the Ole Firmer's Almaniac

The ole firmer walked around the backside of the barn. His wearied eyes took a moment to focus on the horizon; dark clouds appeared to dominate that distant line; they'd been hanging there for quite a long while now. The immediate vicinity was clear, however, if BLS numbers are to be believed. Mixed signals here there and yon. The times they are a-changin', thought he, and things ain't

what they used to be.

The rules of the game have changed; the old computations are no longer working, with the ole firmer and his firm being blindsided by all the new manipulations, robo-washed sterile by robo-driven arbitragers as if someone behind the sprays and fluff were cleaning the clocks of commerce, wiping away the profits, constantly leveling the playing field and rendering the firmer high but not dry, now eyeless in nasdaq, then dumb in the dow, spooked by the S&P, then suddenly swept up again in a flood of liquidity, floating on Fed flotsam, pummeled by day trade dealers punting buyback fluff up and down the field. The firmer pondered all this while studying the broad side of his barn. Need to fix that roof-- the thought crossed his mind for the umpteenth time.

Then without warning, his step coincides with a pile of BLS. Oh shit, exclaimed he. Up on the rooftop, the ever-vigilant barnyard blackbirds squawked loudly, as if trumpeting their amusement at his misfortune. Caw! Buyback! Caw! Quoth the raven: Evermore! Now and evermore! So shall your ascending P/E path be: driving under the influence of BLS, monitored by SEC, checked with OMB, hog-tied with Dodd-Frank, frothing high in P/E ratios, fearless Fannie and fawning Freddie sharpening pencils in the background, consuming FOMC reports, leaning on Fed puts, flummoxed at SEC stops, disgusted with IRS farts and bewildered by WTF surprises.

LOL . . . not.

The ole firmer's labor participation rate was, and had been for awhile, after 89 months of zero-bound interest rates on the downward trajectory--headed south, as some folks say, although he wasn't comfortable with the phrase. And out there on what used to be the open prairie of Price discovery--that old crossroads of supply and demand-- well, it has become well-nigh impossible to determine where, when, how and why, it seemed to the ole firmer.

This is what it felt like, he surmised, to be on Main Street in a Kmart world, then at Kmart in a Walmart world, now being disoriented in an Amazon jungle, no way out, with the Fed ham-stringin all the supply lines so's to simulate demand on a rising level. How this gmo steady-state staid new world of post-capital never-everland came about he'd never understand.

The old firmer would never understand. He felt like the onslaught of old-timers' disease was gnawing away at his youthful entrepeneural sensibilities.

The obnoxious ravens on the roof calmed down, their screechy cawing now lapsing into a low zirping. Quoth the raven--Nevermore! There's no real investment any more. No more frontier, no more exceptional expansion, no more manifest destiny, where do we go from here, caught between rocknroll and a hard face.

They say casinos are big now.

Where's the high-flyin' high-multiplyin' authentic productivity? Inventories high, sales low. Slow go. What would Rockefeller do? Where's JP Morgan when you need him? Carnegie's steel has all been laid; Edison's taking a nap and Bell won't answer the phone. No Ford nor Chevy on the horizon that I can see, thought he. Watson's now a programmed response. Fairchild's been implanted in a solid state econ. Gates is creaky; Jobs is gone-- out there somewhere on that musky dark cloud horizon. What's everybody doing?

Tappin' on chinky glass, devolving in devices vices, sippin' Singapore slings, all sound and futility signifying no-growth, thought he, hobbling along on a programmed 2% inflation path. Old-timers like me can no longer hit the broad side of a barn with our antiquarian projections based on old-school free-market dynamics, rallies and hog bellies, bushels, widgets and gadgets, buy and sell orders 'til the bears come home, might as well lay bricks in mortars with all these start-up farters.

Out on the horizon, big dust-storm coming up. Bulls are at it again, trying to stampede their way out of the Everything's OK corral, but Uncle Fed and Aunt Fannie shut 'em down every time.

Glass Chimera

An American poem

Punchbowl herds on de game Preserve

sippin up liquidity from de FedReserve,

dey spec and dey sling

dem dummy dollars, an' sing:

Oh give me a home where the FedFunds do roam

and de sheep and de bulls graze on Loan,

where seldom is heard a deflative word

and Govment reports steer de herd.



Now down in de City

workfolk stay gritty:

burgerflippers on strike

suburbers take hike

while Fed pumps liquidity

jackin up mediocrity

de system reward passivity

instead of generatin' activity.



While corpos say downsize

lefties get organize

obsesies say supersize

an' children go unsupervise;

Den Anonymous grab de tail

of dat lowlivin' beasty grail,

scarin' up rabble hell

against highrollin' game Preserve shell.



Somewhere out here in mudville today

de prophets dey cry while de profits may play;

but dere's no more renewal to tout,

cuz mighty America has struck out.

On de udder hand maybe not:

Have I understated our potential a lot?



O give me a land where innovators roam,

and de Feds on de Preserve get sent home,

where thee brave make a move and thee bold take a chance

at renewing our anthem, and reviving our dance.



Glass half-Full

Time for the fiscal cliff plunge?

Back in the 1930s, the United Kingdom was the declining economic power of that age, as the United States is today. During those turbulent early '30s, the Brits were having some trouble balancing their accounts, and they didn't have enough gold reserves to back up the money demands being made on their financial system. So they forsook the gold standard as a means of backing up their currency, the pound.

About that time, as this 21st-century yeoman internet-reader (me) hath been able to ascertain, the Brit economist John Maynard Keynes figured out that, even though the currency was no longer backed up with gold, folks were still passing money around and doing business as if nothing had changed. This discovery became, by and by, the basis for all monetary activity throughout the world for the last eighty years or so.

Money is money, whether there's a vault full of gold.gov somewhere in England or in Fort Knox or anywhere else in the monetized world. That's the point. We're still passing the stuff around as if it had real value, even though there's no gold backing it up. People love spending it, and the love getting it. Perhaps they always will, even when money becomes mere electrons.

Now we are running out of money again, so the financial markets and the stock markets are obsessing about whether the Fed will bail out our money system yet again, for the third time, since the big thrill roller coaster ride of 2008.

This morning, I encountered an article online by a fellow, Joseph Stuber, who seems to actually know what he's talking about, and can explain the current ramifications of this money dynamic better than I can:

http://seekingalpha.com/article/852831-market-euphoria-continues-as-we-get-ready-to-jump-off-the-fiscal-cliff?

Mr. Stuber mentions, right off the bat, one morsel of truth that John Maynard Keynes left behind; it is this statement:

"The market can stay irrational longer than you can stay solvent."

That's basically what happened in '29.

These days, the whizzbangs who run the markets will work hard milking profits out of the system for as long as they can.

In fact, every stock trader will wheel and deal and play chicken with their suckerish counterparties right up until the time that the whole money machine runs out of fuel (imagined value), in hopes that he will be able to exit the game before the house falls and somebody else is left holding the bag of severely devalued assets.

Some of the perceived value of this market pertains to what Congress and the Fed will do, or not do, to retain the integrity of our currency and, therefore, the value our entire economy.

Mr. Stuber offers two possible scenarios of what may happen when Congress attempts to (or pretends to) deal with the fiscal cliff that awaits us, come January. The so-called fiscal cliff is the deficit debacle that Congress shelved for a year so they wouldn't have to contend with its difficult choices before the election.

My layman's rendering of Mr Stuber's two scenarios (extreme paraphrasing) goes something like this:

If Congress make a deal, like they did last year, to extend the expiring "Bush" tax cuts, then we will muddle through the next year or two just as we have been doing. High unemployment will become the new paradigm, a semi-permanent steady state of dysfunction and financial misery for sizable segments of our population, and nothing much will change, or maybe, who knows? it will all get worse.

If Congress doesn't make a deal, and the tax cuts expire, and the so-called "automatic" austere cuts of last year's sequestration deal are put into effect, then the long-awaited economic correction that we've been forestalling since fall of '08 will, at last, take its toll on our high-on-the-hog standards of living, and it will not be pretty, and recovery will probably not roll into effect until, say, 2017, or so, when our overvalued economy tumbles to a new (lower) foundation for true growth to get a foothold.

Someone should mention this to Mr. Romney before he makes as many vain promises as his predecessor did.

We shall what happens on Nov. 6.

And we shall see what happens when Congress re-convenes after the election.

In Charlotte on Labor Day, I heard Chris Matthews mention that the Dow, which was at around 8000 when President Obama took office, is now hovering around 13,000. Chris' implication was that the President must be doing a good job, or the Wall Street crowd would have pulled their rug out.

Perhaps that is true. I think that Mr. Obama has done as well as can be expected of any Democrat, under the circumstances that were passed to him.

But the question arises: what has the level of bubblish value in our stock markets got to do with anything that is happening in the streets and factories and households of our country?

Meanwhile, back at the ranch, or the apartment, as the case may be, what about you, Mr. America, Ms. America? What will you do this week to pitch it and help solve the problem?

Glass half-Full