Reply #32: The Feeling that You've Heard this Bull Before (Mogambo)

[54anickel]

http://www.kitco.com/ind/Daughty/jan252006.html

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But just to show you that the Fed is still kicking, the category of Government Securities Bought Outright went up by $1.3 billion bucks. This, if you look up "Fraud, Ultimate, Government" in your Handy Mogambo Encyclopedia (HME), is when a bank that is a de facto arm of the government prints up money to buy government debt. Net result: Government spends, further indebting the citizens, and the banks create the money to buy the debt, which increases the money supply, which will make prices go up (price inflation)! This gives us stupid American taxpayers and even more stupid American voters a DOUBLE whack to the head (DWTTH); more interest expense to pay, more debt to pay off, and higher prices to pay from now until forever. So I am really, really, really, really huffy about that, too.

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But things economic must be really worse than advertised, as Ford is laying people off, General Motors is laying people off, Chrysler is laying people off, and lots of companies are laying people off, and I am hearing a lot of stories about how total revenues were down (which is bad) but profits were somehow up (which is good) all over the place, which means that they must have cut costs. This is what passes as brilliant management today.

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- The yield curve has actually inverted, as short-term interest rates are now higher than long-term interest rates. This is always a very bad sign for an economy, as bond players are betting that the economy will be so weak that the Federal Reserve will be forced to drastically lower interest rates, thus increasing the value of their long bonds.

Peter Grandich hears me talking about an inverted yield curve and says, "I think an inverted yield curve, no matter how small of an invert it was, is one of the most reliable indicators around." Reliable indicator of what? Using my amazing Mogambo paranormal abilities (AMPA), I not only know EXACTLY what he thinks it means, in all its far-flung ramifications, but I also know how to shorten it to the pithy "We're freaking doomed!" because an inverted yield curve means we are facing a recession, and with this heaving, bloated, over-indebted, over-leveraged, mal-invested, idiotic big-government economy, we cannot possibly stand the strain.

What in the hell stock investors are so happy about, on the other hand, beats the hell out of me.

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