THIEVES, LIARS, AND THE LIARS WHO ENABLE THE THIEVES AND LIARS

Yesterday I noticed that a couple folks writing under the by-line, "AP Business Writer," headed an article under this gushing lede: "The Fed confirmed what Wall Street has already concluded: The recession is starting to ease." And in support of this bold statement they cited the fact that the Fed observed that the state of economic decline "appears to be somewhat slower."

Hmmm.

Now I'm not looking to defend the FMOC, but in looking at the Fed's announcement yesterday, I ain't really seeing the optimism that our glorious financial press seems so desperate to see:

Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

Now, I'm the first to posit that any Fed optimism in the face of what's really happening is irresponsible and ludicrous. But it just amazes me how desperately the mainstream financial press wants to paint a rosy picture that justifies ever more money seeping away from saving, in order to shunt it over to Wall St. and debt-financed consumerism. And as we know, this gilding of a wilting flower seems to work: Wall St. rallied yesterday.

Anyway, apart from the press' foolishness and the Fed's cheerleading (or is it the other way around), let's take a look at the substance of what the FOMC said yesterday:

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

Maybe I should have characterized this as part of the "cheerleading" section, because I'm not seeing anything here that makes sense. Inflation (and they're talking about price inflation, since they've already inflated the money supply) will remain subdued . . . because the economy is retracting. The same economy that's slowing down more slowly than before. Ok (I guess). So the Fed will keep rates low . . . to promote price stability? Huh?

I think we can translate this as, "More money coming!" Why? Because that's what central banks do. They inflate. But, of course, the Fed says there won't be any "inflation," meaning price inflation. Ostensibly because it can just sop up all that money by selling its assets back into the economy when prices start to rise. And as we've addressed here before, what will it sell back, since the composition of the Fed balance sheet gets more and more questionable as time goes on. Well, let's look at what it says:

to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn.

Hmmmmm. Let's do the math, shall we? $1.45 trillion of agency mortage-backed securities and agency debt. And who are these "agencies," you might ask? Oh, just Fannie Mae and Freddie Mac and those sorts of bankrupt governmentally-supported entities. And a mere $0.3 trillion worth of treasuries. They ain't too solid an investment either, but at least there's some tradition there of purchasers.

But all-in-all, I ask the same question I always ask: who the fuck is gonna buy $1.45 trillion worth of shit? In addition to all the shit that's already parked on the Fed's balance sheet? And if your answer is "no one," or "not many folks" or "hell, I dunno," please remember that any un-repurchased shit will remain on the Fed's balance sheet. Which means that $1.45 trillion worth of newly-printed Federal Reserve Notes (those would be the unsecured debt instruments the Fed issues, known to most of us as "Dollars") remain in the general economy.

Which will raise prices somewhere, sometime. Food? Medical care? Rent? Fuel? Take a guess, spin the spinner. But the spinner will stop somewhere.

And let me then ask the other question I often ask? Does anyone in power have a clue what he's doing? If not, how do they keep their jobs? If so, how do they stay out of prison?

More debt, more fiat currency, more lies and double-speak. Yet we're supposed to believe that good times are just around the corner. If only so.

ONE DOLLAR IS WORTH A THOUSAND WORDS

Straight from the "Believe What They Do, Not What They Say" files, we get this dandy little nugget 'o news from Bloomberg (H/T Jesse): Insider Selling Jumps to Highest Level Since 2007. A highlight or two:

Executives and insiders at U.S. companies are taking advantage of the steepest stock market gains since 1938 to unload shares at the fastest pace since the start of the bear market.

* * *
While the Standard & Poor’s 500 Index climbed 28 percent from a 12-year low on March 9, CEOs, directors and senior officers at U.S. companies sold $353 million of equities this month, or 8.3 times more than they bought, data compiled by Washington Service, a Bethesda, Maryland-based research firm, show. That’s a warning sign because insiders usually have more information about their companies’ prospects than anyone else, according to William Stone at PNC Financial Services Group Inc.

“They should know more than outsiders would, so you could take it as a signal that there is something wrong if they’re selling,” said Stone, chief investment strategist at PNC’s wealth management unit, which oversees $110 billion in Philadelphia. “Whether it’s a sustainable rebound is still in question. I’d prefer they were buying.”

Insiders from New York Stock Exchange-listed companies sold $8.32 worth of stock for every dollar bought in the first three weeks of April, according to Washington Service, which analyzes stock transactions of corporate insiders for more than 500 institutional clients.

That’s the fastest rate of selling since October 2007, when U.S. stocks peaked and the 17-month bear market that wiped out more than half the market value of U.S. companies began. The $42.5 million in insider purchases through April 20 would represent the smallest amount for a full month since July 1992, data going back more than 20 years show. That drop preceded a 2.4 percent slide in the S&P 500 in August 1992.

* * *
“They’re going to say, ‘Thank you very much,’ and move on to cash or something else,” said David W. James, who helps manage about $2 billion at James Investment Research Inc. in Xenia, Ohio. “This is not a situation that suggests to us we’re seeing an economic recovery.”

Bottom line about the bottom line: when Wall St. Insiders who possess more information than you have (and possess a bit more money too) suddenly start selling everything that's not nailed down, it really doesn't matter whether they or their D.C. shills tell us recovery is on the way, does it?

Follow the money, not the words. It'll tell you all you need to know about where this is heading.

IT'S NOT A LIE IF THOSE WHO DEFINE "TRUTH" ARE DOING THE LYING

I'm sure by now most of you know that yesterday Goldman Sachs reported the bestest, stupendousest, wonderfulest, profitingest 1st quarter results in the history of financial reporting.

(Of course, they conveniently decided to change from their usual December through February reporting period, instead implementing one that encompassed January through March.)

And what happened to December, a month where the bank decided to write-down lots of really big losses. Well . . . they just ignored it. And the financial press lapped up their overwhelmingly big, and dishonest, numbers.

Jesse has a solid take on this latest move from our Masters. Read the whole post -- which is very short -- but this paragraph sums it up nicely:

Goldman did nothing illegal in their management of their earnings, both in the way in which they parsed the losses into a 'stub month' which was ignored, or in their decision to time an early announcement of 'exceptional profits' with a stock offering. But the financial press handled this badly, and considering the huge debt and forebearance Goldman owes to the government and the public it was not befitting a major institution with strong ties to the Obama administration.

It's the Insiders' country. We only live in it. Unless a sea change comes.

CONTRACTUALLY BOUND TO ROB YOU BLIND

I'm sure by now you've all heard about AIG doling out $165 million in bonuses to the same useless executives who drove the company into the ditch with their risky investments and failed policies.

I'm sure you've also heard the Oscar-worthy hand-wringing of enablers Summers, Geithner, and Bernanke: If only we could undo those inviolable contracts between AIG and its employees, we would. We're just so outraged by this miscarriage of justice against the American people. I was so mad when I heard about this I tore my hair out and screamed in anger!

Bullshit, I yell. Yeah, they just found out about this over the weekend. Please.

Maybe if these brilliant, powerful, all-knowing leaders of the American economic recovery had done a shred of due-diligence into AIG's contractual obligations they could've chosen not to loan the $170 billion to the failing company. Or, more accurately, since the Three Stooges obviously did their due diligence and knew full-well about the bonus plan, they could have -- gasp! -- attached contingencies to the $170 billion and demanded that AIG award no bonus money after the bail-out. Make no mistake -- they knew about this bonus money and bailed out AIG anyway. It's too big to fail!

If AIG had said, we'd love to tell all our incompetent executives they'll receive no bonus money, but we're contractually obligated, then Timmy, Larry, and Benny could've informed the failing company that they're contractually bound to the American people not to give away money to thieves, bums, fools, and gamblers.

The bullshit storm grows stronger. It's up to Cat 4 and blowing harder. Whatever we're hearing out of The Three Stooges' mouths ain't the truth. Up is down, black is white, war is peace. And billions of dollars of corporate charity with taxpayer money brings "outrage" and "shock" to the very people who gave it away.

We're being bamboozled, and they're not even trying to hide it.

IF A PICTURE IS WORTH A THOUSAND WORDS, IS A CARTOON WORTH $700 BILLION?

(Or isn't it $850 billion now?)

H/T Barry Ritholtz

Anyhow, in a related development, check out this link, an A.P. piece about lobbyists and the gang lining up for their share of the Paulson Pie (H/T Cunning Realist). And as you'll see, this ain't a one-party show. The trough is open and everyone's looking to dig in. Mmmmmm, good. Free money sure is tasty.