Friday, June 13, 2008

just can't help myself

It finally got to me.  I have NO time for this, but I just can't stop myself.

The Stock Market- the "financial sector" - is entirely populated with absolute idiots.

And, just for fun; most of them are certifiable gambling addicts, to boot.  Self-deluding, in the extreme.

Two stories, running simultaneously in the New York Times, right now; prove this beautifully.

Gasoline prices rose 5.2 percent in May and were up 21 percent compared with a year ago, according to the report, released by the Labor Department on Friday. On an annual basis, inflation ran at 4.2 percent compared to May 2007. The rise in the index was slightly more than economists had forecast.

Food prices rose again in May as Americans paid 5 percent more for foods and beverages than a year ago.

... Minus the cost of food and gasoline, inflation was 0.2 percent for the month.

Ok, got that?

Story 2; "Stocks Up After Inflation Data."  This is the entire story, here; a note;

NEW YORK (AP) -- Wall Street is extending its gains in early trading after a pair of economic reports point to the Federal Reserve keeping interest rates stable when it meets later this month. The Labor Department's report on core inflation, which measures price increases but strips out volatile food and energy costs, met investor expectations.

The Reuters/University of Michigan preliminary reading on consumer sentiment for June has fallen to 56.7 from 59.8 last month. The market had expected the reading would remain unchanged.

Taken together the reports seem to make the case for the Fed to keep rates unchanged, rather than raising them, when it meets June 24-25.

The Dow Jones industrial average is up about 124 at the 12,266 level.

Oh.  My.  God.

So- the market is ignoring the real inflation rate- by stripping out food and energy.  Why?  Because they want to, is why.  It makes them feel better.  And they're ignoring the fact that their pundits thought wrong on consumer "sentiment" (otherwise known as "consumer confidence", a measure of how willing consumers are to believe in the future, and spend money).  

Pundits right?  Yay!  Pundits wrong?  Yay!

My jaw is just dropped, right on the floor, at how anyone can claim, with a straight face, that these morons know what they're doing.

The only possible action from a responsible government would be to move in with troops, and lock 100% of the inhabitants of the "financial sector" in a loony bin.  Or maybe Guantanamo?  They're about to go out of business there, I understand.  We could consider it a Federal employment Initiative; keep that facility working.


On the good side: also in the NYT right now: Speculators Become Targets.

Legislators are aware that constituents are angry about speculators driving up food prices (and fuel prices).  And they're starting to call, seriously, for action.

Did your emails and calls a couple weeks ago have anything to do with that?

YOU BET THEY DID!!!  I guarantee it.  It's quite possible that your email was the first one that staffer read, and they kind of blew it off.  But then they got another one.  And another.  Hey, it's a trend.  And the talk started- and here is a nice fat article in the NYT- and rising awareness.

Thanks, guys, and congratulations.


DC said...

Consumer sentiment and consumer confidence are extremely important economic indicators. They measure Americans' perceptions of their financial situation and whether it's a good time to buy big-ticket items. Consumer spending represents about 70 percent of U.S. gross domestic product, so when consumer sentiment/confidence fall, it's not a good sign for the economy. Last month, confidence fell to its lowest level in 28 years -- and yes, surging food and fuel costs did play a huge role. You can't just look at core inflation in isolation and pretend food and fuel don't count. We're not talking about minor price swings here -- retail gasoline prices have hit a series of record highs and topped $4 a gallon for the first time ever, and futures prices for oil and key commodities like corn have also climbed to record levels.

Investment bankers on Wall Street may be greedy as hell, but they're not stupid (well, not completely). I can't believe for a minute that they really think the economy isn't going down the toilet. They're just gambling that they can grab everyone's money and parachute out of an airplane going into a death spiral before it hits the ground and explodes. They'll risk it all for one dollar more.

Melissa said...

why on earth they would take out the cost of fuel and the cost of food from these sorts of statistics is beyond me. Whenever I hear about this sort of thing I scratch my head. A new sofa, a new dishwasher, a new car, that's all stuff people want, not need, so what does it really matter what happens to the price of these things? the two categories they are ignoring, food and fuel, are things that people need to buy, so I don't see how taking these numbers out of the picture ever makes sense. When I hear that these numbers are being excluded, it makes me discount any conclusions drawn.

Anonymous said...

For real CPI calculated the way it was done pre Clinton look to the Shadow government Stats site @

Mr Williams recreates real CPI, GDP, M3 money supply growth and unemployment stats, very usefull.

While I agree there is an issue with speculation especially in food, oil is definately in shortage with a 2 million barrels/day shortfall being made up by ethanol and other substitutes.

If regulators clamp down on the futures markets in the U.S. do you know what's going to happen? 100s of billions of dollars will be converted to yen, Euros and other currencies and moved to other futures markets, driving the U.S. dollar even weaker which will raise U.S. inflation even higher.

One country or one market cannot solve the speculation issue, this it has to be a world solution and there will always be some market willing to make their vig on futures trading.

My belief is the entire Financial system is about to collapse on it's own greed and stupidity, today's commodities costs are nothing to what they will be when money becomes worthless. I've moved some savings to silver and gold because what happened in Argentina, Zimbabwe and other countries could happen in North America too.

Greenpa said...

DC- ok, there's a conflict there between fine meanings of "stupid", and "fool", though. It's quite possible to be brilliantly intelligent- and a total fool, in my lexicon.

Besides which- it's the gambling addict part that may be the biggest force. Very smart gamblers on a losing streak- become wildly irrational, believing the next throw of the dice IS going to save them.

Anonymous said...

The Wall Streeters made their money, their clients mostly didn't. The same public that loves George Bush is the the public that has been fleeced, and the persons at the very top of the pyramid put their money in investments outside the US or hard commodities {copper, gold, platinum, titanium} after 2005. I could make this into a 500,000 word treatise, but there's no paycheck here, so I'll pass. Everyone involved even moderately seriously with US Government statistics knows very well that they are cooked, blackened in fact, they are total lies. No news there.
As to the speculator article, it offered no hope. It's a Washington election year hearing festival, but the speculators will not be affected, not even the abusive and manipulative speculators, which is what the story really covers, who seldom if ever are penalized. The most we can hope for is the same thing we saw during the last month when several times the Big Oil Boys
had to sit through a civilized chastising in front of a Washington Committee or two.
Bottom line, as they say in the biz and finance world, don't rely on the government statistics, the mainstream press or the regulatory or legislative branches {probably forget the damn executive branch too} for succor as these fine ladies and gentlemen are fast about covering their own privileged glutei at present, and if it were not an election year, the hearings wouldn't be happening either.
Citizens: rough seas ahead, batten down the hatches.

DC said...

Yeah, Greenpa, they're totally addicted to gambling (especially with other people's money), and their obsession with making "just one dollar more" (than whatever they have at the moment) is pathological. In a past incarnation in this life, I sat in on meetings and phone conferences with some of the big boy bankers, and I can tell you that a few of them had a complete, complete disregard for everything except financial gain. Family, friendships, healthy relationships with coworkers, poor people, the environment, etc., etc., etc. meant absolutely nothing to them. They had entirely lost their humanity and defined meaning and success exclusively in terms of dollars and cents. You hear stories about these kind of people, but to observe it first hand was really scary . . . and sad . . . and scary.

I'm glad there are people like you out there who are on the opposite end of the spectrum. It gives me some hope.

Anonymous said...

One of my relatives is a Risk Analyst, and his team of 7 people (he's the junior one) lost the mortgage bank he works for $7 million dollars last year.

Yet he's still employed. And still trying to give me economic advice. And assures us the worst is over - when any idiot can drive through his suburban neighborhood or my urban one and see the foreclosed houses, the trucks and SUVs for sale, the kids wandering around unsupervised because both parents are working and can't afford child care or summer programs.

I hope to God I'm wrong about where the world is headed - but being conservative with spending and extravagant with savings and investment in the stuff we need to live is not going to do me wrong, either way.

EJ said...

Midwest flooding & food prices in NYT tiday: Last week, the price of corn rose above $7 a bushel on the commodities market for the first time, and soybeans rose sharply, too, reacting to the harsh weather hampering crop production across the Midwest. In addition to Iowa, the farming states of Illinois, Indiana, Wisconsin and Minnesota have suffered an unusual level of flooding this year.

Soaring global demand in addition to the increased use of corn for ethanol, an alternative fuel, have shrunk the worldwide supply of staples that are the core of practically every continent’s diet.

Meanwhile, the price of oil has jumped, raising the cost of producing crops and feeding livestock and causing an increase in grocery bills here and abroad, sparking riots and protests in at least two dozen countries.

At a moment when corn should be almost waist-high here in Iowa, the country’s top-producing corn state, more than a million acres have been washed out and destroyed.


TB said...

Related reading on energy hedge funds and the "Enron Loophole" that makes such speculation possible: here.

There's even a video: here.