08/07/2002 Archived Entry: "The Commerce Department Pump, while the Economy goes to the dump"
Why does it seem that the Commerce Department is just jigging the numbers to suit the message. In late June, they jig it upwards, GDP revised upward, then a month later, it shows up not quite so strong, U.S. economic growth slows. In fact, there's a good chance that the 2Q 2002 will be later revised to negative growth, given that the GDP numbers are seemingly being pumped for political purposes. This is the same government, remember, that recently imposed a legal requirement on the top execs of America's largest corporations to swear to the accuracy of their companies' financial reports. Uncle Sam, check your own books, that's coming out of the heartland. Try as they may, the attempts by Bush/Cheney to say they inherited a recession fall flat nearly halfway into their one-term.
"The Bush administration has run out of options when it comes to the economy," said Doug Usher, a senior analyst with the Mellman Group, a Democratic political consulting firm in Washington. "Clearly they don't have a plan, so they're trying to claim things are not that bad. But people see right through that, so they're going to plan C, which is blame somebody else."
Given that under Bush, America has plunged headlong back into debt, what's Plan D? That'd be another War, this one in Iraq. It won't happen before the 2002 elections though, the Pub doomsdayers say they have it under control:
The decision was made on July 23-24 by the U.S. Federal Reserve, reliable European sources report, that any and all measures would be taken to keep the U.S. stock markets from melting down before the November 2002 mid-term elections. At stake was far more than the Republican Party's election prospects, or U.S. stocks. With J.P. Morgan-Chase executives forced to call a teleconference July 24 to dispel swelling rumors that they were facing insolvency, urgent action was required. The rumors of insolvency also included Citigroup, second only to J.P. Morgan-Chase as the top holder of derivatives in the United States. Were even one big U.S. bank to go under, it would trigger "financial Armaggedon" for the already terminal global system. The "whatever necessary" decision led to the greatest stock market intervention ever by the U.S. Federal Reserve, supported by other G-7 central banks. It succeeded in halting the meltdown ... at least for a week.
If you'd like some lingo, Credit Bubble Bulletin, by Doug Noland will give you a financial wrap that's in the bear's grasp:
I highly recommend that readers go back and read Bill Gross’ July and August writings (www.pimco.com). His past two pieces have been especially interesting, and what I read between the lines is absolutely fascinating.... “The corporate market at the moment is close to full tilt (pin-ball machine analogy), half frozen, trading on price – not yield.” In other words, the market is virtually closed down for all but a few borrowers. The economy may not be far behind....
Which brings us to the heart of our concerns. We have for some time operated with an anchorless monetary and Credit system creating finance at a whim. And to throw historic Credit excess at an economy that produces so little of a tangible nature is simply asking for a Credit disaster. Furthermore, the contemporary Credit mechanism is dominated by the securities markets, where myriad instruments are aggressively managed by performance-chasing portfolio managers and leveraged speculators. This leads to excessive Credit creation too often inundating the hot sectors in manic bursts. Later, extreme Credit availability gives way to boom turned bust, impaired borrowers and lenders, market revulsion, and unavoidable Credit crunch. The bottom line is that the Credit system is only as stable as the ebb and flow (flood and drought) of contemporary markets. Throw on top of this an historic experiment developing a sophisticated market for trading and insuring Credit and other market risks (equity, currency, interest rate, etc.), which is about to be unveiled as an enormous failure. Yet, as long as the bull market held in securities and risk, the New Age system had all the appearances of a financial miracle. But the unfolding bear market in risk has seen buyers disappear and anxious sellers multiply, an imbalance that will not be rectified for years to come. Not only are the portfolio managers and speculators running for cover, many of the key players in the risk market are suddenly more interested in saving their hide and staying out of jail than they are in trying to book speculative trading “profits.” “Game Over.”
Which brings the current discussion to South America. What's LaRouche doing in São Paulo? Financial Armaggedon Is Unfolding in South America, but the IMF, Managing Director Köhler Confirms Agreement with Brazil, has thrown them some time.
Replies: 1 Comment
May be the GOP should push their gun agenda down in the other South (now that they have secured the US South)...South America. Pretty soon, they would need guns to hunt game in order to survive.
Posted by Yankee @ 08/09/2002 03:05 PM PST
