Zimbabwe Ben Bernanke’s “green shoots” fallacy
Posted by Benjamin J. Thompson | Filed under Economics, Essays, Liberty, News
Just focusing on the movements of a graph really doesn't help you see the big picture.
If there’s one thing I’ve learned from watching the financial markets for the last five years, it’s that eight weeks is nowhere near long enough to pronounce a conclusive change in the winds. Relying solely on post-hoc technical analysis of a graph is a sure-fire way to get yourself pantsed by the market.
When guys like Peter Schiff were foretelling the implosion of the housing market, it took over a year and a half for their predictions to manifest. Shiff, Ron Paul, Lew Rockwell, Tom Woods, and the rest of the scholars at the Ludwig von Mises Institute were right on the money, not because they were good at analyzing graphs, but because they understood immutable economic laws.
Yet during all that time, it was exactly Bernanke, Paulson, Krugman and the ones with the biggest megaphones on the mainstream news who said all was well, and the doomsayers were off their rockers. Now those people expect us to believe them when they say 8 weeks of non-carnage is an economic turnaround? There’s been no fundamental change!
An eight-week-long upturn in … stock markets since March 10th has sparked a wave of optimistic commentaries in the financial media…
It’s largely the new “mark-to-make-believe” fraudulent accounting rules that’ve permitted the banks’ financials to look so good — or at least look not so bad.
We need to keep in mind that the Fed and the government have been stirring the pot of economic chaos even more aggressively than we previously thought, and we have yet to see all the unintended consequences.
Just because the Wall Street numbers turn up for a couple of months doesn’t mean the general economy is out of the woods yet. The Great Depression lasted for about 15 years, and since our government’s chasing the same Hooverian/Rooseveltian policies so far, we should expect the same until they decide to do an about-face on their policies.
It’s not that I don’t want to see the economy recover, or that I dislike Obama so much I don’t want to see his policies bring about a recovery. This is a matter of economic laws that governments can’t suppress. Their policies have been aimed at all the symptoms but never the underlying problem. They’ve shot us up with enough pain killers to make it feel OK, but the bones are still broken. Any real recovery will be in spite of these policies. Once this bear-market rally runs its course, these facts will become obvious, at least until they find some new free market bogeyman to blame.