Board-Ansicht
Mix-Ansicht- mit 'geputzter' Brille gelesen.............. - Emerald, 18.09.2003, 06:37
mit 'geputzter' Brille gelesen..............
-->One more from the Investment Rarities site:www.investmentrarities.com
BEST OF MARK ROSTENKO
September 17, 2003
Throughout this economic slowdown, consumers have gone on spending like there’s no tomorrow. At the coaxing and prodding of Grand Master Bubble-Maker Alan"I didn’t know it was a bubble" Greenspan, consumers have kept on borrowing and digging their financial graves still deeper. That’s not the stuff that genuine recoveries are made of.
Recoveries are made of getting the financial house in order and consumers building"pent-up demand" through fiscal restraint. What did we see prior to this recovery? We saw auto sales hit records. We saw consumers sell bigger pieces of their homes back to the mortgage company and trade them in for more toys and goodies.
All the stuff that’s supposed to be put in place for a recovery hasn’t been put into place. You know why the stock market is higher? Why the data is coming in a bit better these days? Because the Fed has been pumping liquidity into the system like Rosie O’Donnell has been pumping Ho-Hos and Fruit Pies into her system.
Yeah, some things are looking a bit better these days. It is recovery? No! It’s a knee-jerk reaction to cheap money. What happens when you give a credit-addicted consumer access to cheaper and easier cash? He spends it. That isn’t a recovery. It’s just an addict out enjoying his latest fix.
"But isn’t that how a recovery works?", members of our astute readership query."Isn’t it the Fed’s job to create looser monetary conditions so that folks will get back to spending and a recovery will ensue?" To which I reply"Yes, but a recovery from what?"
In order to have a recovery you need to lay a foundation for recovery. Look at where we are today. We’ve seen thirteen consecutive rate cuts, trillions of dollars worth of"money" created out of thin air, and a record budget deficit. This is an economic recovery like ‘how many consecutive cigarettes a lung cancer patient can smoke’ is a measure of the efficacy of his iron lung.
Of course the data are looking a bit better these days. How can they not blip up somewhat when trillions of electronic dollars have been generated out of thin air and
lobbed at the consumer?
Let me put it this way. If next week the feds sent everyone a check for $500 and the following week retail sales spiked up a bit, would anyone be stupid enough to mistake that for a recovery in retail sales? Well folks, that’s pretty much what has happened between lower rates, refinancings and a few tax cuts. At some point folks were bound to hit the stores and the data was bound to blip upwards.
If you want to call that"recovery", so be it. But the trick to this gig is to spark a SUSTAINABLE recovery. Handing everyone a check for $500 stuffed inside a greeting card that says"Shop dingbat, shop!" doesn’t generate a recovery. It simply generates parking lots full of dingbats.
Get this, dear reader: it has taken unprecedented and monumental efforts to cause the data to cough up a little whimper of improvement. The buffoons at CNBC are giddily proclaiming"Well golly Gomer! That’s great! Finally all those efforts are starting to show up in the numbers."
What they should be asking is"Why is it that three years into this thing, with interest rates near record lows, government spending at record levels, following tax cuts and all kinds of other incentives, are we now witnessing only slight signs of improvement?"
(Copyright 2003 by Mark M. Rostenko and The Sovereign Strategist)
PS:
Herr von Pieren will die Samstags-Arbeit einführen, damit sich das
Konsum-Verhalten wenigstens in der BRD schnellstens aufhellt. Na denn!
Emerald.
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