KEEPING UP APPEARANCES

I finally had to say something about all of this hype about the Dow. It seems that too many really do NOT know the truth about the Dow' highs. People seem to forget to add in inflation when they hear what the Dow is doing (including the mass media). So me, always a facetious pain, decided to give to those few that will take the time to research a bit, a heads-up. Yes, I am ready for the few neonuts that will try to say this thread is false, now on to some facts.

The Dow made it to a new closing high this week, and in my opinion, it is a miracle that the market didn't completely collapse after September's inflation report. The report of the highest level of inflation in 11 years should have been the straw that broke the camel's back. The camel's load already seems to be getting pretty heavy to me: The yield curve has remained inverted for months; we had the first negative reading in the Philly Fed index in three years; national housing sales have plunged and prices are showing their first declines since 1993. The index of leading economic indicators has declined for seven straight months. Online advertising revenue is down; newspaper advertising revenue is down; the help wanted index is down. Across the board the economic news is terrible - everything is pointing to a recession.

Everything, that is, except for the stock market. It makes me consider that the only things standing between this market and a crash are the November elections. Under normal circumstances, September's inflation report - the highest inflation reading in 11 years - would have absolutely creamed the market. This market is priced to perfection, and believes that the Fed is done raising interest rates, that inflation is under control. Under other circumstances, September's news would have been a splash of ice cold water on the buoyant market. But the Dow took it all in stride, just as it has taken all of the bad news of the past few weeks in stride, levitating like the undead to its all time high. There is, to put it mildly, something fishy about this market. Its levitating act has the feel of something unnatural. This being the case, it is impossible not to ask: How hard could it be to manipulate the Dow - just 30 stocks - for a few weeks until the election? Especially considering that your Secretary of the Treasury is the ex-Chairman of Goldman Sachs?

Let's just say that in the next couple of weeks before the election that the Dow makes even a new high. Even so, it will be a meaningless high. For one, the index is still substantially lower than its 2000 peak after adjusting for inflation. And the Dow of today isn't even made up of the same stocks as it was in 2000! A new high, if we do get it, will be meaningless - a phony, sham new high. But it will serve its purpose - the same purpose as the Newsweak cover above: It will give the appearance that everything is just groovy going into November's election. When things start to look bad for Bush & Co, you should have expected a big run up in the market and a big, distracting, meaningless piece of spectacular news: Dow Hits New High!

The Dow'S new high, is a phony new high, since adjusted for inflation, we are nowhere near the old highs. Using the Fed's very own CPI Inflation calculator we find that we'd need a 13,817 Dow today to equal the 11,750 Dow of 2000.

Am I suggesting that the market is being manipulated for political purposes? Gasp! Shocking, I know. But to quote Mr. Bush himself, "If you fool me, you can't get fooled again." (huh?) We've had six years now to see how tricky this administration can be. According to Bob Woodward, Bush has Tricky Dick's evil old mentor himself, Henry Kissenger, dropping by the White House regularly for secret consultations. We know that Bush's father lost the election because of "the economy, stupid," and Bush's Brain Karl Rove isn't stupid enough to let that happen again.

Bush is good friends with Prince Abdullah of Saudi Arabia, and if Saudi Arabia opens its oil spigots wide then the price of oil can be made to fall very quickly. Like eighteen bucks a barrel in a couple of months quickly. I wouldn't be surprised to see further strategic reductions heading into the election. Am I suggesting manipulation of the oil market for political gain? Shocking, I know.



Could there be any better way to deflect attention from the issues that really matter in the upcoming 19 days? "It's the economy, stupid." Those words must have been seared into Bush's brain. With new stock market highs - false as they may be - Bush may finally have evidence of the "great economy" that no one else seems to see but him.

~~~~~~Forever A Facetious Pain~~~~~~
~~~~~~Enlightened Smiles~~~~~~