Saturday, July 9, 2011


"Common sense is not so common."

-- Voltaire

Most of the recent hot IPOS in the Internet space are now 'hard to borrow.' Translation? The stocks are going up on air... and on short squeezes.

The continued slack in the labor market ensures that unit labor costs will be contained. While a positive for corporate profits, it also signals an extension of the screwflation of the middle class.

Demand expectations, especially of a consumer kind, will likely disappoint in the months ahead.

The M1 Money Multiplier points to a possible economic contraction ahead. It tells a story of little velocity of money, limited bank lending and the likelihood of a renewed deflationary cycle and possible economic contraction ahead.

Structural unemployment is a real issue and will be a consistent drag on domestic economic growth so are the foreceful headwinds of fiscal imbalances at the local, state and federal levels. (See the municipal job losses in today's report!)

The notion of a self-sustaining and smooth recovery is in jeopardy.

More likely, it is a pipedream.

The so-called economic geniuses of Wall Street really have no clue. What is really astonishing to me is that they are still employed! (Memo to the media: hold them under fire for their poor prognostications in the weeks ahead.)

As to the U.S. stock market viewed as a leading indicator of growth, that is bogus, too. In 2002, 2007 and in the first half of 2010, the direction of the U.S. stock market gave the wrong signals on the direction of economic growth.

And the recent two-week rally in stocks is, too, giving the wrong signal of smooth and self-sustaining growth.

Run, don't walk, to read Ambrose Evans-Pritchard's Telegraph column, "Europe, Free Speech, and the Sinister Repression of the Rating Agencies."

Run, don't walk, to read 'Can Anyone Create a Hacker-proof Cyberspace?' on Knowledge@Wharton.