Saving Is Dumb… Say The Central Bankers
By Tyler Durden
Submitted by Tony Sagami via MauldinEconomics.com,
Get a load of this headline from a German newspaper, which translates into “Extreme Low Interest: Who Saves Is the Fool.”
The reason for that insulting headline is simple: central bankers have been waging a war against savers.
Example #1: Former President of the Federal Reserve Bank of Dallas, Richard Fisher, offered this sage (sarcasm alert) advice last week: “I would be prepared when they move – and I hope they move sometime in June – there’ll be a settling in of the market place. There will be a correction. Suck it up. Deal with it. That’s reality.”
Example #2: ECB President Mario Draghi had this to say: Negative interest rates are “not the problem, but a symptom of an underlying problem” caused by a “global excess of savings.”
“If central banks did not do this, investing would be unattractive,” said Draghi. In other words, shut up and buy some stocks!
What those central bankers want you to do is either (1) spend money to increase demand, or (2) buy stocks to increase capital.
Well, it sure looks like American consumers are not doing the former.
How many times have you heard experts say that the US economy is consumer driven? It’s true; almost 70% of our GDP is attributable to consumer spending.
However, the latest Census Bureau numbers show that retail sales fell 0.2% in March following a contraction in both February and January. In other words, retail sales fell over the entire first quarter.
Of course, the people who know how consumers are really doing are the people who sell to them, such as Sally Smith, the CEO of Buffalo Wild Wings, which just reported an awful quarter:
“The macro environment for casual dining has had a rough quarter and a rough couple of quarters. I just don’t think there is a robust consumer out there.”
If Smith and the Census Bureau are right, our economy is headed for a recession. EVERY time the yearly growth rate of retail sales has fallen below 3%, the US economy has gone into recession.
At the same time our consumer-driven economy is hitting a brick wall, there is a regulatory change coming that could knock the stock market off its feet.
SEC Ready to Stop Accounting Shenanigans
I’m talking about the Securities and Exchange Commission finally doing its job and putting a stop to the accounting hanky-panky that artificially inflates profits.
According to Dow Jones, the SEC is getting ready to step up its scrutiny of companies’ “homegrown earnings measures,” signaling it plans to target firms that “inflate their sales results and employ customized metrics that stray too far from accounting rules.”
It looks like the SEC is waking up to the misleading picture that pro forma earnings—compared to generally accepted accounting principles, or GAAP—generate. Now the commission is launching a campaign to crack down on made-to-order earnings.
Mark Kronforst, chief accountant of the …read more
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