President Bush and Economic Optimism

The United States should be relieved; President Bush is optimistic about the future of the economy:

"President George W. Bush sought to assure the public that the U.S. economy remains fundamentally sound even as the country is experiencing 'unsettling times in the housing market.'"

"'Inflation is down, job markets are steady and strong,' Bush said today at a White House news conference. 'The fundamentals of our nation's economy are strong.'"

Is the President's steadfast optimism in Iraq the same kind of steadfast optimism he has in the economy? It would be nice to know where this optimism comes from. Maybe it comes from all those economics classes Bush took in college:

"'You need to talk to economists,' he answered when asked if there was a risk of recession in the US economy. 'I think I got a B in Econ 101. I got an A however in keeping taxes low, and being fiscally responsible with the people's money.'"

How is the President being fiscally responsible? Is he being fiscally responsible when our national debt has exceeded nine trillion dollars? Is he being fiscally responsible when he permits no bid contracts? And about that "B":

"President Bush as an undergraduate at Yale did not in fact receive a grade of B in his economics course. Bush received a grade that would correspond with a C-."

Oh....That's what I thought...

Hank Paulson: Don't Single Out an Industry!

Henry Paulson came out today to criticize congress' attempt to impose working tax rates on hedge fund investors. I agree with his view that we shouldn't single out an industry for imposing a tax rate:

"'I want to avoid responding to the headline of the moment, singling out an industry,' Paulson said. 'I don't believe it makes sense to put in a special provision aimed at one industry today.'"

What industry would that be? The hedge fund industry? And what industry do they engage in? Let me explain the problem I have. Hedge fund managers are managing other people's money. A guide for determining the tax rate:

(1) If you're managing your own money, then you should be taxed at fifteen percent.
(2) If you're managing somebody else's money, then you should be taxed at thirty-five percent because you're essentially acting as a money manager.

A Stampede of Bulls(hit)

Is there any member of the Bush Administration who isn't delusional and incompetent? If there is, it's not our Treasury Secretary:

"The major slump in the housing market is nearing an end and should not have a significant impact on the overall economy, Treasury Secretary Henry Paulson said Wednesday."

Sure Hank, whatever you say...

"We have had a major housing correction in this country," Paulson said in an interview with a small group of reporters at the Treasury Department. "I do believe we are at or near the bottom."

So, we have Hank P. trying to assure us that we are at or near the bottom of the housing correction. Now let's hear Ara Hovnanian, CEO for K Hovnanian Homebuilder, weigh in:

"There is not a recovery that is about to happen.''

Hmmm. And what about the recent homebuilder confidence index? Maybe that press release hasn't made it to Mr. Paulson's desk yet.

But back to Ara. He might be the only CEO willing to speak to the media about the current housing 'slump'. From CNBC comes this report:

"I'm blogging to you...in mid-town Manhattan, where I've never in my life seen so many freaked out CEOs. I say this only because not nine months ago I attended a similar UBS conference, where the homebuilder CEOs and their CFOs and their PR reps and their baggage handlers and their mother-in-laws were all fighting with each other to jump in front of our cameras to talk about the recovery shining brightly ahead in the housing market."

CEOs from Ryland Homes, Standard Pacific Corp, and DR Horton all refused to answer press questions regarding the current 'slump'. I guess if you don't have anything nice to say, don't say anything at all?

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From another bull comes this headline: "US Economy to Expand in Coming Months". Please tell me more:

"The U.S. economy should expand modestly in coming months as a healthy job market continues to trump weakness in housing prices, a gauge of future business activity showed on Thursday."

But Wait! What about this:

"Initial jobless claims rose by 10,000, a third consecutive increase, to 324,000 in the week ended June 16, the Labor Department said today in Washington."

Oh, I see you explain it by saying this:

"While the big increase was unexpected, analysts said it did not change their view that the labor market remains hardy."

So a "healthy job market" entails a "big increase" in jobless claims?? Oh well, they're the analysts, right? I'm sure any objections I voice can be explained away somehow or another...

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Not to be outdone, Marketwatch had this headline: "US Economy Weathered the Worst, Index Shows". This is great! Maybe these main stream perma-bulls have changed my mind after all:

"'These data may be suggesting that the economy has weathered the negative impact of the housing slump and the spring run-up in gas prices,' said Ken Goldstein, labor economist at the Conference Board."

Do "labor economists" specialize in energy or real estate? I always thought they were job market specialists. I'm not saying the man doesn't have the authority to speak on topics other than the job market, but it would've sold the story more if the guy commenting on gas prices was an "energy economist", or if the guy commenting on the housing market was a "real estate economist".
There are a few problems with what Ken said and what he didn't say.
What he said: the economy has weathered the housing 'slump'. What he didn't say: the housing 'slump' is far from over.
What he said: the economy has weathered the run-up in gas prices. What he didn't say: we don't know how long this 'run-up' will last or if the 'run-up' is done running up.

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The spin-cycle is running on high these days. Don't let the bulls confuse you.