelievable amount of ‘stimulus’ money that floods the banks and then wonder
why we haven’t had a complete recovery! We have the Fed putting up some 12
trillion dollars in a 14 trillion economy in a wild scheme to cure illiquidity
and other metrics of an economy-crushing debt-driven deflationary spiral that
might still sink us. How can we be surprised when bank stocks fall 90% and then
the fed comes in with boat loads of money at zero interest and then the banks
make some small pr0fits?
An example:
When Citibank stock
prices fell from $23 down to a dollar and then raised to $3.80
last week we must think this is wonderful as it is about a 380% rise!! Actually
it is still DOWN more than 80%. Let us buy some more! Actually Citibank is a Zombie Bank and is dead. It is not bankrupt because the fed
stuffs money in their capital accounts to show that their assets and cash are
really greater algebraically than their liabilities. If we wildly print more
money the fed will also become a government zombie. Then we will be bartering
with our shoes, jugs of used crank case oil and assorted rummage.
The yoyos in
Washington even celebrated a new tranche of 500,000 lost jobs last month by
spouting the words that have come to be the ultimate cliché lately: “It could
have been worse!.” Sure, Citibank stock
could have only risen 200% and it was much better than we expected.
Here we have the
government struggling to save the UAW for political reasons and we have pushed
bond holders to the back of the bus and diluted Chrysler stock so the greedy
unions will get 55% and the bankruptcy judge hadn’t even heard the pleas and
motions at the time. The short message here is that our government wants to
subsidize an auto maker and coerce them into making green-weenie cars that fit
their current EcoNazi hysteria and investors will take the first hit and then
taxpayers will pick up the rest of the tab. We are to be happy about this?? Our worthless
government will make an Amtrak or a US Postal Service out of Detroit’s dead
businesses and subsidize the whole mess with our tax dollars the way they do
Amtrak.
This is a political
trick and not so veiled. The hope is that Obama and his socialists can give us
the illusion that what they are doing is ‘making a difference’ or ‘showing the
effects of a ‘positive ‘ change and hope that people will spend more and create
more jobs. Actually, the opposite is happening: the smart money waits on the
sidelines and picks up jewels knowing that they can make profits in certain
sectors of the economy and will avoid the rotten spots like banks and cars. Savings
are up so consumption is down. The GDP will thus fall
more. If investors really believed in our government and the magic of UAW
unionism, they would all this buying and the GM and Chrysler shares would be soaring. The
opposite is true. Their shares are nearly worthless.
This is all fluff, hokum and leftist politics at work. Watch
your investments—we are heading into massive inflation from all this printing press panic and we will pay dearly
until our phony government stops spending such huge amounts on phony social
programs.
Think about this.
rycK
Comments
to: ryckki@gmail.com