Early in yesterday’s session, with the Dow Industrials off a hundred points but stubbornly refusing to give up any more ground, bears were sounding a despondent note in the Rick’s Picks chat room. It was mid-morning, and shares had leveled off for a couple of hours after having fallen in more or less orderly fashion since the opening bell. "Don't bet that the wondrous [Plunge Protection Team] won't pick a great point to jump in again," noted one trader, glumly alluding to the Fed’s surprise attack on bears two Fridays ago, when the central bank announced a 50-basis-point cut in the discount rate. Came this strychnine reply: "The bears sound so defeatist today that perhaps the DJIA is on its way to a refreshing 500-point decline. Don't despair, pessimists! Our time will come."

Alas, the Dow Industrials did not fall the implicitly hoped-for 500 points, only a mere 300.  That would have been scant comfort to anyone looking for the NYSE to start reflecting reality rather than the increasingly pallid hallucination of a strong U.S. economy.  Wasn’t it just last week that our hallucinator-in-chief, Treasury Secretary Paulson, pronounced the economy “very, very healthy”?  Yeah, right.  Even so, we’d be the first to concede that it is perceptions that matter most, and that the Plunge Protection Team’s efforts might therefore be better spent manipulating our awareness of the economy than goosing shares with well-timed forays into the S&P futures pit.  A little LSD in the water supply, perhaps, and millions of otherwise clear-headed observers might start to see things Paulson’s way. Either that, or, we fear, they’d start seeing “666 “ tattooed on the foreheads of everyone who appears on CNBC.

Six-Sigma Event

Plunge Protection Team aside, even bulls must be wondering at this point what They will do to prevent the six-sigma event on Wall Street that might someday make us recall a piddling 300-point drop in the Dow with nostalgia. Surely They will do something!?  In point of fact, the Federal Reserve, by lowering the discount rate, has already used up virtually every administrative tool it commands, --other than lowering the federal funds rate. On this subject, and the possibilities thereof, no one has been more lucid than Gary North. We’d stopped reading the guy a while back because he wouldn’t cop to the possibility, let alone likelihood, of deflation, notwithstanding the fact that a $500 trillion debt implosion lies in prospect for planet earth.  

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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2007, Rick Ackerman. All Rights Reserved. www.rickackerman.com 

-- Posted Wednesday, 29 August 2007 | Digg This Article