Shock-and-Awe Overload for this Econ News Junkie
I have no doubt that America spent more in the second quarter, but was this because (maybe) families had to eat, fill their vehicles, and replace routine worn-out stuff at higher prices? But remember, “core inflation” doesn’t reflect jumps in either food or energy.
I’ve been thinking about containment. Actually I’ve been thinking about damage control, the housing bubble, Wall Street, foodstuffs, sports/entertainment, the Military, Justice, and the White House. What a week that was! Fred, the news junkie, was actually experiencing shock-and-awe overload.
You see, no matter where you looked last week (or... no matter what the subject), everything seemed to need “a fixer” or at least a major public relations makeover big time. This week “der spinmeisters” will need to get out in force—not to actually “fix” the problems, mind you, but at least to fabricate a happy explanation of sorts, making all the front page messes of last week—well... less messy and more palatable.
Months back, when FED Chairman Bernanke attempted to sooth concerns over the impending housing bubble's finally “passing its gas” by stating that the US financial institutions (TH*NK banks) were not going to take the hits the Savings and Loans did almost two decades ago. This was echoed by Maestro Greenspan, whose policies of cheap money had actually created it. The banks wouldn’t take the hit; the investors in the MBSs, CMO’s, and CDO’s (those who bought rights to any future liquidations from the liabilities they purchased as derived investments) would. This is pretty much a zero sum game. Meaning...for every dollar of write-down, write-off, or marking-to-market, somebody will have a loss. Two weeks ago, investment banker/underwriter Bear Stearns absorbed a hit of a few BILLION on two of their housing hedge funds, and last week those investors were told not to count on getting anything back—nothing.
The Wall Street euphoria of the Dow cracking 14,000 (for whatever reasons that happened) deflated or “passed gas” as the markets suffered their worst one-week declines in five years. This was spun/contained as a “correction,” reflecting uneasiness about the housing situation, crude oil within pennies of all-time highs, and the unraveling of placing more debt-based investment grade paper (junk bonds) to finance the numerous merger and acquisition buyouts which had been fluffing the equity markets. Some correction? Last Thursday and Friday alone, upwards to a TRILLION dollars of “paper” gains, and assets simply evaporated! How will “der spinmeisters” contain these declines as a “correction” and not a ...?
Meanwhile, in the marketplaces for our food and stuff, reported figures suggest a bump in US consumer confidence and the Gross Domestic Product. More means better to Uncle $ugar. I have no doubt that America spent more in the second quarter, but was this because (maybe) families had to eat, fill their vehicles, and replace routine worn-out stuff at higher prices? Remember, “core inflation” doesn’t reflect jumps in either food or energy. Outstanding plastic money (credit card) balances were up during the same period. As far as what happened with the money supply, it’s really hard to say. When concerns were expressed over how much money was being printed, Uncle stopped reporting the broadest measurement (the M3) a year ago in March. Adding insult to injury, there were more recalls/alerts for food contamination. China wasn’t to blame here: they’ve “contained” their previous bad raps by executing their chief quality control guy.
Sports headlines focused on the Tour de France doping scandals. Football was “dogged” by illegal inhumane dog fighting. Baseball records are being soured by potential steroids abuse. The objectivity of basketball refereeing is under investigation. All will require containment and major public relations rehabbing to appease the fans—and on the entertainment front ditto for Britney and Lindsay.
The military and our involvement abroad need “containment,” too. The President has put a lot of his eggs in the Petraeus basket – deferring any decision on troop cutbacks until after the General reports in September. Selected Capitol Hill types got an “off the record” pre-briefing at the Pentagon via closed-circuit satellite transmission—no content was made public. But... the Iraqi Prime Minister did go public with his desire for Petraeus to leave—now. Our government stopped weekly reporting of how many hours of electricity are now available in Baghdad. The tragic demise of football-star turned Iraq-War-soldier Pat Tillman was further downgraded from death-by-terrorist attack to casualty-by-friendly-fire to close-range-fragging? The White House isn’t saying much about this one—claiming executive privilege.
How do you pursue contempt of Congress charges when the Attorney General won’t pursue them and the White House claims executive privilege at every turn?
Congressional antipathy escalated about ignored subpoenas, stonewalling, and obstruction of justice in the attempted firing of various US Attorneys. Alberto Gonzales’ star is definitely waning. How do you pursue contempt of Congress charges when the Attorney General won’t pursue them and the White House claims executive privilege at every turn?
With all these fronts needing containment, is there any wonder why President Bush is looking forward to an extended vacation/getaway to his Texas ranch? Even in the heat of August?
I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.
Copyright 2007 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at firstname.lastname@example.org
Copyright © 2007 The Baltimore Chronicle. All rights reserved.
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This story was published on July 30, 2007.