.....continues apace throughout the media and the internet, but nowhere else locally is it more egregiously done, in a completely knuckle-headed way, than at (where else?) Cone's.
There can be only two reasons for the responses from Cone and his dutiful respondents: They are incredibly stupid - naive, or they are purposefully misrepresenting the situation for some (political/social/economic?) reason that is not so easy to discern.
Here are some facts they ignore, or gloss over:
1. Economic growth will continue throughout 2008, albeit at a somewhat reduced pace. The negative nabobs constantly misrepresent hat people like Bernanke and Paulson have to say about this subject.
2. Foreign trade will continue to support growth this year, with a further reduction in trade deficits. It may indeed be enough to offset the slowdown in new home start-ups. Although the weakened dollar helps here, there are no signs that the greenback value will continue to erode.
3. Excluding major monetary policy changes, the current flux the markets have been going through cannot be explained by anything but forces that artificially interfere with the process. It's really pretty simple, despite the mystery some ill-informed people would have you believe.
If you analyze the so-called "catastrophic losses" of those invested in credit/housing markets, you'll see that "catastrophic" is about as misleading a term as you can use to describe such losses.
As Marin Sosnoff has said:
"Money managers normally panic over bad news on the margin. They know that incremental news that comes as a surprise moves stocks sharply up or down. Anyone who believes in the existence of an efficient stock market needs professional help. There's always too much misconstruing of news that only gets sharply refocused later on."
4. New home builders' inventories of unsold units are dropping, and many analysts say that most of the decline in this area is behind us.
5. The Fed (and other market makers) appears to have a handle on the so-called "credit squeeze". Businesses and consumers (at least the intelligent of these groups) should be able to handle things well enough, and there looks to be some help in the form of new tax cuts on the way.
Some analysts see rate cuts to continue. And, for those who are paying attention, there's money to be had out there.
Ethan Harris, at Lehman (which, by the way, says in a convincing manner that there will be no recession) says "While consumers are likely to grow more cautious in 2008, solid income growth should prevent a sharp contraction in spending." In addition, spending on capital goods shows signs of increasing.
To conclude, I will repeat what Bill Poole, FRB St Louis President, said Wednesday:
"The current financial turmoil will take awhile to play itself out. The fundamentals of our economy remain strong, however, and 2008 looks to be a year of rising growth. Economic forecasters expect slow expansion in the first half of the year and a quickening pace in the second half. Meanwhile, if borrowers, lenders and investors can refocus on financial basics and re-emphasize critical lessons about credit and risk, the financial future can be brighter than the second half of 2007. For that brighter future, we need to infuse our education at all levels with the lessons of 2007—old lessons to be sure but easy to understand at a very practical level from 2007 experience. With continuing effort we can expect that financial upsets such as the current one will be infrequent and milder when they do occur."
I posted Poole's remarks at Cone, but no one seemed to want to discuss it, seeing as how it was contrary to the meme they want to promote.
There's more to come. MUCH more.
Let's leave it at this:
Are there problems in the economy?
Yes, of course, but not to the extent the Cassandra crowd continues to wail about.
Do the signs indicate disaster on the horizon?
Is the constant drum beating over "recession" useful?
Only to those who have some external motive to do so.
It's irrational, and can only lead to an artificial undermining of consumer confidence. That's what we're saying about "talking the economy into a recession". It CAN be done.
If you are one of Cone's "Wally Worry" brigade, be prepared.
I will challenge your nonsense EVERY time I see it.