Good News Is Bad News
Good News Is Bad News. “Those who would understand the mysteries of the marketplace must drink deeply of the well of Wisdom.� That’s Socrates, 122BC.
Now Socrates, may or may not have said that. But if he didn’t, he should have. Take Friday, the 8th: the financial news was intoxicating. The jobless rate fell to 4.7 from 4.8. virtually no unemployment. Chickens boiled and steaks sizzled in the pots and pans of American workers. And since even the price of crude declined, there would be eclairs and frosty cakes on the table for dessert. Investors rubbed their hands in glee - visions of sugar-plum profits danced in their heads.
Wait a minute. That specialized market place we call the New York Stock Exchange swooned with horror! The Dow Jones dropped 96 points. Why? Well to understand, you need another swig from the Well of Wisdom. Good news is bad news. All that bubbling prosperity will energise the inflation fighting Fed to up the Fed Funds Rate, maybe even half a point instead of the usual one quarter point. So reflect the buyers and sellers of equities.
Therefore the decline in the DJ. Naturally bonds swooned too. The 30 year treasury zoomed to 5.04 knocking down the price of course.
Inflation, like the ghost of Hamlet’s father stalked the stock exchange. Good news is bad news due to federal interference in the cost of credit.
Comments (8)
D Biscoe
Would you rather we harken back to the era before federal interference... a recreate events such as depressions past.
Published: April 8, 2006 1:09 PM
David C
Would you rather we harken back to the era before federal interference... a recreate events such as depressions past. Posted by: D Biscoe at April 8, 2006 01:09 PM
Yes I would. First because the progress of the industrial revolution and the information age has happened inspite of the efforts of the US government, not because of it. Second because the great depression was not only created by the federal reserve, but greatly prolonged by it. Third because the economic fundamentals back before the great depression were a lot better than they are now. In case you haven't noticed, the US dollar is in deep deep disturbing trouble. Anyone who'se not been buying gold lately is stupid, poor, or going to be poor.
Published: April 8, 2006 1:54 PM
Daniel Coleman
Socrates lived from about 470 BC to about 399 BC, making it even less likely that he uttered that quote ca. 122 BC.
Published: April 8, 2006 2:36 PM
ted roberts
dan, no, no, not "Socrates" but "Socrites" the elder. First cousin to theophiles. It was supposed to be a joke but the editor missed it because I miscommunicated. If the reader misunderstands, it is always the author's fault whose first duty is communication.
I made up the quote just to put the reader in a philosophic mood and signal that there was heavy thinking to follow.
But, thanks for your comment. Keep areading. ted
Published: April 8, 2006 6:14 PM
np
it was a great day if you were short the bond market.
Published: April 8, 2006 7:37 PM
Tom Fiedler
D Briscoe's blog Brought out a fine response by David C. Is it an exaggeration to say the Federal Reserve not only orchestrated and still maintains the great depression (by issuance of fiat currency) but destroyed the Republic as well?
As for David's support of people holding gold, the central banks; the BIS, World Bank and the IMF will likely confiscate gold as the various national fiat currencies collapse. Perhaps we should encourage the prudent to diversify their possession of prescious metals to silver, palladium, platinum and rhodium as well.
Published: April 9, 2006 8:34 AM
David C
In reply to Tom Fiedler, I'm not sure the government will confiscate this time. I think the internet would get the word out 1000 times faster than the government can deploy. Since the currency is not backed by gold anymore anyhow, confiscation wouldn't be needed to re-adjust, and during the great depression there was apparently $35 in circulation for every ounce of gold in the treasury, today there it is estimated $35000. Unlike then, there isn't enough gold in the world to isolate them from the consequences of their behavior. Maybe some big ETF's, egold-money and central stores are vulnerable, but other than that it would be hard. Finally, all the wall street boys and teacher pension funds who have washington in their pocket, are they themselves going to want a safe place to store value other than banks, stocks, and bonds.
Published: April 9, 2006 11:50 AM
billwald
In the old days people invested in companies that produced a good product at a fair price. Now days it is "my computer can out trade your computer." There is no connection between the market and the economy of the working people.
Published: April 11, 2006 9:57 AM