You know Vince, one of the greatest football coaches (American) ever? He was the guy caught on film yelling from the side (touch) line, "What the hell is going on out there?" I was channelling Vince a bit today so I called He Who Knows All Things and asked, "What the hell is going on out there?" He answered, "Who the hell knows." This did not make me feel good.
This morning, the GDP for the second quarter was announced as having grown 1.7% along with a reduction of the first quarter number. What was also announced by the Bureau of Economic Analysis was the manner in which something called comprehensive revision had been recalculated going back to 1925 in order to more accurately present economic growth which of course means that there isn't anybody out there who knows what the hell is going on in regard to the economy and that all numbers, including this morning's, are crap. Nice one guys. All I know is nobody here in the Fly-Over Zone can find 1.7% despite the best corn and soybean crop in recent memory. Deliberate? Welllllllll, not if you believe in the absolute honesty of this administration. Not many of those guys around this part of town either.
So while markets were trying to digest this bag of fertilizer, out comes the Fed to announce that while things didn't go all that well they didn't go all that badly, and there is optimism for the second half, and blah, blah, blah, and oh, by the by, we are going to keep liquidity running for a bit. Well of course you are guys (and girls--that's you Janet), because this tsunami of liquidity is the only thing holding this mess together and everybody with half a brain has figured that out. However, creeping into this picture is the fact that the 10 year has stayed right up there 100b.p. from a year ago and why the hell is that happening and for once, in addition to the admission that I was wrong in saying it was coming back down I can explain it. The market got head-faked by Bernanke, switched all the positions, got faked out again and now, pretty much convinced that the Fed doesn't know what the hell is going on out there either, is just going to sit tight with open books until Another Sure Thing appears on the horizon.
And speaking of Janet...This Chairmanship thing really got out of hand today with every talking head in the universe, including many Over There chipping in on the relative strengths--and especially weaknesses--of the two primary candidates. She could stop it any time she wants but she's running hard...perhaps too hard. The Leader could stop this anytime HE wants--after all he started it with the disgraceful interview in which he fired Bernanke. How? Simple, really. Choose a third party with whom no one would disagree. A guy with an Ivy League education, impeccable economic and public sector service credentials, nice guy by all accounts and who would be ready to serve. How about Roger Ferguson? Fills the bill completely. The perfect choice and huzzahs for the The Leader all around. The New York Times would be drooling to write that editorial once again praising his foresight. Most importantly the in-fighting and the critics would be silenced which for the new guy may not be a bad thing. Not a word would be raised in protest. Makes sense to me. Oh, did I mention that Mr. Ferguson is Black?
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