The BarkerLetter

March 27, 2008

Greetings investors!

The U.S. government revealed its gross domestic product figures for the 4th Qtr today … growth was pegged at 0.06 %.

That follows previous rates of 4.9% and 3.8% for the third and second quarters of this year, respectively.  

Plus, we’ve been told that the economic growth going forward will be an identical 0.06% for the next three quarters.

So — where’s this much feared recession? The customary pair of negative growth quarters? Where’s the beef?

Do you suppose all the dire predictions were just a clever ruse by Bear Stearns to get some cheap money, help it close a few difficult positions, handle some excess redemptions? If so, then it worked like a charm! With the Fed’s discount window open to broker dealers, we may see the entire stock market become monetized.  Say, that’s not a bad idea, and I’m sure it would even work for awhile.

Or maybe it’s a cyber recession. I think in America it’s possible to have such a thing, plus the subsequent ‘recovery’ of course, without actually having to endure it in real time. Perhaps we’ll just pole vault directly to the next period of untrammeled growth.

Actually I’m beginning to sense a political motive. I think the Republicans would rather have a recession now, when they can do something about it, than several months down the road when they’re out hustling votes. It’s why they’ve been pushing the economy onto the agenda in recent months.

I suppose it’s possible that the subject of the economy — and the prospect of a recession actually peaking during the upcoming presidential campaign – just hasn’t come up during the conversation in their little smoke-filled backroom. But I kind of doubt it. I think it’s more likely that the subject has come up repeatedly and there has been concensus in favour of conducting a preemptive strike.

Hey, if we don’t have a recession at all then so much the better — they’ll say quick action by the Fed prevented it.

I think there must be some softer, gentler people in the U.S. government these days. After all, they’ve manufactured a way to save the country without creating massive, collateral damage, like the last time.

Careful out there!

Kb