Persistent Ignorance by 'Those Who Know Best'

It's funny -- or sad, depending on your perspective -- how those who supposedly know best -- the highly paid "experts" on Wall Street -- keep misreading what is happening in the real economy.

For example, all signs point to the fact that what we have been going through these past few years is not just a garden-variety recession, but a full-fledged meltdown spawned by the bursting of the biggest credit/housing bubble in history.

Yet the "Wrong Way' Corrigans" who never saw the unraveling coming, who insisted that the crisis would remain "contained" or otherwise end quickly, who kept seeing rebounds and bottoms that never quite materialized, and who are now proclaiming an end to the "recession" -- their word -- persist in trying to mislead or confuse the masses with their profoundly ignorant assurances.

The latest delusion is the notion that allegedly "good" earnings from corporate America herald the beginnings of an economic recovery. In "The Thesis Continues To Validate: GE," The Market Ticker's Karl Denninger puts paid to this silly theory.

GE (NYSE: GE) was out this morning with earnings and continues to validate my central thesis: severe economic contraction.

Revenues were down 17% - another double-digit contraction, and this is particularly troublesome in what it says about the global economy, given GE's global reach.

Again, we continue to see the same sort of theme in industrial and consumer products reporting - Harley Davidson (NYSE: HOG) reported units shipped down 30% year over year yesterday, and now GE out with a 17% year over year revenue decline.

Comments

[wendling_r:]

While I agree with you in the intermediate term on the economy and GE, short term I believe both will rally. The reason is simple. The specialist system is setting the broader market up for a major advance into October before a sharp short decline happens. The same will happen with GE as its specialist manipulates the stocks price in accordance with the DJIA. Short term I expect it to move to the possible $25.00 level before falling in the fall.

For my latest report on GE click on the site attached to this post and go to the reports page. All the information is free.

Richard W. Wendling

Jul 19 06:54 AM

[Davewmart:]

If you want a real laugh, check out the burblings of Anotole Kaletski, chief economic writer for 'The Times'
He not only completely failed to see anything coming (he insists, 'no-one saw it coming', being apparently ignorant of people like the Austrian school, for whom it was clear that increasing levels of debt forever was never going to be sustainable - but of course he means the economic establishment and the neo-classicists, who were being paid good money not to see anything coming as too many people were making too much money from the economic ponzi scheme of debt-based asset price inflation), but like Hitler, has learnt nothing and forgotten nothing.
The crash was, according to Kaletski, the result of allowing Lehman brothers to crash, and had nothing to do with debt levels.
So he has not had to change his models at all, and reacts to the scorn his remarks overwhelmingly attract in comments by not publishing them much anymore.
So things are rapidly improving in the UK, and in Kaletski's world, and we can get out of debt by taking more on.
And he is still employed as an economic writer.

Jul 19 07:36 AM

[Old Trader:]

From a big picture perspective, GE's numbers are much more disheartening HOG's, since, as the article points out, GE reaches across the globe, in almost every sphere of economic activity, while HOG is the very picture of "consumer discretionary".

It doesn't bode well that SI is in similar straits as GE, since its arguably the Eurozone's version of GE.

Jul 19 09:50 AM

[wocojoe:]

Michael

GE is not a HOG, both do not relate to one another in size nor sector, your point is lost. After reading your posting, I have no intention of reading your book. Of course, the recession is not over, and the next few quarters will be have lack luster returns. Yet, there are bright spots in corporate america, where business seems to have stablized, at lower levels, and will improve in 2010. If you want to focus on doom and gloom then focus on corporations in those sectors in real financial trouble and on the verge of bankruptcy like GM, Chrysler, Citi, etc ... Rather then trashing GE, which is well run, maintaining their business, and financial success in a difficult economy. You picked the wrong stock to diss here, and did not make your point, and lost your focus.

Sorry

Wocojoe

Jul 19 09:51 AM

[Dr A J:]

I believe Mr panzer is right on target.I think a lot of those experts are allowing their political views to influence their opinions.Just for the record,specialists do not manipulate stocks.

Jul 19 02:27 PM

[Dr A J:]

I believe Mr Panzer is right on target,many of the so called experts are allowing their political views to intervene.Just for the record, specialists do not manipulate stocks.

Jul 19 02:37 PM

[Jimbo:]

My wife and I once owned a chunk of GE. We also knew a young person who worked for GE as a trouble shooter trying to maintain a system that had many bugs. It was alleged that GE knew the system had problems but sold it anyway and hoped to fix it on the fly. I was tempted to sell GE when I heard this but didn't because it was praised as a great enterprise. This suggests to me the same problem I observed in the U.S. auto market: allegedly, companies would put a car on the market, knowing there were problems but expecting to straighten out problems at the dealership level. This kind of thinking helped put the auto industry in the fix it is in today. We sold GE at 10.71$

Jul 19 03:04 PM

[H. T. Love:]

I have to agree. Being new, I can't tell you have many stocks I used to be long of (got out of most in June, sitting on cash) and have been looking to make a trade on, have absolutely identical charts configurations. I mean, it's like 90% of them. I pull up daily, 200 day and I have to look at either the current price or ticker symbol to tell them apart.

The stoch's, MACD, RSI, MFI, et al are the same.

I've not been sucked in yet - I guess I'm waiting until it'll *really* hurt! LOL!

HardToLove


On Jul 19 06:54 AM wendling_r wrote:

> While I agree with you in the intermediate term on the economy and
> GE, short term I believe both will rally. The reason is simple. The
> specialist system is setting the broader market up for a major advance
> into October before a sharp short decline happens. The same will
> happen with GE as its specialist manipulates the stocks price in
> accordance with the DJIA. Short term I expect it to move to the possible
> $25.00 level before falling in the fall.
>
> For my latest report on GE click on the site attached to this post
> and go to the reports page. All the information is free.
>
> Richard W. Wendling

Jul 19 05:59 PM

[H. T. Love:]

On Jul 19 07:36 AM Davewmart wrote:

> If you want a real laugh, check out the burblings of Anotole Kaletski,
> chief economic writer for 'The Times'
> <snip>

> So things are rapidly improving in the UK, and in Kaletski's world,
> and we can get out of debt by taking more on.
> And he is still employed as an economic writer.

Yep! An old saw: "Those who can, do, and those who can't, teach". I guess we could change "teach" to "only write".

HardToLove

Jul 19 06:03 PM

[Gregman2:]

Put them on straight commission: it will cure their delusions. Insulation has a way of distorting perceptions of what's really happening to most folks in the real economy. This trickle up system
has failed for the vast majority and its "gurus" are a big part of that failure.

Jul 19 06:22 PM