Optimism, Realism, Pessimism, Delusionalism & Dennis Kneale

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Davos
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Optimism, Realism, Pessimism, Delusionalism & Dennis Kneale


 Optimism, Realism, Pessimism, Delusional-ism & Dennis Kneale

It would be an understatement to say that I was surprised by this video and Dennis Kneale's optimistic call (CNBC Video on page) that this is the end of the recession.

Is Dennis Kneale really the optimist he claims to be? Or, would Dennis fall into a different category? And are bloggers like Karl Denninger pessimistic like Dennis implies, or is Karl a realist?

Optimism:

op·ti·mist (pt-mst)

n.

1. One who usually expects a favorable outcome.

Realism:

re·al·ism (r-lzm)

n.

2. The representation in art or literature of objects, actions, or social conditions as they actually are, without idealization or presentation in abstract form.

Pessimism:

pes·si·mism (ps-mzm)

n.

1. A tendency to stress the negative or unfavorable or to take the gloomiest possible view:

I suppose if you put it in the context that Dennis JUST expects a favorable outcome, then yes, he is an optimist.

Realistically however, I would define this recession as a soft depression. One that is getting worse not better. That isn't a pessimistic outlook. That is an outlook based on actual data, not Enronesque numbers or Enronesque data.

Actual data.

It is a glim/ It is an ugly/bad outlook. But, glim and ugly/bad aren't the same as pessimistic.

I'd consider myself a realist. It is what it is, and it is going to be what it is going to be. If, I and many other bloggers are correct, then to get to the good times, we will first go through some really, really, really bad times.

I'm optimistic that things will work out. Eventually and after much pain.

But if we base our optimism on false, misleading, incorrect data are we optimists or realists?

No.

In fact, I'd advocate that we'd instead be classified as Delusional. I'd also argue that it will make us pessimistic people after we lose our life savings and weather an economic Katrina without any preparation what so ever.


Delusional-ism

de·lu·sion (d-lzhn)

n.

3. Psychiatry A false belief strongly held in spite of invalidating evidence, especially as a symptom of mental illness

I'm not advocating that Dennis Kneale has any form of mental illness. I personally would classify myself as mentally ill IF I invested my money based on a strongly held belief that the recession is over in spite of invalidating evidence - such as a bogus GDP (Gross Domestic Product) numbers, the end to a not yet over housing crash, or calling unemployment 9% when it is actually between 18%-21%.

I think what Dennis may not know is how off GDP really is. Please, for just a moment: Forget the great work that Karl Denninger, Nate Martin, Chris Martenson or a bunch of other super bloggers have done on the recent GDP numbers. GDP is off by about 30% to begin with.

Chris Martenson, PhD, creator of "The Crash Course," where I blog the "Daily Digest" did this super video.

As I said before, GDP is off by about 30%. Thirty percent of 2008 GDP ($14,264,600,000,000.00) is about 4.2 trillion bucks. Being off by 4.2 trillion bucks is akin to not being able to aim in the direction of the target. If your aim is that pathetic you shouldn't even pick up a gun.

Forget about GDP being off by 1%, 2%, 3% or 6%. GDP is off by at least a third thanks to things like imputations. You own a house and the BEA takes your rent payment - that you don't pay or make - and applies it to GDP. Enron would be proud. I wouldn't base how much toilet paper I'd use on a GDP report let alone if I should be bullish or bearish.

GDP reports are a waste of tax dollars. It makes the U.S. look like a sub-prime borrower. It is, in short an embarrassment that makes the cooked books of Enron look good.

One of the best books I read this summer was Michael W. Covel's "Trend Following." Chapter 6: "Human Behavior," was for me, the best 15 pages of the entire book. Let me read you one paragraph:

"Behavioral finance is the study of why and how human beings and markets behave in relation to each other. It evolved out of the contradiction between classical economic theory and reality. Economic theory is based on the assumption that people are able to act rationally, have identical values and access to information, and use rational decision-making. The truth is that we are irrational to varying degrees and seldom make completely rational decisions even if we think we do."

"Irrational to varying degrees."

I link to Karl Denninger's fine blog often, I've never seen "America is toast" or that "We are all going to die" on that blog. Saying things like that I would not classify as realism or realistic reporting. Asking 'if the footnotes count' to me is akin to stating that the rating agencies might as well calculate GDP. But the clincher was when Dennis asks, "Karl, you got all these numbers but you got this one number you can't explain. The S&P 500 is up more than 40% since March 9. ...How do you explain that my friend?"

Reality lags perception and economic theory is based on the assumption that people are able to act rationally. I think they do have access to identical information. Identically correct information - on the better blogs, and identically incorrect information on some of the cable services. Right now reports like the current GDP is leading investors to have a false perception. Real economic data can't be conned.

The market will correct.

It is okay to join a bear market rally.

The question is whether you are an realists, a pessimists or a delusionsist is will you be able to get out when reality takes hold? Will you be prepared for what is coming? It is one thing to stay behind in a hurricane, it is another to get caught in one with no preparations what so ever.

Take care, D. "Davos" Sherman Okst - blogger and realist!

 

 

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Re: Optimism, Realism, Pessimism, Delusionalism & Dennis ...

Dennis Kneale is a pollyannaish, hypocritical establishment conformist. He has usurped Kudlow and Cramer as the most brazen Wall St.boot-licker on cable TV. Anyone foolish enough to listen to this hack deserves whatever they get. It's one thing to be optimistic where optimism is warranted. It is another thing to be brazenly optimistic in the face of obvious danger. It is cronies like him who have hyped the Washington and Wall St. lies and led boobus americanus further down the path of no return. I cannot stand to watch this fool disregard facts and logic to come to the conclusions he comes to. He is the ultimate BOOBUSAMERICANUS! Forgive my pessimism but fools like this were calling bottoms to the market in the summer of 2008!

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Re: Optimism, Realism, Pessimism, Delusionalism & Dennis ...

Forgive my pessimism

I'd call it realism, not pessimism. Take care

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Re: Optimism, Realism, Pessimism, Delusionalism & Dennis ...

Desperate delusion Davos, these people were staring at the end of their world last fall, contemplating the unemployment line. Now that their source of income has been brought back from the dead they are telling themselves that it was all just a really bad dream. They need others to believe as well - particularly to believe in the Market. They have convinced themselves that fundamentals don't apply, that a shared illusion can support their livelihood.... Realists who point out that selling "financial services" in a broke economy is unsustainable just inject unnecessary doubts in viewers minds and therefore must be subjected to ridicule.

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Re: Optimism, Realism, Pessimism, Delusionalism & Dennis ...

Shades of 1930 IMHO. Not much has really changed in all these years.

1927-1933 Chart of Pompous Prognosticators

Chart locations are an approximate indication only

 

  1. "We will not have any more crashes in our time."
    - John Maynard Keynes in 1927

     

  2. "I cannot help but raise a dissenting voice to statements that we are living in a fool's paradise, and that prosperity in this country must necessarily diminish and recede in the near future."
    - E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928

    "There will be no interruption of our permanent prosperity."
    - Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928

     

  3. "No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment...and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding."
    - Calvin Coolidge December 4, 1928

     

  4. "There may be a recession in stock prices, but not anything in the nature of a crash."
    - Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929

     

  5. "Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months."
    - Irving Fisher, Ph.D. in economics, Oct. 17, 1929

    "This crash is not going to have much effect on business."
    - Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929

    "There will be no repetition of the break of yesterday... I have no fear of another comparable decline."
    - Arthur W. Loasby (President of the Equitable Trust Company), quoted in NYT, Friday, October 25, 1929

    "We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices."
    - Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929

     

  6. "This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan... that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years."
    - R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929

    "Buying of sound, seasoned issues now will not be regretted"
    - E. A. Pearce market letter quoted in the New York Herald Tribune, October 30, 1929

    "Some pretty intelligent people are now buying stocks... Unless we are to have a panic -- which no one seriously believes, stocks have hit bottom."
    - R. W. McNeal, financial analyst in October 1929

     

  7. "The decline is in paper values, not in tangible goods and services...America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin."
    - Stuart Chase (American economist and author), NY Herald Tribune, November 1, 1929

    "Hysteria has now disappeared from Wall Street."
    - The Times of London, November 2, 1929

    "The Wall Street crash doesn't mean that there will be any general or serious business depression... For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game... Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before."
    - Business Week, November 2, 1929

    "...despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation..."
    - Harvard Economic Society (HES), November 2, 1929

     

  8. "... a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall."
    - HES, November 10, 1929

    "The end of the decline of the Stock Market will probably not be long, only a few more days at most."
    - Irving Fisher, Professor of Economics at Yale University, November 14, 1929

    "In most of the cities and towns of this country, this Wall Street panic will have no effect."
    - Paul Block (President of the Block newspaper chain), editorial, November 15, 1929

    "Financial storm definitely passed."
    - Bernard Baruch, cablegram to Winston Churchill, November 15, 1929

     

  9. "I see nothing in the present situation that is either menacing or warrants pessimism... I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress."
    - Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929

    "I am convinced that through these measures we have reestablished confidence."
    - Herbert Hoover, December 1929

    "[1930 will be] a splendid employment year."
    - U.S. Dept. of Labor, New Year's Forecast, December 1929

     

  10. "For the immediate future, at least, the outlook (stocks) is bright."
    - Irving Fisher, Ph.D. in Economics, in early 1930

     

  11. "...there are indications that the severest phase of the recession is over..."
    - Harvard Economic Society (HES) Jan 18, 1930

     

  12. "There is nothing in the situation to be disturbed about."
    - Secretary of the Treasury Andrew Mellon, Feb 1930

     

  13. "The spring of 1930 marks the end of a period of grave concern...American business is steadily coming back to a normal level of prosperity."
    - Julius Barnes, head of Hoover's National Business Survey Conference, Mar 16, 1930

    "... the outlook continues favorable..."
    - HES Mar 29, 1930

     

  14. "... the outlook is favorable..."
    - HES Apr 19, 1930

     

  15. "While the crash only took place six months ago, I am convinced we have now passed through the worst -- and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us."
    - Herbert Hoover, President of the United States, May 1, 1930

    "...by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent..."
    - HES May 17, 1930

    "Gentleman, you have come sixty days too late. The depression is over."
    - Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930

     

  16. "... irregular and conflicting movements of business should soon give way to a sustained recovery..."
    - HES June 28, 1930

     

  17. "... the present depression has about spent its force..."
    - HES, Aug 30, 1930

     

  18. "We are now near the end of the declining phase of the depression."
    - HES Nov 15, 1930

     

  19. "Stabilization at [present] levels is clearly possible."
    - HES Oct 31, 1931

     

  20. "All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S."
    - President F.D. Roosevelt, 1933

 

cannotaffordit's picture
cannotaffordit
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Re: Optimism, Realism, Pessimism, Delusionalism & Dennis ...

 Davos,

I have just adopted a NEW outlook about collapse.  Now, I am quite sure that the terrible hard times will only be for the lower and middle class folks.  I think the wealthy/elite will always have enough power and position to continue to live the good life, whether here or in some incredible paradise somewhere else.  And I suspect they'll laugh everyday about how they skimmed and scammed the rest of us out of everything we had and left us miserable.

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Re: Optimism, Realism, Pessimism, Delusionalism & Dennis ...
Ben A wrote:

 Davos,

I have just adopted a NEW outlook about collapse.  Now, I am quite sure that the terrible hard times will only be for the lower and middle class folks.  I think the wealthy/elite will always have enough power and position to continue to live the good life, whether here or in some incredible paradise somewhere else.  And I suspect they'll laugh everyday about how they skimmed and scammed the rest of us out of everything we had and left us miserable.

 

Ben,

I really think that some to most of them won't even care enough to realize how much pain they created. Their perspective is within their own walls of reality. Remember, these folks don't even know how much a gallon of milk costs. Remember Dan Quayle?

I suppose some understand and may even find enjoyment in others pain, it somehow makes them feel better about themselves.

 

C.

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Re: Optimism, Realism, Pessimism, Delusionalism & Dennis ...

Hi Davos,

You commented 'But the clincher was when Dennis asks, "Karl, you got all these numbers but you got this one number you can't explain. The S&P 500 is up more than 40% since March 9. ...How do you explain that my friend?"', when I watched the video on Friday my jaw dropped when Kneale said that. The market is up, ergo the recession is over. Whatever machinations are keeping the S&P and Dow high, I wonder this is what the uninformed majority are thinking.

I was amazed the other day when the Shanghai market came off 8% in one day and yet the US market was down only slightly and ended the week up (again). Karl Denninger and Chris's breakdown of the GDP figures were rational and reasoned unlike Kneale's harangue of Karl on CNBC. Kneale's obviously not stupid but I do wonder how unthinking he is.

I know people have responded about previous posts of mine where I have shown charts (e.g. the S&P from 1960 to date). I'm not making calls on the market, however IF we are following what happened with Japan's 'lost decade' (and the West certainly seems to be at the moment) there is no reason at all to assume that what goes up won't go down. And Japan was/is a nation of high personal savers.

DavidC

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Re: Optimism, Realism, Pessimism, Delusionalism & Dennis ...

 But the clincher was when Dennis asks, "Karl, you got all these numbers but you got this one number you can't explain. The S&P 500 is up more than 40% since March 9. ...How do you explain that my friend?"

 

Simple answer:  It's not real.  It's a market that is being manipulated upward by a select few institutions to create an illusion of "happiness".  Again, it's fake!  

 

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Re: Optimism, Realism, Pessimism, Delusionalism & Dennis ...
Ben A wrote:

 Now, I am quite sure that the terrible hard times will only be for the lower and middle class folks.  I think the wealthy/elite will always have enough power and position to continue to live the good life

Let's all keep in mind that there are two very distinct types of "rich" folks: 1) the productive, honest businessmen, surgeons, entrepreneurs, etc. who are a benefit to society and 2) the very small percentage who have obtained their wealth in unproductive ways (e.g. banksters).  Do not lump Hank Reardon in with Wesley Mouch.

Remember that "The Millionaire Next Door" demonstrated that the vast majority of high-net-worth individuals are frugal, self-made, productive members of our society.

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Re: Optimism, Realism, Pessimism, Delusionalism & Dennis ...

 

SteveR wrote:

Do not lump Hank Reardon in with Wesley Mouch.

Thank you, Steve!

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cannotaffordit
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Re: Optimism, Realism, Pessimism, Delusionalism & Dennis ...

 Steve,  I was not referring to the professionals and hard working milionaires next door.  I am referring to those who control the Fed Res, etc. and are multi-billionaires....you know......the untouchables, who have banking interests all over the world, and pull the strings of government big time.  Anybody with just a few million is likely to suffer when their dollars become virtually worthless.

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