THE NEXT TIME YOU HEAR

For anyone who bothers to spend a little time with stock market history the following quotes are well-known.

         John Maynard Keynes in 1927: “We will not have any more crashes in our time.”

H.H. Simmons, president of the New York Stock Exchange, Jan. 12, 1928: “I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future.”
Irving Fisher, leading U.S. economist, The New York Times, Sept. 5, 1929: “There may be a recession in stock prices, but not anything in the nature of a crash.” And on 17, 1929: “Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”

W. McNeel, market analyst, as quoted in the New York Herald Tribune, Oct. 30, 1929: “This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.”

Harvard Economic Society, Nov. 10, 1929: “… a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall.”

We have lifted them from an excellent piece http://www.zerohedge.com/news/2014-11-12/economic-end-game-explained because they are so relevant to what's going on today.

One must remember that when another person's economic territory is jeopardized or in any way threatened, the manipulation intensifies. It's the same everywhere, politics, economics, the stock market notwithstanding.

Main stream media is one of the main manipulators, usually via what Lenin called useful idiots. These are often well-known, even well-meaning people the media provides with public exposure. They come from a variety of areas, academia, corporate suites, Hollywood and so forth.

They are not necessarily evil people or conspirators. They're believers for the most part. Zealots at the extreme, Myrmidons at the center and the edges. Many are infatuated with the sound of their own rhetoric. People like New York Times economist Paul Krugman should come to mind.

Krugman's probably a decent sort and most likely when he was a kid even his mother loved him. In the military one quickly learns that it isn't only the enemy who can snuff you. Who are the ones in your own squad, well-meaning or otherwise, that can get you done in?

Danger is often much closer than most of us realize. Weapons are suppose to be kept up and down range. And MSM is suppose to reveal the truth and so they do. But it's their truth. And most likely not yours or mine.

This is hardly new. The history of news is rife with manipulations and falsehoods. It's different this time is one of their biggest falsehoods. See Alan Greenspan and just in time inventories around the 2000-2002 period. These are people who thrive in the world of half truths and selective data picking. Many of them masquerading as revisionists.

A good example appeared in yesterday's WSJ in a book review by Princeton economic professor Burton G .Malkiel, best known for his efficient-market hypothesis as expressed in his 1973 book, A Random Walk Down Wall Street. If you're like many us you've had a copy on your bookshelves for years.

And you know that if you mention a guy named Malkiel, you just mentioned another guy named Bogle and a huge mutual fund organization many know by the name of Vanguard.


Malkiel was reviewing James Grant's newest book, The Forgotten Depression, a review of the economic downturn in 1920-21, just after the great war to end all wars. Grant's the publisher of Grant's Interest Rate Observer and a known gold enthusiasts. He is also often cited for his bearish views.

Malkiel begins his review by quibbling with Grant's use of the term "Depression" in the title, saying "recent research suggests that the decline in the early 1920s wasn't as severe as that term usually signifies...." 

The point of Grant's book is the 1920-21 downturn happened and recovered without any government intervention, a point Malkiel concedes.

No fiscal stimulus was administered in 1920-21, and a powerful, job-filled recovery followed. Today our 'overmedicated' economy is in its fifth year of a 'lackluster recovery.' In the current environment, he (Grant) believes, we should take a more laissez-faire position.

There's an old saying that if your neighbor gets laid off it's a recession, but if you lose your job it's a depression. But who gets to define depression, the statistics crunchers, government officials and academics or those going through it, those who were there?

 Grant's point is it was a serious downturn for those who endured it that was turned around without any government interference.

Perhaps so, but there are important differences between then and now, and there is more to the story, Malkiel writes, rolling out one of the shills for government intervention's favorite arguments.

Malkiel then notes "...monetary policy did not cause the recession of 2008. The crisis was precipitated by the unraveling of a housing bubble and excessive leverage by individuals as well as financial institutions, creating a crisis whose remedies are different from 1920-21.

Malkiel conveniently skips the question of why it was necessary to unravel anything in the first place--that is, who helped not only create but stimulate the housing bubble--politicians with there push at the time every American should be able to afford a home and the Federal Reserve. 

Teaser lower interest rates tied to short-term Treasuries that will soon need refinancing coupled with low or no down payment incentives pushed by so-called well-meaning politicians and government bureaucrats are mighty tempting.

The financial institutions and individuals were just walk-ons to the program. It's there we'll give it a go. How many politicians who penned pitiful legislation at the time are being called out, let alone fined or prosecuted. 

Malkiel concludes his review with the old academic trick of damning with faint praise.

One can disagree with Mr. Grant's analysis and still admire his ability to produce a readable and carefully researched history.  People who believe in the inadequacy of the current macroeconomic orthodoxy will find him to be an articulate spokesman. 

In residency training, medical residents are judged by their fund of medical knowledge. It's the pure basics of medicine, the stuff they were suppose to learned and mastered before they showed up in residency.

If they fail early on to measure up, the department chief frequently asks them to move on and conveniently writes them a letter of damning faint praise. In essence, kicking the can onto the next fool and ultimately to the public at large.


It might be a stretch for you, but think of that pubic at large as the taxpayers the next time you hear it's different this time and government wants to help.