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Spot The Oxymoron: "Growth Down, Optimism Up"

Tyler Durden's picture




 

Submitted by Simon Black of Sovereign Man blog,

With a nod to the absurd, Federal Reserve Chair Janet Yellen freely admitted earlier this week that the Fed really has no idea what’s going to happen to the economy.

Bear in mind this is the person who controls interest rates in the United States, effectively setting the ‘price of money’ for the most widely used currency in the world.

This is key– because the price of money (interest rates) influence the prices of so many other things. Real estate. Business investment. Automobile sales. Agricultural commodity prices. Oil prices. Etc.

Of course, there’s a knock-on effect. Consider, for example, how many products and services are influenced by the price of oil… fertilizers, plastics, shipping, etc. And then how many products and services are influenced by the price of shipping… like everything in the world that’s imported / exported.

So in setting the price of money, Ms. Yellen is influencing the price of just about everything.

Yet she and her fellow members of the Federal Open Market Committee (FOMC) admittedly don’t have a clue where the economy’s going.

This stands in stark contrast to what investors are used to. Back in the 90s, Fortune put former Fed Chair Alan Greenspan on the cover with a headline– “It’s HIS economy, stupid”.

Greenspan 290x300 Spot the oxymoron: Growth down, optimism up

That’s how clear it was back then. Greenspan was the benevolent wizard… the ‘maestro’ in masterful command pulling the strings of the largest economy in the world. And investors had all the [misplaced] confidence in the world in this arrangement.

So you’d think that with such a demonstration of ignorance that investors would be heading for the hills, right?

Not so. The big banks and institutional investors (who appointed most of the FOMC members to begin with) rewarded the Fed’s stunning admission and lack of foresight with… record high stock prices.

If I could quote our long-lost Billy Mays– BUT WAIT, THERE’S MORE!

The Fed also reduced its GDP growth forecasts for the US economy from 2.9% to 2.2%. In case you’re not too fast on the ‘calc’ icon, that’s a 24% proportional reduction in GDP growth. Not exactly a drop in the bucket.

AND, of course, there’s the recent data that inflation has ticked up, even according to their own official numbers. Of course Ms. Yellen proceeded to downplay the inflation, writing it off as ‘noise’.

So this morning I received yet another analysis from a large private bank I deal with; the report’s headline– FED: Growth down, optimism up.

Hmmm. Spot the oxymoron here. (OK fine, paradox)

Growth is down. Inflation is up. The grand wizards don’t have a clue. Yet people are excited about this?

I feel like there’s an alternate universe out there where this sort of paradox would make sense… some magical 5th dimensional world where up is down and men breathe through their nipples. (why else are they there, gents?)

But alas, this is not some alternate universe… ’tis the sad state of our FUBARTASTIC financial system.

Fundamentals no longer matter. Common sense is now a totally foreign entity. High frequency traders and algorithms dominate the marketplace, brokers steal customer funds to cover their own losses, banks sell their customers ‘shitty deals’ and take the other side of the trades.

And everyone is drinking from the same spiked punch bowl where bad news is good news, good news is good news, and a single clueless committee has all the power.

Looking at this ridiculous market, I really I find it hard to believe that the odds are stacked particularly well in favor of the little guy.

Bottom line: if you’re in the markets, invest with caution. And if you have the courage to swim against the school, bear in mind there’s a whole world of alternative investments– primarily things like private businesses that are far less susceptible of being directly manipulated.

 

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Fri, 06/20/2014 - 10:02 | 4877679 drchris
drchris's picture

They got the STUPID part right.

Fri, 06/20/2014 - 10:17 | 4877731 jbvtme
jbvtme's picture

either this guy is sleeping with the photo shop girl or he transfusing blood from his biological clone

Fri, 06/20/2014 - 10:30 | 4877784 I am more equal...
I am more equal than others's picture

 

 

 

Opti-morons or octi-morons

Fri, 06/20/2014 - 10:34 | 4877797 bania
bania's picture

Found the moron! Just looking for the oxy now...

Fri, 06/20/2014 - 10:31 | 4877787 TeamDepends
TeamDepends's picture

And PMs are vertical!  Bear market is over!!!!  If you don't hold it you don't own it.

Fri, 06/20/2014 - 10:35 | 4877804 jbvtme
jbvtme's picture

krugman...you too?

Fri, 06/20/2014 - 10:42 | 4877826 overmedicatedun...
overmedicatedundersexed's picture

from Wa Post paper:n" a country that is home to the largest Jewish community in Europe, the first three months of the year saw reported acts of anti-Semitic violence in France skyrocket to 140 incidents, a 40 percent increase from the same period last year. This month, two young Jewish men were jumped and severely beaten on their way to synagogue in an eastern suburb of Paris." Perhaps Jews might want to police the last 4 fed presidents, and varius jewish .gov and finance/msm moguls, but they will not, and they seed the hate that will come, I do not want it to but the ball is rolling down hill and it may be too late...scape goats are needed and soros I am sure will turn in all of his tribe to save his neck.

Fri, 06/20/2014 - 10:29 | 4877779 PT
PT's picture

He already dealt himself four Straight Royal Flushes.  This time the odds HAVE to be in My favour!!!

...

Fri, 06/20/2014 - 10:02 | 4877680 skidsmango1
skidsmango1's picture

the market will crash after people read this and know the jig is up.

Fri, 06/20/2014 - 10:16 | 4877738 buzzsaw99
buzzsaw99's picture

people have very little to do with it

Fri, 06/20/2014 - 10:38 | 4877815 PT
PT's picture

Naaah, the market can go heaps higher!  Once volume gets down to one share of SPY flicking back and forth between two players in Belgium, imagine how high QEinfinity can drive it!

Fri, 06/20/2014 - 10:04 | 4877684 cpnscarlet
cpnscarlet's picture

The FED knows exactly what's going to happen - it ain't good and that's why they are lying.

It's all over but the shouting now. I feel it in my bones.

Fri, 06/20/2014 - 10:22 | 4877756 freewolf7
freewolf7's picture

They're not stupid, they're sociopaths.

Fri, 06/20/2014 - 10:05 | 4877687 madbraz
madbraz's picture

So the guy's conclusion after saying all this is that you should "invest with caution"???  Talk about a oxymoron.

 

You need to be a moron to stay invested in risk.  Upside is 10% if lunacy can continue to its fullest, not one bit more. Downside is 90%.

Fri, 06/20/2014 - 10:08 | 4877700 Grande Tetons
Grande Tetons's picture

Lunacy has no limits. The upside will not be constrained by your sanity. 

Fri, 06/20/2014 - 10:12 | 4877722 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

Oxymoron: someone who has taken too many pain-killers, then partakes in gov statistics.

Fri, 06/20/2014 - 10:23 | 4877759 madbraz
madbraz's picture

It has limits.  The shortage of collateral.  Collateral that is rented every day, not owned.  Courtesy of the NY FED.

 

The music is playing, but there are few chairs left.  

 

My guess is that someone will end up with the wrong end of an enormous losing bet in interest rate derivatives.  I'm further guessing that the NY FED is probably aware of this and is caught in a pickle between keeping this turd friend afloat or tossing him to the sharks to save the system.  If this guess is right, if hedge funds corner them like this was the whale trade, then it gets interesting.

 

All guesses, but obviously things are much, much, much worse than we know. 

Fri, 06/20/2014 - 10:34 | 4877798 nickels
nickels's picture

The article was written as if the Fed was as venal, self-centered, paranoid, greedy, political, owned, and psychotic as the Defense Dept. or the Supreme Court. What's the chance of that?

Fri, 06/20/2014 - 10:16 | 4877735 slaughterer
slaughterer's picture

Upside is still probably 20% for the ultimate blow-off top of the bubble.   It will amaze us all when it happens. 

Fri, 06/20/2014 - 11:01 | 4877912 I Write Code
I Write Code's picture

Upside is the assets ride the elevator when hyper-inflation takes off.

It will probably still be a relative loss, but preserving even 90% in such an environment would be a victory.

Fri, 06/20/2014 - 10:04 | 4877690 Chippewa Partners
Chippewa Partners's picture

Get a clue, the market only goes one way.  FED all the way BABEEEEEE..

SPU to the moon!!!!

So sick and twisted the sheeple are clueless.

Fri, 06/20/2014 - 10:06 | 4877698 asteroids
asteroids's picture

History repeats itself. Japan failed to kill off its zombie banks (harsh critisism for other CB's for not doing so) and now a generation later its in terrible shape. How is the US Fed and the ECB any different?

Fri, 06/20/2014 - 10:15 | 4877730 DavidC
DavidC's picture

Answer - they're not.

DavidC

Fri, 06/20/2014 - 10:08 | 4877701 Dr_D
Dr_D's picture

Momentum is weak but fundamentals are strong!

Fri, 06/20/2014 - 10:11 | 4877714 jbvtme
jbvtme's picture

sounds like my sex life

Fri, 06/20/2014 - 10:22 | 4877752 markelshark
markelshark's picture

ftw!

Fri, 06/20/2014 - 10:08 | 4877704 Temporalist
Temporalist's picture
Shanghai to Start International Gold Trading in 4Q

http://www.bloomberg.com/news/2014-06-20/shanghai-to-start-international...

 

Fri, 06/20/2014 - 10:10 | 4877709 JRobby
JRobby's picture

His role was all part of the grand plan that has made the ultra rich, ultra rich to the 8th power (estimate, probably much higher)

He was very vocal in '97 about not regulating the derivatives markets in any way. He had pull then. Now he is just another used up scapegoat in the "grand wealth transfer theft". Probably the most useful idiot scapegoat,

Hey kids! It's just "notional value" it will never have to be unwound.

Filthy amoral criminals need public punishment.


 

Fri, 06/20/2014 - 10:12 | 4877719 Seasmoke
Seasmoke's picture

These lizards sure seem to live a very long time. 

Fri, 06/20/2014 - 10:20 | 4877746 jbvtme
jbvtme's picture

telomerase baby

Fri, 06/20/2014 - 10:11 | 4877711 Grande Tetons
Grande Tetons's picture

Off topic. I was expecting Silver to vomit today...so far...not happening.  I was expecting my dreams to be crushed today.....I guess I will have to wait until next week. 

Fri, 06/20/2014 - 10:12 | 4877717 fonzannoon
fonzannoon's picture

they have it capped. No need for vomit. They will probably just bleed it back to $18 slowly.

Fri, 06/20/2014 - 10:16 | 4877732 Grande Tetons
Grande Tetons's picture

What part of crushing my dreams next week did you not understand?  

All I wanted was one fucking weekend where I was not kicking myself in the ass...and you...had to rob me of that. Me no likey. 

Fri, 06/20/2014 - 10:21 | 4877748 valley chick
valley chick's picture

Slowly going up up up!  Time to page Sudden Debt and wake that cookie up as he wanted a wake up call when reaches 21. Let's see if tptb let it happen.

Fri, 06/20/2014 - 10:10 | 4877713 Seasmoke
Seasmoke's picture

I honestly believe that Yellens performance and answers were the absolute worse I have ever heard. They made no fucking sense !!

Fri, 06/20/2014 - 10:13 | 4877716 Yen Cross
Yen Cross's picture

 Greenspam and eggs, or SPAM I am Greenspan.  BTFD, because I fathered the HELOC bubble.

 If that guys ears get any bigger he's going to float away. (wishful thinking)

Fri, 06/20/2014 - 10:29 | 4877777 buzzsaw99
buzzsaw99's picture

ferengi alien lizard mutant baby

Fri, 06/20/2014 - 11:29 | 4878046 Yen Cross
Yen Cross's picture

 lmao. Dumbo The Flying Fiaopter...

Fri, 06/20/2014 - 10:14 | 4877727 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Is it me or does Yellen look like egghead the kid Foghorn Leghorn used to watch in some of the Looney Tunes cartoons.

Fri, 06/20/2014 - 10:16 | 4877736 SanfordandSon
SanfordandSon's picture

Growth down, inflation up

That's the way we like to pump it up

Fri, 06/20/2014 - 10:18 | 4877740 Colonel Klink
Colonel Klink's picture

The 4 living Federal Reserve chairmen should all be tried for crimes against the US citizens, found guilty, and executed.  Pure and simple.

Fri, 06/20/2014 - 10:19 | 4877744 B2u
B2u's picture

Fuck you Greenspan.

Fri, 06/20/2014 - 10:20 | 4877747 luckylongshot
luckylongshot's picture

Yellen knows the problem is that the private banking parasite has got so big it is killing the US economic dog. However she has a problem as she works for the parasite so will keep the slow death spiral going as long as possible. Don't assume the Fed will ever do anything sensible to fix the problem.

Fri, 06/20/2014 - 10:24 | 4877762 yogibear
yogibear's picture

Greenspan's photo would look better with him in a orange jumpsuit and in shackles.

What a fraudster.

 

Fri, 06/20/2014 - 10:27 | 4877763 NuYawkFrankie
NuYawkFrankie's picture

re Fed really has no idea....

Paging Moe Howard.... paging Moe Howard....

Please report to the Eccles Builing on What's Left Of The Constitution Avenue...

Fri, 06/20/2014 - 10:27 | 4877773 Oldwood
Oldwood's picture

This is the beauty of chaos. Rules, written or even just common sense, no longer apply. Everything now lies in the hands of those in power. There is no societal conscience. We have been reduced to sheep and they are the herder, snapping their whip and banging on the feed bucket. Sheep don't rationalize, they simply react to the immediate stimulus. If they say up is down, then down it is.

We rational thinkers, desperately clinging to the notion that up is still up, are watching the world seemingly spin off its axis, yet nothing happens. No crash, no collapse, nothing but more of the same. This chaos is being used as it is in every war and will be used to dispirit us and dominate us. This is a multi front attack. Do not think that our foreign travails are not linked to our domestic (immigration) and financial.

Every force for individual freedom is under attack, demanding submission to whomever claims it. We will be dominated by a county commissioner, local building inspector or the president of the united states. We have been rendered powerless, and any attempt to resist will label us as a threat. We have entered a world of madness and are left to viciously gnash our teeth or sit with a stupid smile and drool seeping from our lips.

I vote for the latter.

Fri, 06/20/2014 - 10:43 | 4877832 the grateful un...
the grateful unemployed's picture

i prefer the term rational unthinkers. the fed knows where the economy is going, (they are in the business of central planning, si? no?) and therefore they don't know where the economy is, one of those laws of physics, you can know where something is going, or how it is moving but you can't know both. the more they know about the economies direction they less they know about the economy (the fault is in central planning just as we have always said) at some point they will make a bad mistake. making the rational decision not to think we are prepared to understand the current economic reality. if the fed would read zerohedge, and quit trying to plan the economy they would know something besides knowing the future which is what haven't done yet, and of which they are active agents. running a centrally planned economy with no idea where its going? (and certainly no idea where it is?) now thats insanity....

Fri, 06/20/2014 - 10:29 | 4877781 the grateful un...
the grateful unemployed's picture

second law of thermodynamics still applies?

Fri, 06/20/2014 - 10:33 | 4877792 buzzsaw99
buzzsaw99's picture

not to "them" it doesn't. "they" always accrete in both orderly and chaotic conditions.

Fri, 06/20/2014 - 10:34 | 4877803 MFL8240
MFL8240's picture

Whjy doesnt she ask someone who knows what the hell they are doing?

Fri, 06/20/2014 - 10:38 | 4877813 Atomizer
Atomizer's picture

Mr. Yellen openly confides, I'm just pissing in the wind and following its direction.

Fri, 06/20/2014 - 10:44 | 4877838 orangegeek
orangegeek's picture

Spot the fucking moron???

 

Yellen, is that you???  No????  Oh, it's you Krugman.

Fri, 06/20/2014 - 10:47 | 4877853 GeorgeHayduke
GeorgeHayduke's picture

Growth cannot continue forever on a finite planet, so that part is easy to understand if you have a brain based on reality. Optimisim, on the other hand, is based on human emotion, which has no basis in reality. Looking at the current political situation, I would expect much more emotion-based stupidity from both the so-called left and right until reality-based limits put an end to it.

Fri, 06/20/2014 - 12:44 | 4878331 Bemused Observer
Bemused Observer's picture

Normal growth can indeed keep going. As long as it occurs within the constraints of your economy, you CAN keep growing.
It is this new 'Wall Street' type growth that cannot continue. Because in a normal economy, the profits from today's growth get re-invested in tomorrow's growth, enabling it to occur.
Wall Street 'growth' is harvested and consumed by the 'today' people, leaving nothing in place for future growth.

They keep saying that the growth CAN continue like that, because it gives them the excuse to TAKE all those profits. Sort of like the guy ahead of you at the all-you-can-eat buffet who takes the entire pan of King Crab legs for himself even though he can't possibly eat them all, and tells you not to worry, they'll eventually bring more...

Fri, 06/20/2014 - 10:50 | 4877871 AcidRastaHead
AcidRastaHead's picture

These sentences pretty much say all that needs to be said:

"Fundamentals no longer matter. Common sense is now a totally foreign entity. High frequency traders and algorithms dominate the marketplace, brokers steal customer funds to cover their own losses, banks sell their customers ‘shitty deals’ and take the other side of the trades.

And everyone is drinking from the same spiked punch bowl where bad news is good news, good news is good news, and a single clueless committee has all the power."

Fri, 06/20/2014 - 11:24 | 4878027 Duc888
Duc888's picture

Acidrastahead: And everyone is drinking from the same spiked punch bowl where bad news is good news, good news is good news, and a single clueless committee has all the power."

 

Don't fret, that's not a turd in the punch bowl, it's just a really small olive....really.

Fri, 06/20/2014 - 12:22 | 4878236 mendigo
mendigo's picture

Price of money approaching zero - for those who are on the inside.

Fri, 06/20/2014 - 12:31 | 4878276 mendigo
mendigo's picture

In a world where money is freely available to 0.005% of the population...

 

They can destroy your business

They can throw you in jail

They can buy the government

They can rewrite the laws

They can start wars

They can destroy governments

They can buy your children

They can control what you see and are taught

They can monitor you

Fri, 06/20/2014 - 12:33 | 4878279 khaproperty
khaproperty's picture

She says it - all others not.

Fri, 06/20/2014 - 12:35 | 4878285 Bemused Observer
Bemused Observer's picture

Watching these clowns try to manage this economy is like watching your idiot friend trying hard NOT to puke after an evening of bar-hopping. YOU know he needs to get it over with, but he just keeps sitting there, choking back the mess, re-swallowing, corn chunks flying out of his nose, and in between swallows he gasps "I'm good...I'm good."
But you know full well he's gonna leave you with a nasty mess and wish to hell he'd just get it over with so you can clean up and drive on.

Fri, 06/20/2014 - 13:52 | 4878559 moneybots
moneybots's picture

Alan Greenspan- a crime against humanity.

Fri, 06/20/2014 - 13:55 | 4878571 moneybots
moneybots's picture

"Looking at this ridiculous market, I really I find it hard to believe that the odds are stacked particularly well in favor of the little guy."

 

Alan Greenspan would never allow the odds to be stacked in favor of the little guy.

Fri, 06/20/2014 - 22:19 | 4879813 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

What would the mirror image of this article be if one could change what is manifesting now? One would hopefully choose an honest broker/arbiter with a fair and unbiased equitable manner of conducting business, and then one could establish honest fair trade that is ethical. The global world of economics has lost it's ethics and that is something that cannot be artificially replaced

overnight. As one brighter than a wizzard, and certainly smarter than Alan Greenspan, I would be happy to be the new man at the helm on Wall Street. Where is my office located and how much do I get paid in my first year? If Wall Street wants a long term contract for my services as one brighter than your previous 'wizzard' I am open to offers? Frankly, there is only one way to be honest in business and that is the big trick to it all, folks.

p.s. I'm a smoker so I'll have to have an office with a view and

permission to smoke or i'll be forced to break the rules again.

Sat, 06/21/2014 - 03:10 | 4880127 honestann
honestann's picture

The federal reserve is an exercise in the absurd.  The actions they take are designed to enrich their owners (themselves) by seeming to address a short-term problem.  But those actions are more effective at creating longer-term disaster than helping to eliminate short-term problems.

The consequences of ALL manipulations accumulate and accumulate and accumulate... until finally they become so powerful they cause a massive effect.  Sometimes those effects are positive in some ways (stock market booms), but ALWAYS the net consequences of every artificial action is to destroy the efficiency of the real economy.

So the rich and powerful get richer and richer, while the real economy "regular folks" depend on goes forever down the tubes (now much faster than even technological advancement can compensate).

Do NOT follow this link or you will be banned from the site!