Stagflation – sounds like a symptom of erectile dysfunction but so, so much worse

For those of us who were either too young or too stoned to remember the late Seventies, it was somewhat of a bad time for just about everything but pornography and science fiction movies (of course putting those two things together probably did a lot to ease people’s pain, but still . . .).

One of the ways everyone knew that the late Seventies were exceptionally bad, besides the occasional Pinto exploding in front of them, was that the economy was so bad that theorists had to invent a whole new word to describe what was going on – stagflation.

Ok, so for everybody who forgot to stay awake during their freshman macro-economics class, the story goes a little something like this:

Next door to you, there is this jerk named inflation. This is the yahoo who moved into the house next door to yours, parked his busted 1987 Oldsmobile Cutlass Sierra on his front lawn and proceeded to let his grass sprout up under the engine block few a couple of years until the day he sold his house for about a third of what it was worth – probably because the entire structure and surrounding yard now smelled like cat pee.

On the other side you have this poor, miserable bastard named unemployment. God only knows when this guy moved in but he’s been around forever and is usually tolerable until he misses a few disability checks. That’s when you notice that stuff is starting to go missing from your garage. Now, you would say something but the guy has kids and you feel bad and generally he’s not too much a nuisance if he can stay sober and on his meds.

Ok, so inflation and unemployment hate each other. They are never never seen together. It’s pretty much a rule of the neighborhood. Everyone thinks it got something to do with some tools that went missing out of inflation’s garage around 1972 but nobody is sure. But, if inflation is around then unemployment is usually nowhere to be seen and vice verse.

Except there was this one time in like 1978 / 1979 when inflation was hanging out watching his lawn get overrun with crabgrass and all of the sudden unemployment showed up with liter of Jack Daniels and a whole crap load of fireworks. Needless to say, the results were not good. By the time they were through like four whole towns had to declare a state of emergency and whole bunch of crazy homeless guys were now living under the bridge about a half a block away from your house.

So what is the point of this you ask? Besides catching up on all that history that your high school teacher didn’t get to because nobody ever makes it past WWII (really, how do countries like Egypt teach history? They have about 10,000 years on us. What is their WWII) ?

Well, economists are now saying that the recent increase in unemployment figures (that’s right, I am lookin’ at you Michigan) combined with the increase in oil prices has basically led them to feel a presence that . . . they have not felt in a long time – stagflation. Otherwise known as “hey! I don’t have a job but it’s ok cause I still wouldn’t be able to afford anything if I did!”

Anyway, the real point is that, in between chronicling Barack Obama’s favorite ice cream flavor or Hillary’s most secret crushes, the press might want to seriously look at each one’s economic stimulus package and try to ascertain if either one of them realizes the scope of what we have gotten ourselves into.

Oh and for the record, most economists agree that Reagan got us out of stagflation by deficit spending out of his ass on stealth bombers and triton nuclear submarines, basically creating a military-industrial welfare state. Unfortunately, George II has already deficit spent us into the toilet on a pointless asymmetrical war that doesn’t have much need for a $22 million aircraft made by our friends at Lockheed-Martin (so it looks like those jobs aren’t coming back either).

Oh well, there’s always Jack Daniels and fireworks I guess.

Wall Street and stoopid media stories: Apple, Inc.

As we have briefly pointed out, people no longer think for themselves. This herd mentality is most often seen on Wall Street, where a slight whiff of panic, real or imagined, tanks the market. Over the last three or four weeks, we’ve seen a significant sell-off in the stock market in general, for very legitimate reasons. Mostly due to the outrageous economic policy being driven by the current administration. There are other places to go to learn about economic policy – we don’t have a favorite, just a few off the cuff.

Anyhow, let’s look at one of the major darlings of Wall Street over the last few years: Apple, Inc. The market capitalization of Apple, Inc. has taken a big hit so far this year, losing somewhere over $50 billion. Apple is fairly predictable around this time of year, with a usual run up as their annual MacWorld conference/expo happens, and a corresponding sell off during or shortly after the keynote by their CEO. This year was no exception. Couple that with the general bearish attitude these days, and Apple’s share price dropped more than usual.

What is ridiculous, however, has been the overreaction to Apple’s financial results announced after market close on the 22nd of January. They had the most profitable quarter in the 31 year history of the company, and provided fiscal 2nd quarter guidance to the street that was not in line with “expectations”. Within minutes of the announcement, Apple shed over $14 billion in market cap in after-hours trading. Why? Because CNBC and other media outlets overreacted, and lots of people listened without really looking into the numbers behind the panicky statements. MacWorld has an outstanding look at this irresponsible behavior, by way of MWJ as published by MacJournals.com. Read it here. It’s rather long, but very interesting and worth the read.

Ugh.