-- Posted Thursday, 4 September 2008 | Digg This Article
| Source: GoldSeek.com
The bad news is that prices of some investments are falling below their long-term moving averages, which seems to be the most important piece of technical analysis that there is, and that is why all kinds of trading programs are kicking out "sell orders", which has to be immediately counterpunched by the central banks, governments and "interested parties" (meaning mostly retirement funds and other institutional investors, as the Financial Times reports that these institutions own a "66 per cent share of all stocks").
The upshot is that the captive "investors" of these institutions are getting scared, although if you walk up to one of these self-professed "scared" guys and ask, "Hey, do you have a bunker in your backyard?" they will say "No"; and if you ask, "Hey, are you packing heat?" they say, "No"; and if you ask them, "Hey, are you buying gold, silver and oil with every freaking bit of money that you can get your grubby little mitts on as a defense against the monetary madness of the Fed and the other central banks of the world?", again they will say "No."
So I laugh in scorn at them - Hahaha! - as they obviously know nothing about being scared! Hell, I'm so scared that I haven't had a bowel movement in a month, although I'm securely locked into the Mogambo Bunker Of Defensive Power (MBODP), and I'm dripping with weapons and "good luck" charms! Now THAT'S scared! And probably why I am so cranky!
About what am I scared? All kinds of economic crap that all leads to the inescapable conclusion that We're Freaking Doomed (WFD) to die from inflation, like, for instance, the National Debt went up by $21 billion in the last week alone!
Or, to lighten the mood, that the government's GDP deflator was revised DOWN to 1.2%! Hahaha! I am laughing insanely at the sheer hilarity that inflation is estimated to be 1.2%, and yet I am so scared and outraged at this insult to my intelligence that my teeth are clenched and grinding so hard that sparks are actually flying out of my mouth, which is not as easy as it sounds.
Hell, the Consumer Price Index was up 8% in the first quarter alone!
I was going to just let it all drop and get back to drinking to excess so that I will pass out and not have to deal with any of this, but then I saw that there was a new girl in class, Shirley, and I figured that the best way to impress her was to make a big stink about how the raw data of the Gross Domestic Product (the entire output of goods and services produced by this country, as measured by prices paid) was achieved only by adjusting GDP by a piddly 1.2% inflation in prices, hoping that she would say, "Oh, Mogambo! You're so Smart And Handsome (SAH)!", when my dreams are dashed by Mish Shedlock at Globaleconomicanalysis.blogspot.com suddenly saying the same thing!
"Part of the reason the GDP number looked so good," he says, "was because the GDP price index for the second quarter was marked at just 1.2. In other words, (the Bureau of Economic Analysis) subtracted from nominal GDP 1.2% in order to produce their version of 'real' (inflation-adjusted) GDP. GDP would have been negative if a larger deflator was used."
Next Mr. Shedlock quotes a report that government spending is soaring, as "Real federal government consumption expenditures and gross investment increased 6.8 percent in the second quarter, compared with an increase of 5.8 percent in the first". Hahaha!
Then he visibly impresses Shirley by dryly opining, "I question the merit of adding all government spending, no matter how useless, to the GDP, but that is what is done."
Unhappily, I can see by the way she is positively swooning over his erudite remark that I have irretrievably lost Shirley. With true Mogambo Sour Grapes (MSG), I dismiss her as a moron who would have just strung me along until all my money was gone and then tossed me aside, and having never understood Austrian Business Cycle Theory at all. Bah! I leave her to Mr. Shedlock.
I turn instead to John Williams at shadowstats.com who says that he agrees with us, and that "One can believe the GDP numbers or not. I don't. The US economy is contracting and the assumptions used to show expansion are getting more and more absurd with each report."
Well, the GDP reports are absurd, the GDP Deflator is absurd, and the prices of gold, silver and oil going down is absurd. What can one do in such circumstances except to buy gold, silver and oil while downing copious amounts of alcohol and pining for the lost Shirley?
Fortunately, I am not long into a new bottle before I note that gold, silver and oil will go back up when the current interventions cease, while the beautiful Shirley is gone forever.
And one day soon, when they have risen in price to their real value, I can have all the Shirleys I want. And anything else I want, too! Whee!
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Editor's Note: Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter - an avocational exercise to heap disrespect on those who desperately deserve it.
The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning and other fine publications. Click here to visit the Mogambo archive page.
-- Posted Thursday, 4 September 2008 | Digg This Article | Source: GoldSeek.com
