More Pseudo-Paradoxes: Supply and Demand, Experts

Supply and Demand bring equilibrium to he market.

• Baloney.  The economy is built on highs and lows -- there is no such thing as equilibrium.
• For example: not-too-long ago, SUVs were all the rage.  They were expensive.  Now, due to high fuel pices, SUVs are no longer selling.  The prices have dropped considerably.  The high prices of the past and the low current prices reflect the vagaries of demand, NOT equilibrium.
• Home prices -- same concept.  
• Do not participate in the mob mentality.  If everyone is purchasing something and it seems expensive, refrain from buying.  It may take months or years, but you will eventually be rewarded.  Even if the price never comes down, saving that money is reward enough.

Experts who explain what went wrong with the latest market crash/ banking crisis, etc.

• Prior to a crash, there are usually a few pundits who attempt to warn everyone of the impending financial danger.  They are usually shouted down by the "Experts" who preach with religious fervor that everything is okay ... it better be, since they are probably invested in the part of the market that is about to crash.
• After the crash, the "Experts" step in and explain, point-by-point, what went wrong with a scholarly reverie.  MEANWHILE, the few pundits who were right prior to the crash are drowned out AGAIN.
• So, the few pundits who get it right are ostracized prior to a market crash, and largely ignored afterwards.

***

For more pseudo-paradoxes, check out Fame/Fraud Matrix and [INSERT WOODY WOODPECKER LAUGH HERE], two ebooks full of dailyskew satire and thoughtful commentaries.  Also, check out these previous DailySkew posts:

Pseudo-paradoxes

More Pseudo-paradoxes

The Economy: Now What?

As some of you know, we famously predicted the collapse of the housing market after the 2004-2005 Hurricane seasons ravaged Florida, Alabama, Mississippi, Louisiana, and Texas.

A year ago, I wrote a follow-up that explained the need for Acceptance (tm) ... in other words, we needed to accept the coming fall in housing, and plan accordingly.

Again, I wrote that in March of 2007.

That was plenty of time for the geniuses at Bears Stearns to divest themselves of some of their sub-prime mortgage investments at a loss ... a small loss, compared to the full-blown Ebola virus eating away at their company's existence!

But, hey, what do I know? I'm just a writer on the web. I'm nobody, as far as the GENIUSES are concerned.

For some reason, I actually believed the folks on Wall Street would take the proper action....

A couple of days ago, I read this article thanks to Drudge, where 82-year-old famed economist Anna Schwartz basically said what I said a year ago.

God bless her ... but if she's the smartest economist whom people respect ... then we are clearly doomed. It is clear that the younger "Wise" men and women on Wall Street, who should be rising to to fill Anna's, and Milton Friedman's, shoes aren't worth the paper their MBAs are printed on, or their salaries.

My friend Damian asked me, "Now what do we do? What's the solution?"

The solution that I prescribed a year ago remains the same ... unfortunately, the treatment will be more painful.

As I've explained in the past, the actions of the Fed to lower rates to 1% Post 9-11 merely moved our economic troubles from that time into the future ... AND, it increased the nature of the problem.

So, what does the Fed do now, knowing what's happening? They lower rates to below 3%!

Whatever happened to historic lows? Don't they understand that 4% is a perfectly reasonable interest rate?

Do they really think that putting the rate below 3% will bring confidence back into the economy? Sorry, Mr. Bernanke, but that was a one-trick pony, and Mr. Greenspan already rode it.

I was okay with lowering the rate to 4% ... but Bernanke needs to stop listening to the braying on Wall Street. It's time to stand firm, and let the dominoes fall where they may. Instead, Mr. Bernanke seems determined to add more dominoes to the cascading stack, toppling over more citizens and financial institutions in its wake.


The longer the Federal Reserve, along with Treasury Secretary Paulson and the politicians on Capital Hill, continue to delay the inevitable, the harder the economy will crash when they finally run out of tricks.

I pray the Fed stops lowering rates. I pray that certain financial institutions are allowed to die in peace -- Bears Stearns is starting to look like Weekend at Bernie's, for goodness sakes!

The economy will survive. The dollar will recover ... eventually. We'll get through it.

We must take our economic castor oil. The credit binge, individually and collectively, must stop. And it will stop, whether we like it, or not.

How do they know?

Here are some random quotes I've heard over the years:

"People are clearly inspired by Barack Obama's message. That's why they're voting for him."

"McCain needs to reach out to conservatives; they won't vote for him otherwise."

"America wants change!"

"It's the economy, stupid."

"No team will sign Barry Bonds because of the court case and the public outrage against him."

I have a simple question: How on earth do commentators, pundits, news anchors, and all else KNOW what Americans are thinking, feeling, and wanting?

What. Did they talk to five people walking by before going on the air to get a feel for public sentiment? Do they look at a poll where a majority of people say one thing and then project the image that 100% of the people feel that way?

As one of the few people walking on this blessed earth with a brain, I tire of these tactics. I tire of seeing the effects of these tactics on John Q. Public -- around water coolers, at supermarkets, etc. Average folks tend to parrot what they're verbally fed.

I wish intelligent analysis was considered profitable by the MEDIA.