It is widely known that in Life and the Obama administration only two things are certain: Debt and Taxes. But we think it may be time to add a third truism: "Every time the administration announces how it plans to help the economy, the stock market is going to crash."
On Wednesday, Fed Chairman Ben Bernanke announced "Operation Twist" which will sell off short-term treasury notes and buy more long-term U.S. debt. The somewhat incomprehensible words were barely out of his mouth before the Dow Jones Industrial Average plunged more than 700 points over the course of two trading sessions.
Fortunately, thanks to Barack Obama's recent speeches about the "Buffet Rule," we now know that all investors are evil bastards who pay no taxes at all and deserve a good fiscal spanking, so no one important got hurt.
What's that you say? You're in the middle class and your retirement savings are invested, and you just saw a huge drop in your portfolio? That's because you were evil and didn't know it!
Meanwhile, NASA's dead Upper Atmosphere Research Satellite is expected to fall out of orbit today, causing 6.5 tons of flaming debris to come crashing down... somewhere. NASA experts aren't yet able to predict the exact places where You Really Don't Want To Be because, thanks to their new focus on Muslim Outreach, they're only allowed to do calculations using an abacus.
So perhaps they should let Ben Bernanke take a crack at it. Because it really wouldn't matter what answer he finally came up with...we could be sure that the really catastrophic damage will occur on Wall Street.
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14 comments:
Reminds me of when SpaceLab crashed to earth in the late 70s and John Belushi enacted what would happen when it did using a plastic SpaceLab model and a desk globe during the "news Report" segment. The frenzied mayhem of that bit would be quite apropo for both scenarios that you cover in today's posting. By the way, am I the only one who remembers when SNL used to be funny, daring and clever? Good Christ! am I really that old? Grooaann
Randy S.:
If you want a clue as to how old you are, look in your medicine cabinet. I looked in mine this morning and wept. I too remember when SNL was funny.
I pray no people are harmed by the falling space junk but I would find it an appropriate metaphor if it landed in the rose garden at 1600 Pennsylvania Avenue, Washington, D.C.
I believe you're referring to SkyLab, Randy S. And thanks so much for the reminder of Belushi's SNL report. I just *had* to find it and enjoy it once again, especially with today's events in mind!
Here's the link: http://www.youtube.com/watch?v=NAr2HkQr1YM
I can think of bunches of places I would like to see the space junk crash, but today, I think the UN is tops on my list. They could build something there that is actually useful, like maybe a Wal Mart or a McDonalds.
The most elegant and beautiful aspect of free market capitalism is that it is entirely self-correcting.
The problem is that all too often, those "corrections" do not make certain people happy, and they take it among themselves to try to "correct" the "corrections" with fiscal and monetary policy. Very often, the "corrections" they attempt to make are 180-degrees opposite of what the market thinks they should be. This is folly, and that's when things get really volatile and ugly.
And so this is how we arrive at this point. The more they try to "fix" the economy, the worse it seems to get. Sure, on occasion they temporarily fix the problems faced by bankers on Wall Street, but ultimately things just get worse in the long run. And of course, there are those who use the "crisis" as an excuse to pursue their own political goals.
Today, thanks to policy decisions and manipulations from the Federal Reserve, Congress and the Administration, few people are "investing" today. Instead they are scattering defensively, or just gaming the system. I know I am.
Only after we get leadership that realizes that we've been chasing the tiger's tail and says "Enough is enough!" and ceases trying to fix the unfixable will we get stability and people will feel safe and free to actually invest in America again without fear of having their heads chopped off. Until that moment, get used to the roller coaster ride, expect "Recovery Summer ]I[, Recession Too" and a very ugly presidential race full of distraction and unbridled class warfare like you've never seen.
Decades ago it became apparent that uncontrolled markets without all this government control and "help" leads to stability and growth; why, centuries ago even, what with Adam Smith and Frederick Bastiat in the late 1700s. And a controlled market with the government in charge of "fairness" leads to chaos; with the French Revolution & Terror a particularly bad example.
It's bizarre to me that people in government still insist on "doing something" just to make it look like they're, um, doing something. But I have never understood the power grabbing mind nor the control-freak attitude which permeates our government at all levels today.
And most of the current crop of Republicans just want power; and don't seem to have a blessed clue that keeping the current systems in place is just going to bring us down.
I'm also confident that the next president is going to be a one termer too; and we shall waddle in the doldrums until 2016. Enjoy the ride. (and I think Obama is shooting for 9000 -- he thinks the markets are golf, apparently.)
@Randy S & Angry Hoosier Dad- There's a lot of that "getting old" thing going around, whether it's remembering when SNL was funny or having an overstuffed medicine chest. Or in my case, wearing a CPAP mask at bedtime. Oh, I tell myself that it makes me look like a jet pilot, but my wife and daughter assure me that it looks more like I'm in intensive care. On the other hand, I'm in better shape than John Belushi...
@ConchRepublican- Thanks for the link to the SNL skit. I've got to admit that it sucked some of the fun out of the routine when Belushi got laughs suggesting that the falling satellite could knock down the World Trade Center (which, of course, still stood at the time). We were such innocents then...
@Colby- It will be impossible for the U.N. building to be hit with debris because they passed a strongly-worded resolution forbidding it.
@John the Econ- Great analysis, as usual. The funny thing about a self-correcting system is that the only thing outside interference can do is make it work less efficiently (or break it entirely, albeit temporarily). The chaotic swings we're seeing on Wall Street are too frequent and too distressing to make it seem a good place to invest anymore...and all the more so when you've got a jackass speechifying that if anyone does make money in the market, it should be taxed away. Personally, I've been moving out of the market for awhile now, and really wish I'd pulled back farther about three days ago.
For people approaching retirement age, this kind of volatility is just unacceptable. So here's a handy rule of thumb (which also ties together today's threads): "If you're old enough to remember when SNL was funny, you're too old to be in the stock market."
@Jim Hlavac- Not all politicians "do something just to make it look like they're doing something." Some of them also "do something" because they're getting some sort of payoff (either financial or political). It's almost like when they're sworn into office, they have to take the Hypocritic Oath: "First, Do No Good."
And per the current crop of Republicans, I have very little enthusiasm for any of them who don't say that a drastic (some would say "radical") housecleaning is in order. It's far too late for half-measures to save us.
If remembering when SNL was funny, what does it mean when you remember how funny the Jack Benny Show was? I haven't even seen SNL for years; it's on past my bedtime and I try not to laugh anymore because it always costs me an extra pair of Depends.
I know one thing for sure, though. Ben Bernanke is NOT funny; not even close. What IS funny though, is the comment Gary Johnson said last night about his neighbor's dogs. I would have loved to have seen BO's frowny face after that one!
@Colby- I'll see your "Jack Benny Show," call you with the "Burns & Allen Show," and raise you with "Kukla, Fran, and Ollie."
I thought Gary Johnson seemed terribly out of place on that debate stage last night...but his line about his neighbor's dogs was the best one of the entire night! For those who didn't see the debate, Mr. Johnson said that his neighbor's two dogs have created more "shovel ready jobs" than the Obama administration. The entire audience erupted, and even the other candidates were laughing and applauding.
I am glad that Gary Johnson listened to Rush Limbaugh yesterday and borrowed that line about the dogs, it was even funnier on Rush's show.
Stilton, as for the CPAP mask, even my pets laugh at me when I wear mine.
Hey, I remember all those shows, too..thank you very much!
The Belushi bit( I just watched it ), had a bit of eerie prophecy in it; he mentioned ( and totally did not accept) that if the falling Skylab back then hit the world trade center, it would fall over! Ooops! Who woulda thunk it?
I'll bid Red Skelton.
@gray lady- Gertrude & Heathcliff! The mean widdle kid! Freddie the freeloader! Great show...I've always been a big fan of Red Skelton.
My favorite story is when Doug Fairbanks happened on Bill (W.C.) Fields one lunchtime sitting outside a sound stage, reading a Bible. When asked what he was doing, Bill responded in his characteristic drawl, "Looking for loopholes...."
OK, I don't actually remember that ... but it's still a great story!
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