Friday, September 30, 2011

The News has many layers like an Onion and can make you cry

The Dow fell 241 points today, taking it well under 11,000 but still a couple of hundred points above bear territory (which is a 20% drop from the previous high). Commodities also took a beating, except gold which was basically unchanged today. Gold has lost about $300/oz from its recent peak. If you are still tempted to buy gold, keep in mind that if you bought it at its peak in 1982 at $850/oz and kept it, rather than sitting pretty now that its at $1600/oz, you would still be in the hole as the inflation adjusted price should be $2500/oz.

The Federal Reserve will start Operation Twist on Monday where it will begin selling off 400 billion in short term Treasury bonds from its holding and buying the equivalent in long term bonds. This program is to be spread out over the next 9 months with the intention of driving down long term interest rates. The current return on thirty year bonds is already down to 2.9% falling 0.35 points since the announcement of the Fed program. Two year notes on the other hand have jumped to 0.25% from near zero.

Just after yesterday’s economic numbers indicated things might not be as bad as we thought, we find out today that personal income fell in August. This was the first drop in nearly two years and explains the relatively flat consumer spending numbers. The savings rate also hit a two year low as consumers are tapping savings to pay the bills.

Almost everybody with any influence is still talking about austerity as the solution to Europe’s problems and here in the US too. Any further cut back in government spending will of course be a death blow for and economy that is barely holding its own.

Congress comes back Monday and the hostage taking begins again. The Senate had offered two budget extension options to the House, one of six weeks and the other of just one week. The Republicans of course chose the one that will crash the government on Tuesday (the day after they comeback). They are demanding cuts to the budget of what are really trivial amounts of money, but they make sure they only demand cuts Democrats are loath to make.

The party of life is determined to cut the WIC program that feeds pregnant women and infants. They also have their sights set on cutting health insurance for kids and health clinics. They believe in right to life until you are actually alive, and then they try to kill you. The Onion satire magazine is “reportedly under investigation” by the Capitol Police for running an article describing Republicans holding school children visiting the Capitol building hostage as Obama negotiates by bullhorn.

Tweeted updates of the ongoing hostage situation apparently set some Republican news manufacturer into high gear, who then set about creating the illusion of a scandal over the “incident” created by The Onion. Congress wasn’t even in session at the time, making it unlikely that the Capitol Police were the least bit alarmed, if they even noticed.

The only difference between The Onion and Fox News is that one of them produces made up news that is actually funny on purpose.