As you may have noticed, I am not particularly interested in that phony (at least in its general practice) science called “economics.”
But I can draw some conclusions from evidence. Last week, I heard George W. Bush bragging about how great the economy is. Which caused me great trepidation, mostly because every time that Bush makes a statement, the opposite turns out to be true.
It’s called “Colonel Klink Syndrome”: In an episode of the 1960s CBS sitcom Hogans Heroes there is a bomb that has to be defused. For some reason, Hogan, played by the late Bob Crane, has to defuse the bomb. The Nazi prison camp commandant, Col. Klink, played by the late Werner Klemperer, watches in his hysterical, pompous way. It comes down to two wires.
Now, Klink was quite a character. A pompous egomaniac, he was so dreadfully bad at his job that the prisoners often had to bail him out, just so that he’d remain Commandant, and the Nazis wouldn’t send an ACTUAL soldier to cramp their style (they acted as a transfer point for downed Allied flyers, etc. ). Klink’s preening, neurotic, nepotistic incompetence was the core of the series’ comedy, just as … well, you can draw the presidential parallel without my help.
In that episode, Hogan has a dilemma: If the right wire is cut, the bomb is defused. If the wrong one is cut, the bomb goes off. So, Hogan asks Klink: Which wire do I cut? Klink says, with utter certainty: THAT one.
Hogan cuts the other one. The bomb is defused. He explains: I knew that Klink would pick the wrong wire. (It is a certainty, like the dawn). You could literally bet your life on it.
So, too, when George W. “Col. Klink” Bush says that the economy is great, you know we’re screwed. (“Clean Skies Initiative,” “No Child Left Behind,” “Healthy Forests,” “Spreading Democracy,” etc. etc. etc.)
It’s very much the same thing that the citizens of the old Soviet Union knew: whatever the official newspaper Pravda (“truth”) wrote was so predictably a lie, that you COULD get your news from it, if only by negation.
Well, in our new evil empire the news is ugly. And even the U.S. press has finally picked up on the precipitous drop in the value of the U.S. dollar.
Which I told you about back in July.
Wednesday, July 25th, 2007…12:40 pm
The Dow Which Is Being Spoken Is Not The True Dow
Glad to see that the US press is catching up.*
[*The foreign press has been well aware of this for some time. Here's a good piece from the German magazine der Spiegel, a YEAR ago:
Experts have been predicting for some time that the dollar would eventually go into a nosedive, and now that time seems to have come. The US currency has lost five percent of its value against the euro since late October, and 13 percent since the beginning of the year. The euro is currently fluctuating around a value of $1.33, which is only 3 cents away from its all-time high in 2004. And yet Trichet's counterpart Ben Bernanke, the chairman of the US Federal Reserve, has done nothing but look on as the dollar plunges.
It's a very interesting analysis of WHY the foundation of our economy is crumbling. Seriously, go read it.]
And I’d be a hell of a lot happier if George W. Klink said that we were tanking. We are, but you’ll never hear him say it. But what astonishes me is that it is soberly reported in the press — as is a contant drumbeat of ‘happy news’ about the economy.
Because we’ve painted ourselves into a corner. If you belive the fake “daily reason” for whether the market went up and down (and these same people sneer at people who read tea leaves!), then, like them, you’re probably hypnotized by the false cause and effect relationship that’s guessed at, daily.
Or we could get hit by an asteroid. You never know.
Weirdly, everybody’s “guess” in the media tends to coincide: investors reacting to such and such sent the market … into a tailspin, into a bull market, into negative territory, or any one of a thousand stock clichés that bear a striking similarity to sports jargon.
How about those regular, mundane pseudo- “cause and effect” reports on what the stock market “thought”?
And people call astrology a pseudo-science! Technically, astrology was a purely empirical discipline wherein celestial events were combined with earthly happenings (which was where the big bucks were, serving a King, and pointing out the “omens” for him) to form “causal” relationships. (Geez, what does THAT sound like?)
Compare: “An eclipse in Leo, your Majesty. This signals the death of a Head of State! (Not you, your Majesty. Your conflagration of Mercury in Leo with Mars at your fundraising protects you from the ill effects of this malodious omen.)”
And contrast: “Stock markets rose sharply today, reacting to projections of a bumper crop of dental floss for the third quarter. (Don’t worry, though. Your dental floss futures contracts are firmly rooted in the burgeoning demand for biodiesel in the Scandanavian lowlands next summer. Heavy caribou migrations should prompt an army of diesel Volvos and Saabs to drive up to the Arctic Circle to pester the Sami.)” [Note, this is a MADE UP news story.]
It’s soothsaying, pure and simple, and so idiotic that a couple of years ago, when a panel of “experts” on the “economy” were asked about the prospects of a recession, they agreed — to a pundit — that recession fears were ludicrous. It later turned out that we were ALREADY in a recession when the panel was convened.
So, they’re lying.
But more importantly, they’re lying FOR A REASON: Heisenberg’s Uncertainty Principle.
You heard me. Heisenberg’s Uncertainty Principle (or, rather the mischaracterization of it in the popular media, which is what we’re talking about anyway: mischaracterization in the media.) It’s a phenomenon known as Observer Effect: the act of observation alters the event being observed. If you want an example, take a look at what a television camera does to a political gathering, a party, a classroom full of kids, or a roomful of models.
Well, as I said, that’s not ACUALLY what Heisenberg’s Uncertainty Principle is (it’s a more mathematical issue dealing with statistical probability and prediction), but in the absence of a better term, we’ll accept the popular misunderstanding of the “law.”
Well, in stock market reporting, Heisenberg is a BITCH, baby. Just witness what I wrote about this week, (“Love and Kisses from the Land of the Freed Balloons” 11- 3-07)
But NOT TO WORRY! The economy’s GREAT!
Meredith Whitney, the analyst who prompted a $369 billion (£177 billion) plunge in the value of US shares on Thursday by issuing a negative note on Citigroup, hit out at Wall Street’s culture of intimidation yesterday after receiving several death threats from investors in the bank. [emphasis added]
Everyone in the financial media still gets the vapors when they think about Alan Greenspan’s “irrational exuberance” statement at a congressional hearing and its alleged effect in triggering a stock market tumble.
OK: the market has a long history of huge, irrational, mob-like lurches, formerly called, correctly “panics”* and “bubbles.” So, those who decry the “Nanny State” at every opportunity, spoon-feed sugary financial news, lest baby throw a tantrum. It’s a well-known little bit of training advice to newbie brokers and financial advisors: never advise a sell. There’s no percentage in it.
[* A great book on the subject is the classic, Extraordinary Popular Delusions and the Madness of Crowds, By Charles Mackay, which you can read here, and its extension in three volumes from Project Gutenberg all for FREEEEEEE.]
You can advise buys, and if they don’t work out, well, nobody’s perfect. But if you advise a SELL, and the stock goes UP, then the investor will never believe you again. (She’ll brood about all that fictional cash that she COULD have made, and blame YOU.)
No: baby is VERY cranky in the best of times, and the financial press, financial pundits and government spokesnakes are VERY careful not to upset baby. Because Heisenberg might just bite them in the ass. So, the paradox of the financial press is that the worse things are, the more that they bullshit you about how sweet the smell of success is, when it’s actually quite a different odor that’s wafting from Wall Street.
Here, you can be a financial pundit, too:
When Bush took office, crude oil was $20 a barrel. Yesterday, for all practical intents and purposes, oil hit $100 a barrel. Now, couple that with the appoximately 50% drop in the value of the dollar since the dollar’s peak in 2001, and, OK, that’s $50 a barrel, expressed in 2001 terms.
And, since everything that you buy, eat or consume was transported to you using gasoline or diesel fuel and/or fuel oil (tankers), what do you think the effect of the new, record oil prices will be?
(And note that gas prices conveniently AREN’T figured into the US government’s monthly cost of living figures, along with dairy products, neither of which any of those living ever use. Yeah. Right. Sure.)
Geez, no WONDER the stock market is so volatile.
Baby’s cranky. And with good reason.