.As our good friend Triffany says,
"What the Fed?"
This is what the Fed says:
The Committee expects inflation to moderate later this year and next year...the upside risks to inflation and inflation expectations have increased.
What in the world is anyone supposed to believe that the Fed thinks, with language like this? So much for transparency.
In the most recent Fed statement, and I am not making this up, they said:
The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices...
What the crap? Who is writing this stuff?
Here's my guess as to what the Fed statement says today:
Release Date: June 25, 2008
The Federal Open Market Committee decided today to lower its target for the federal funds rate 325 basis points to -1.25 percent.
Recent information indicates that economic activity remains non existent. Household and business spending has been "subdued," which is a French word that means "totally crappy." Labor markets have softened further, but are still crispy on the outside, thus creating a taste sensation that will take the financial world by storm. Financial markets remain under considerable stress, and we suppose that perhaps, there maybe, just might be, some regular people that are having a hard time making ends meet.
We, of course, don't know any "regular people," so we'll continue to focus on some other things.
Although we don't take energy or food into account when we measure inflation, because we don't eat or put gas in our cars, we want to emphasize that movie tickets are too expensive. Could somebody do something about that? I can't see "Kung Fed Panda" AND the new "Indiana Jones and the Economy of Doom" movies unless I go to a matinée. I can't take that much time off work. What do you think, I'm a congressman?
Ok, here's the deal: please take your home off the market. That'll cool things down, and remember, if you stop paying your mortgage, it won't matter anyway because your mortgage company doesn't exist anymore. And stop driving, flying, eating corn, wheat, beans, meat, or vegetables, or going to the midwest, selling stocks, buying bonds, or complaining about anything ever.
I had some other things to say, but I gotta run. The movie starts in a half hour.
Greg Ip and Sudeep Reddy, the writers of the WSJ's Real Time Economics Blog, write:
One thing’s nearly certain, however: Buy a lottery ticket, and even if you’re the most cold-blooded rationalist this side of Eugene Fama, you’ll get so wrapped up in what you’d do if you won that you’ll place far greater odds on your chance of winning than is actually true.
That's from their post today which you can read here. They also discuss a field experiment where an organization dramatically increased blood donations by offering a lottery ticket to anyone who donated. A thought provoking post, indeed:
1. Do you ever imagine the gains in your account from your trades, the moment you actually open the trade (or even before)?
2. How often do you think of the potential loss, and the effect on your account, at the time you take the trade? Very infrequently for most. I've been trying my best to think of both -- the potential win but then more importantly, on the risk I'm taking, at the time I take the trade.
3. What if every time you took a trade, you were required to set aside 5 minutes of community service time, which you would build up and donate in chunks of 1 hour?
4. What if for every 30 minutes of community service, you earned 30 minutes of trading or market time? Or for every 30 minutes you spent at the computer working on trades, you had to set aside 30 minutes of family time?
From the Wall Street Journal today:
The indictments of two former Bear Stearns Cos. hedge-fund managers are expected to cite a personal email sent from one to the other suggesting that the funds were headed for the rocks -- four days before they told investors there was little to worry about.
While we're on the subject of Wall St. traders not being much smarter than anyone else (or perhaps far less intelligent, in some ways), I just wonder: isn't accountability the name of the game here? How different things would be today for Bear, Stearns, if somebody had just said very early on, "Hey, we really screwed this up. We made stupid decisions." They, like so many other traders, waited until it was too late.
Don't ever let the same thing happen to you.
If you think that consumer spending is important to the economy, and,
like, you probably do if you live on Earth, then this ought to interest
you; it's the XRT index -- the S&P Retail Index:
Consumers in the United States have stopped spending. Consumer spending is 66%+ of total Gross Domestic Product for a country. Recession, anyone?
