Wednesday, July 2, 2008

Second Half Rebound Now Cancelled; Remember Who Got it Wrong

It was supposed to be more quiet here weather wise today, and very quiet tomorrow. As I type this there is thunder and lightning raging. The weather for tomorrow has now been changed to "unsettled" with flash storms. Not a good day to go fishing in a boat! Weather forecasters lately have been as accurate as all those "second half rebound" fools!

What Can Be Done When We Apply Ourselves
Non financial news can be very exciting as well! I have been following all of the Mars Phoenix Lander news as it has developed. The data is both exciting and amazing. Ice, real WATER based ice has been observed sublimating! This is incredible. Also, the geological makeup of Mars closely matches that of Earth, and not like the Moon at all. Very exciting. I recommend at least a weekly check in at this site: http://phoenix.lpl.arizona.edu/ to get updates on the progress.

Also, Voyager 2 a deep space probe has now crossed into the outer limits of our Sun's influence, the heliosheath. When compared with the same area that it's twin Voyager 1 has documented, it is clear that the local bubble is not spherical, but misshapen due to interstellar space magnetic fields. Again, just jaw dropping stuff. Use Wiki for Voyager program info, but here is a an idea where the Voyager and Pioneer probes are as of now:
Second Half Rebound Now Cancelled; Remember Who Got it Wrong
Now I want to be fair here. I understand that economic issues are complex and hard to see clearly in real time. There is getting something wrong because of outside events. There is missing a call because of bad data. It happens. Nobody can be expected to be perfecto. I have no gripe with missing things, you all know my calls are usually not the greatest in the near term.

Then there is what we have regarding the whole "second half rebound" crew from CNBC, the banking CEO's, many analysts, the FED heads, and other economists. These guys looked at pretty good data. They saw the structural issues facing housing. They are aware of the precarious footing most banks are on. They have all the same information a hack like me has. They were way off. They were as wrong as could be. How does this happen?

Glad you asked. The answer of course lies in what your prospective is and what you want to accomplish. I offer that the sunshine calls were not based so much on a clear thinking take on the situation, but on a hope based effort to influence psychology. The players did not want to scare anyone. They did not want the major problems to have a spotlight on them. By trying to make people feel that things were "on the mend" they hoped to keep the ship level until a fix could be found. Maybe I do not have too much disdain for this effort.

The problem lies in that it is now clear they were all full of it. So instead of anything productive, they have sacrificed their objectivity and credibility in the face of a full blown recession. It will be harder for people to "remain calm" if things get much worse when the people that should know things were cheering a happy tune so recently. In a debt based, credit expansion economy confidence is king. Now even regular types are asking what happened. Not a good spot.

It is at a time like this that you should write down or make mental notes of some of the worst offenders. Their inability to make the right call here cancels their value as a voice. Focus on the ones that had it right way ahead of time and you will be best prepared going forward. The blogroll is full of sound minds and advice so use it, I do.

Have a good night.

11 comments:

Anonymous said...

Isn't it interesting how we can send an object outside of the solar system but we can't manage to make sound economic, financial or monetary decisions?

Just my 2cents.

G

PS: Glad your back and can't wait to see what finally happens. IN THE END.

watchtower said...

Wow, those puppys (Voyager, Pioneer) are out there! Not unlike the calls made by some of the pundits for a second half rebound.
Speaking of which my man Jim Puplava seems to have missed the creamy center of his Oreo analogy.
He explains in his latest Big Pic transcript that he was taken aback by the increase in oil.(if I understand him correctly)

I've heard it said that the rebate stimulis checks are being used to put gas in the tank and food on the table for the most part. (I don't doubt that too much)

I may just be a misguided fearmongering doom and gloomer but this truly looks like it is going to get bad.

I've always leaned to the "government is going to drop $ from the skies to keep deflation from happening" point of view, but reading Mish's post yesterday is really making me think.
Hearing him compare all these "alphabet" financing vehicles to a sort of "crack up boom" that has already happened kind of makes sense in a way.


What to do, what to do...

Anonymous said...

What I think we have in the financial situation here on earth is a tear in the cosmic continuum.

Kevin

Anonymous said...

Out of all the crazy things you're never going to guess who was on Dr. Phill today!

G

PS: Initials are C.S.

Anonymous said...

G

Your right I don't have a clue. I also don't know who Dr. Phill is so I guess I have an excuse but here goes anyway: Charles Schwab.

Watchtower

How is the garden going with the deer? I had one get it mine but it isn't doing nearly the damage that the grasshoppers are. The garden at the house is doing well but the one out at my farm might be a bust this year especially when I include fuel cost to drive out there every other day to water.
I have own a small house about a block from where I live that has a large backyard and I'm thinking gas prices keep going up it may be better next year to just have the water turned on and grow another there. Cost about $50 a month for water at the house and it's costing me about $60 to drive out to the farm now. The grasshoppers aren't nearly as bad at the house I live in so I may do that next year.

what to do... Get out of debt, raise cash, invest in short funds if you have the stomach for that, invest in forgein currency and goverment bonds of countries with deficet surpluses, re-read Prechter's Conquer the Crash.

Kevin

watchtower said...

Hey Kevin how's it going?
So far, so good on the garden.

Kevin, what do you think about these people who say that the dollar is coming back such as this guy Charlie 'Carlos' Tarango?

Here is an excerpt from "The Metrical Equilibrium of Housing" from the Financial Sense website:

"Indeed, why would Central Bankers destroy the very source of their power – the currency system - by Hyperinflation - when history already gives us the answer ? This is the inexplicable circular logic of the “Inflationist’s” and the “Gold Bugs”. Central Bankers are going to commit political and economic suicide to avert Deflation ?"

"“Cash” will be “King” again."

http://www.financialsense.com/fsu/editorials/2008/0705b.html

This guy is a deflationist and after reading his article it made sense to me, but after reading an inflationist's views (uh, like Jim Willie for an example) their arguments make sense also.

In an earlier post I mentioned that when I was young my Dad lost his job, He didn't go on the government dole, instead he took the occasional odd job that came along to make ends meet.
I ate a lot of beans and mac and cheese and homemade "drop" bisquits at that time in my life. I remember our TV went out and that was that, we didn't have money for a new one so we went without (looking back it was probably a good thing).
To make a long story short, I have two brothers, one is deeply in debt today and the other (plus myself) is debt free with a little cash put back. Want to guess which brother was too little to remember the hard times that our family went through?
I've had money in mutual funds for the last 17 years but went to cash back in July 07 after getting the willies about the Bear Stearns incident.
I'm too chicken to go into a short fund but I feel like I'm missing out by sitting on the sidelines with cash and some precious metals.

Take care

watchtower said...

@ G
I was going to guess Carl Sagan (because of this post's space theme) but I think he has passed away.

Anonymous said...

Watchtower

Nothing wrong with cash, it gives you time to think. I also think this is going to be one of those periods of time where return of my money is more important the return on my money.
I have about 40% between the two Prudent bear funds, 40% between the two Hussman funds and the rest in cash and precious metals. I have this in 4 different accounts just in case one of institutions they are with has trouble. I have enough cash in my interest bearing checking account to pay my living expenses for about 8 months, and enough cash at the house to pay about a month maybe longer if things really got nasty along with a lot of metal, guns, gold, silver and lead.

Hunker down and stay out of the line of fire those are live rounds coming at us.

Kevin

Anonymous said...

the Bank of England, determined to fight the next war with the tactics of the last one, has bizarrely decided inflation is the primary issue and that it will be able to control international commodity price increases by suppressing domestic demand. The trouble is that if the Bank succeeds in restricting our domestic spend, it risks plunging Britain into outright economic meltdown. Why? Because the real risk is not inflation, but deflation.

And deflation is worse – much worse – than inflation. In a deflationary economy, prices are constantly falling. If prices fall, profit falls; if profit falls, then growth drops and unemployment rises. This produces a vicious circle of increasing productive capacity, falling demand, falling prices, lay-offs and negative growth. And this is a possible mid-term scenario for the UK.

http://www.independent.co.uk/news/business/analysis-and-features/were-riddled-with-debt-but-the-cure-is-a-killer-860815.html

The only CB that can put the inflation fire out going on around the world IMHOP is the FED, all the others rasing or the FED cutting more will only make this worse. They need to cut and the FED needs to raise.

Kevin

watchtower said...

"Wages are not going up, not in the UK, the US or even euroland. Last week, the analysts IDS reported a fall in wage settlements even as headline inflation rose."

"So inflation may well continue to rise. But with wages dormant, the "second-round" effects will be constrained."

Once again this makes sense to me.
The above quotes are from Kevin's link to an article titled: "We're riddled with debt... but the cure is a killer".

Anonymous said...

The answer is:

en.wikipedia.org/wiki/Casey_Serin

Yup.

Nice to see someone worse off then me from time to time :/

heh heh...

G

PS: Still hanging in there guys.