mish,
Interesting that this post caught your attention. Lots of good ideas at SI to explain the increase in the jobs report. This one is the white-lie type, and I think it gets the Fed and Bush a lot of breathing room for little real action.
I think our community here is too quick to label Greenspan an idiot, or maybe better, a fool. Anyone who can bs Congress for hours on end like he does can't be stupid. I am certain he is aware of the imbalances rampant in our system, and the markets reaction to even a single word change in a published statement completely limits his ability to overtly address any systemic concerns.
So, this surprising "increase" in jobs accomplishes many things with zero declared action from the fed. It puts the breaks on free money forever credit binge. It offers a bit of dollar support to counter the alleged end to Japanese intervention. As a poster on Epic mentioned, it may actually increase some refinance activity, as people rush to lock in rates they perceive will soon increase (note: two banks I use both increased rates about an 1/8 yesterday). And last, it give some credibility to Bush that jobs are coming. I do not think this increase was purely politically motivated, as if it proves unsustainable or fabricated, then it could be a death blow to the reelection effort.
And it costs the Fed NOTHING. Next month we could have a lower jobs report and the Fed won't change the bias for lack of trend. Cheap money continues, rates remain essentially unchanged, the consumer and business continue the credit binge, housing does not implode. How long will it last? I have no idea, but the goal is November at least.
Your post from the fool from Milligram was a reminder to me of how fortunate it is to have a good job. One good jobs report does not change the view that we have overextended and the time for a major readjustment is near. I'm afraid there are going to be a lot more painful stories like Milligram's before this is over.
Thx
TH |
