The Bribes Aren't Working

John Ransom
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Posted: Oct 16, 2014 12:01 AM
The Bribes Aren't Working

So now we know when bad news is actually bad: When the Federal Reserve Bank won’t continue quantitative easing.

The stock market has fallen out of bed in the past two weeks. You can pick its poison: Ebola, ISIS, Obama, Oil or any other proper nouns with bad intent. But my money is on, well, money.

The end of the money parade -- or quantitatively eased "bribes"-- is making it more difficult for traders to find the money to chase stocks up.

But don’t worry stock market. As our guest Chris Versace pointed out on the radio this week, the Federal Reserve already has QE4 ready and waiting if things get too dicey in the economy. Certainly they will keep interest rates ultra-low as a kind of "bribe" to business to keep thing...um...ehhh? So-so?

Why? Because there are some cases where bad news is still good news for interest rates—that is if you think interest rates should stay at or near zero forever.

There is certainly no good reason, you know besides a sound economy, to raise rates right now.

Producer prices came in down 0.1% in September, which is rather odd for an economy that is finally, finally, finally beginning to recover.Oh, and that inflation number? That’s excluding food and oil. When you add in food in oil…yep, you got it…deflation.

Dreaded deflation, which of course is like a pay increase for you and me.

No wonder they hate it so much.

Then there are retail sales, which disappointed, dropping by 0.3% in September, despite falling gas prices, which should have given consumers reason to spend more money. Analysts expected a drop of only 0.1%, an odd thing for an economy that has finally, finally, finally recovered.

Business inventories also rose less than expected, meaning growth likely isn't as robust as economists have forecast.

“U.S. business inventories rose less than expected in August,” reports Bloomberg, “which might lead economists to lower forecasts for economic growth in the third quarter.”

See isn't that all such good news?

Because the economy is weaker than we anticipated, interest rates will stay low, meaning cheap money is here to stay, therefore the stock market can go up forever.

Gosh, if we could just slow down the economy a bit more, think of all the great "bribes" that economists and politicians could give us for our own good.

And the stock market would never fall either.

For example, the White House is handing out $170 million in reparation payments, or “bribes” to the long-term unemployed, via grants, or “bribes” that will go to city governments and businesses, and not necessarily the long-term unemployed that are being “bribed”.

Get this: People have actually been hired, although of course it created no new jobs:

“The White House suggested its efforts have resulted in some actual hiring,“ reports the Huffington Post, “saying rural phone company Frontier Communications has hired 250 long-term jobless since January, amounting to 20 percent of all its hires in that time.”

Imagine if that money just went to the best-qualified applicants, rather than the longest unemployed.

I know: Crazy talk.

And since we are already celebrating more good news, we got great news that Obamacare is going to cost MORE again. More then the previous more it was already going to cost.

According to Republicans Obamacare will cost $311 billion more than was estimated by the CBO in 2012. So…now Obama’s refusing to say whether he voted for Obamacare in 2010, or for that matter Alison Grimes at ANY time.

And that’s the best news of all.

Or at least the funniest at a time when the news just isn't very funny at all.