The Economic Stimulus is Dead - Long Live the Stimulus

By: Adam_Lass

A trillion dollars still hasn't fixed the jobs problem. Washington's solution: change the name to "deflation fighting" and print even more!

How do you know when an idea has failed?

You will seldom hear an idea's progenitor or champions step up and admit that they were wrong. But there are usually more than a few clues lying about - if you are willing to look for them.

For example, a year or so back, the guys on Apple (AAPL: NASDAQ)'s brain trust thought it might be really cool if they wrapped the antenna around the outside of the next iteration of their ultra-successful iPhone: "It would look super clean, and no one else does it that way, so we could really steal a march on the competition."

We are told now that at least one engineer pointed out that no else does it that way for a reason, as it is quite possible to ground out the antenna and lose reception. But in the end, the big guys at the head of the table decided that these were small quibbles compared to how pretty the new unit would look when Steve Jobs showed it off on stage.

The Meaning of Epic Fail

Well now we know that this was a truly bad idea. Apple still claims that it is entirely an issue of users' big sweaty hands actually holding their sleek piece of art, mind you. But they are shipping out free rubber covers (known affectionately in the biz as "phone condoms") that make their precious Apple iPhone 4 look exactly just as ugly as every other functioning phone out there.

Another big clue that an idea is DOA? Watch for when mid-level heads start to roll. For example, the Apple executive in charge of developing the iPhone 4's hardware, Mark Papermaster has been quietly pushed out the door, to be replaced with someone out of the much happier Mac side of the house.

So now we have, "It works just fine, and we are selling millions of 'em, which is why we fired the guy in charge," which, in the language of Silicon Valley, translates to "epic fail."

If It Doesn't Work...

We have a similar situation cropping up on the opposite coast. President Obama is touring the countryside touting the success of his Keynesian economic stimulus programs. His chief proof of this theorem is a bit of a negative, in that he keeps pointing to extant workers and claiming that he saved their jobs.

Unfortunately, he has precious little positive or affirmative evidence to point to, as the economy stubbornly insists on ignoring Washington's rhetoric, and continuously shedding actual real jobs.

And while nailing down the real unemployment rate is about as difficult as nailing mercury to a board, what with all the "adjusting," "juggling," and, let's face it, out and out "book-cooking," we do have an increasingly familiar clue as to the success of the stimulus to date.

Fire Someone...

Much like at Apple, while the man at the top still claims success with his Keynesian carpet bombing, the chairwoman of the White House Council of Economic Advisors, Christina Romer, the architect of Obama's program, and the author of the report that claims we would be well inside the critical 7% unemployment limit by now, has been quietly "allowed to return to California so as to be with her son when he enters high school this fall."

By now we know that the largest Keynesian stimulus effort in the history of the world has indeed failed. But is it dead?

As I sit to write to you, the members of our Federal Reserve's Open Market Committee (FOMC) are gathering in Washington to plot the central bank's course. Word circulating about has the FOMC conceding that the economy is substantial worse off then previously admitted. The proposed solution is, of course, a lot more stimulus.

And Re-Brand!

Since rates are currently hovering right around zero, it is suggested that the Fed will gin up more dollars out of thin air, and inject those invented dollars directly into Wall Street's veins by buying up U.S. shares, further inflating our stock bubble for a short bit until the gap between Wall Street and Main Street once again grows untenable.

Has this idea already failed? Totally DOA!

But much like Apple's new iPhone 4, Washington thinks it can wrap this dead idea in a clumsy new package, in this case branding the round of printing as "deflation fighting." One wonders who will get fired next, while the boss claims complete success?

P.S.The rest of the world already knows how this story will end. Just take a gander at the dollar index, and you will actually be able to see them sidling toward the exits. My suggestion: stick with those short dollar positions going into the Fed meeting.

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Source : http://www.taipanpublishinggroup.com/tpg/taipan-daily/taipan-daily-081010.html

By Adam Lass
http://www.taipanpublishinggroup.com/

Adam Lass is the Senior Editor of WaveStrength Options Weekly along with Bryan Bottarelli, and a regular contributor for free financial market e-letter Taipan Daily. Adam's fascination with technical analysis started in his early days as a wholesale purchasing manager, when successfully forecasting the public's future spending habits (using Treasury reports, stock trends, interest rates, even the Farmer's Almanac) meant the difference between prosperity and failure.

He has been called “one of the most brilliant charting minds in the country.” His deep insight into the economy and value analysis enables him to reliably guide readers through today's incredibly volatile market in WaveStrength Options Weekly.

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