THE MOGAMBO
GURU A nightmare of magic
tricks By The Mogambo Guru
Since it is inflation that makes me insane
with fear, it is only natural to note that the
government's new gross domestic product deflator
(which is used to adjust sales prices for
inflation) has come out, and even with all the
lying, fraud and overt corruption, the best they
can do is admit that price inflation is 2.6%,
which is up from last month! Hahaha! We are
freaking doomed!
And although I am remiss
is saying so, the Conference Board came out with
their new leading, coincident and lagging
indicators. The leading indicator (which is
profits and the economy down the road, about a
year or so from now) was actually up by the
slimmest of margins, taking it to 102.0 from
101.9, indicating
that
the future ain't so hot.
The coincident
indicator, which is just what it says, was also up
by that selfsame minimally slim 0.1 margin, taking
that indicator to 107.1 from 107.0. So things
ain't so hot right now, either.
The action
that makes me want to scream in fear, of course,
is the lagging indicator, which I define as
burdens and inflation. This indicator was up 0.3,
which is three times as much as the others,
continuing an unbroken stream of indications of
higher and higher inflation, taking it to 111.6
from 111.3.
This is exactly as one would
expect if we look in the banks themselves, where
we note that total reserves still stands at the
same ridiculous $42 billion it has been for a
freaking decade. On the surface, then, it looks
like nothing has changed; money is literally being
created from nothing.
Then you get to the
revelation of non-borrowed reserves in the banks,
and you are thunderstruck to see that it is a
negative $91 billion! Hahaha! Which is actually an
improvement over last week's negative $98 billion!
So, flipping it around, their borrowed
reserves is $91 billion, while total reserves is
only $42 billion. So where is that other $49
billion, if they borrowed it but did not add it to
reserves? Who the hell knows? Gaaahh! My head is
spinning! I cannot even understand this new
corrupt crap anymore!
And for this week's
installment of the Sheer Weird From Around The
Solar System (SWFATSS), Barron's reports that the
earnings of the Dow Jones Industrial Average
collapsed to $185.64 from $226.02, and yet (and
here is where it gets weirder than hell), the DJIA
actually ROSE! And it rose so high that the
price-to-earnings ratio soared to an astonishing
70.34! Hahahaha!
Don't see the humor in
that? Another way of looking at this is that you
are paying a price for the stock that it so high
(audience shouts out, " How high, oh, Glorious And
Handsome Mogambo (GAHM)?") that it equals
everything the damned companies in the index will
make for the next 70.83 years!
I look at
the faces of the other people in the checkout line
at the grocery store after I tell them this
amazing, astonishing fact, and I see looks of
puzzlement, which looks like complete befuddlement
to the untrained eye, but without the drooling,
which I should have expected, since I had just
finished giving them a Long And Loud Mogambo
Harangue (LALMH) about how, "The reason that
everything costs so much is that you are all a
bunch of morons, which I can prove because you
voted to elect morons who let the Federal Reserve
create so much excess money and credit, so damned
much excess money and credit, so impossibly and
irresponsibly much excess money and credit, so
bizarrely and insanely much excess money and
credit, which is called monetary inflation, which
always shows up as price inflation as all this new
money bids up the existing stockpile of things for
sale, which in the last few decades had been
manifested as staggering inflation in the prices
of stocks, bonds, houses and especially in the
size and cost of government, which all you
halfwits mindlessly applauded because some
conniving hucksters told you that the government
is supposed to 'help' people, and Wall Street
hustlers told you that they found a way to give
everybody a free lunch by having you give them all
your money to 'invest' for you to fund your
retirement, and you low-IQ boneheads just lapped
it up, but now that inflation is at last getting
around to food and energy, you are all a bunch of
whining idiots who are getting what they so richly
deserve. Hahahaha!"
Again, the other
shoppers did not give voice to their happy
approval and thankfulness for my kind instruction,
and the same blank look on their faces told me to
try again, and make it as personal as I could. So
I said, "The price of the DJIA index is so high
that if all the 30 companies in the index sent you
all of their income, every dime, every dollar,
every day for the next 70.34 years, you would only
then break even! What kind of an idiot would buy
the Dow Jones at such a ridiculous price?"
I never did get a chance to follow up with
them or bask in their gratitude, as by that time
the cashier had finished ringing up my groceries,
which came to a total that was a hell of a lot
more than I ever remembered paying for such a
little bit of grub, but when I complained to her,
she just started screeching at me, "Go away! I
hate you! Just go away!" over and over, like I
don't get enough of that insulting crap at home or
something.
But maybe she knows, and the
other shoppers know, that their precious little
retirement plans are just full of that stuff. But
mine's not. I feel better.
Richard Daughty
is general partner and COO for Smith Consultant
Group, serving the financial and medical
communities, and the editor of The Mogambo Guru
economic newsletter - an avocational exercise to
heap disrespect on those who desperately deserve
it.
(Republished with permission from
The Daily
Reckoning .
Copyright 2008, The Daily
Reckoning.)
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Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
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