-- Posted Wednesday, 16 July 2008 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Wednesday, July 16, 2008
“Phenomenally accurate forecasts”
Our leaders are getting closer each day to acknowledging the dire condition of the economy, even if their statistician have yet to cop to the fact that the country has been in deepening recession since around December. President Bush, Treasury Secretary Paulson, and Fed Chairman Bernanke all made public appearances yesterday to soothe frayed nerves in the wake of the Fannie/Freddie “mess” and a run on California’s IndyMac bank. Echoing Hoover, the President advised people “to take a deep breath” because the financial “system basically is sound.” No un-truer words have ever been spoken about the economy, but we should forgive Mr. Bush this white lie, since, except in times of war, it has never been a President’s job to tell it like it really and truly is.
Nor is it Mr. Bernanke’s, although we do wonder what the Day After would look like on Wall Street if the Fed chairman took to the airwaves and said, in so many words, that “we are effed!” Would investors send stocks into bullish spasms because the air had finally been cleared? Or would they take the message to heart and dump stocks as they have not been dumped since October, 1929? Whatever the case, America has no choice but to rise to the challenges presented by a bankrupt financial system and a political system that is ineffectual at best, hopelessly corrupt at worst. It’s hard to believe that, unpopular as President Bush is right now, Congress sits even lower in the polls.
What Confidence?
Paulson told some white lies of his own, such as that “continued confidence in the GSEs is important to maintaining financial-system and market stability.” No one could quibble with the importance of this task – just that there is almost no confidence left to maintain. And while it can’t hurt Fannie Mae and Freddie Mac to have the explicit guarantee of U.S. backing that was only rumored before, investors should not be cheered by the fact that all of us, collectively, may be taxed into bankruptcy to provide that backing. We don’t think John Q. Taxpayer is in great shape to shoulder the additional $5Tr burden represented by the GSEs, on top of all of the other liabilities that will come with seeing the Baby Boomers through their golden years.
Not all is gloomy, however, as we were reminded yesterday by Intel. The microprocessor giant announced a 25% jump in Q2 profits, attributing them to strong worldwide demand for portable computers. No company is recession-proof, but there are clearly some firms out there that can achieve pretty good numbers as long as the global economy has a pulse. This is not true only of high-tech companies either, as the $50 billion deal for Anheuser-Busch should have made clear. Besides beer and microchips, what other things will we need even if the economy goes to hell?
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Last Chance to Sign Up
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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 © 2008, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Wednesday, 16 July 2008 | Digg This Article | Source: GoldSeek.com
