STAFF NEWS & ANALYSIS
DB Briefs: September Looks to Be a Terrible Market Month/ Solar Power to Go the Way of the Dodo?/ Is the Federal Reserve Political?
By Staff News & Analysis - September 01, 2011

September Looks to Be a Terrible Market Month … The much ballyhooed Jackson Hole Federal Reserve conclave has come to a close, and now exchange-traded fund investors face a treacherous September. This September is likely to be particularly volatile as Federal Reserve Chairman Ben Bernanke deferred any new simulative action until the now two-day Fed meeting on Sept. 20 and 21. Bernanke puts off easing talk until Sept. FOMC Also, International Monetary Fund leader Christine Lagarde said the global economy was in a dangerous phase while Kansas City Fed President Thomas Hoenig, said last week that the Fed, “can’t do it all,” adding further to the uncertainty facing us as we leave the dog days of summer behind. – MarketWatch

Solar Power to Go the Way of the Dodo? … Solyndra to Declare Bankruptcy – President Obama touted the facility only a year ago … Solyndra, a major manufacturer of solar technology in the Bay Area, has shut its doors, according to employees at the campus. Shortly after it opened a massive $700 million facility, it canceled plans for a public stock offering earlier this year and warned it would be in significant trouble if federal loan guarantees did not go through. The company has said it will make a statement – Infowars

Is the Federal Reserve Political? … Why would anyone want to weaken the economy? … Texas Gov. Rick Perry got a lot of blowback for his threat to get “ugly” on Federal Reserve Chairman Ben Bernanke, but the Republican presidential front-runner largely got away with his more serious charge that the Fed was “playing politics” with the economy. Perry insinuated that by “printing money,” Bernanke was trying to give the economy a short-term fix in order to help President Barack Obama get re-elected next year. Perry called that “almost treasonous.” Does Perry’s accusation ring true? Is the Fed political? Does it use its influence over the economy to favor one party over the other? – MarketWatch

September Looks to Be a Terrible Market Month

The much ballyhooed Jackson Hole Federal Reserve conclave has come to a close, and now exchange-traded fund investors face a treacherous September. This September is likely to be particularly volatile as Federal Reserve Chairman Ben Bernanke deferred any new simulative action until the now two-day Fed meeting on Sept. 20 and 21. Bernanke puts off easing talk until Sept. FOMC Also, International Monetary Fund leader Christine Lagarde said the global economy was in a dangerous phase while Kansas City Fed President Thomas Hoenig, said last week that the Fed, “can’t do it all,” adding further to the uncertainty facing us as we leave the dog days of summer behind. Beyond the gloom from the Tetons, a continuing stream of economic reports indicates that the economy continues to slow towards “stall speed.” Manufacturing has dropped to contraction levels and the revision to second-quarter GDP to 1% – MarketWatch

Dominant Social Theme: Markets go up and down and September could go down.

Free-Market Analysis: August was a bad time for US stock markets and top mainstream equity mavens are predicting more of the same for September. The above prognostication reveals unease: Ben Bernanke is not going to prop up the stock market with more quantitative easing, not yet anyway; Christine Lagarde of the IMF believes that both European and American policy-makers need to find innovative ways to continue the “recovery” before it lags substantively; Thomas Hoenig seems to believe the US Federal government needs to be trimmed considerably and the deficit narrowed.

The idea behind all of this is that the stock market is suffering from a variety of manmade ills that are keeping it from achieving its maximum potential. But anyone looking in depth at the American – and Western – stock markets will likely come to the conclusion that increasingly these markets are only kept up by various forms of marketplace manipulation. Plunge protection teams, derivatives, leveraged computer trading – all these help boost stock markets’ averages.

One can bemoan the forces arrayed against the stock market these days. But in fact, the resources of Western governments have been considerably concentrated on keeping all the equity balls in the air. If they are falling down now it is only because the game has been played out and there are virtually no other gambits to try. At some point the REAL market takes over. Manipulations only go so far. The rest of 2011 may show us the real face of the market. The sight may not be a pretty one.


Solar Power to Go the Way of the Dodo?

Solyndra to Declare Bankruptcy – President Obama touted the facility only a year ago … Solyndra, a major manufacturer of solar technology in the Bay Area, has shut its doors, according to employees at the campus. Shortly after it opened a massive $700 million facility, it canceled plans for a public stock offering earlier this year and warned it would be in significant trouble if federal loan guarantees did not go through. The company has said it will make a statement – Infowars

Dominant Social Theme: The brightest hope is Green power, especially power from the sun.

Free-Market Analysis: Our elves remember the 1970s and the crazy efforts in Europe and especially in America to create “green” companies. Solar power was the next Great Thing. All sorts of different types of fuels were discussed and some were mandated. Cars got smaller and smaller.

And what happened? The 1980s happened. Ronald Reagan and Margaret Thatcher came to positions of power with their no-nonsense “conservative” approaches, and gradually talk of running out of oil ceased. Solar power companies went out of business; alternative fuel companies began to wither and die; small cars, unsafer than big ones, gradually went out of fashion.

Like a sickness, green business is fashionable again. Cars are smaller now and run on all sorts of weird and impractical fuels. The idea of oil scarcity remains in vogue but the big wrinkle is Global Warming. Fortunately, global warming has proven out to be fraudulent and is not likely to recoup its credibility anytime soon.

And now the rest of the 1970s is beginning to play itself out. Gradually, the ridiculously hyped alternative energy companies (wind power included) will subside. Government grants will be harder to get. Carbon exchanges will be seen as anachronisms. Solyndra, with US$500 million in low-cost government loans, may prove a harbinger.


Is the Federal Reserve Political?

Why would anyone want to weaken the economy? … Texas Gov. Rick Perry got a lot of blowback for his threat to get “ugly” on Federal Reserve Chairman Ben Bernanke, but the Republican presidential front-runner largely got away with his more serious charge that the Fed was “playing politics” with the economy. Perry insinuated that by “printing money,” Bernanke was trying to give the economy a short-term fix in order to help President Barack Obama get re-elected next year. Perry called that “almost treasonous.” Does Perry’s accusation ring true? Is the Fed political? Does it use its influence over the economy to favor one party over the other? – MarketWatch

Dominant Social Theme: The Fed is a Saintly organization and it is insulated from politics on purpose.

Free-Market Analysis: We have been over this ground many times before. The Federal Reserve – all central banks really – is intended to mimic secular religions. The political accusation is therefore off the mark, but only because it does not go far enough. The Fed is not a political entity; it is meant to be a faith-based one.

The ritualistic secrecy, the revelations on camera in which central banking bosses speak cryptically about the future of the economy, all of this presents us with a kind of modern day Delphic Oracle. The various convocations, the elaborate vocabulary, the dark-suited garb, all of this is part of the larger religious presentation.

Alan Greenspan was perhaps the best of all recent important central bankers at projecting the image of what a central banker should be. Cryptic, craggy and determinedly obfuscatory, he reveled in his role as chief prognosticator of the world’s most powerful economy. When he retired (and until the economy unraveled) he was able to command a million dollars an hour as a result of his long-term performance as Fed head.

The money and status are representative of the emphasis that the great banking families that aim to run the world place on central banking. It is the fount of their wealth. The ability to run perhaps 100 central banks around the world via the BIS, all printing money from nothing, has created fortunes of an inconceivable size, in the trillions most likely.

When one asks, therefore, whether central banks are political – certainly the Fed – one has to consider the Fed’s larger role. There is no evidence that human beings can “run” an economy. Only the free market can do that. But the power that the great families have derived from imposing central banking around the world cannot be denied.

Central banks are indeed political entities. They are also entirely dysfunctional and their performances are entirely divorced from the services they are said to provide. Organized religion often seems to have similar problems.

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