Bernanke's Spin, Contraction NOT Recession

Bernanke says economy may be in store for "contraction," not necessarily recession. Look into my eyes. You are getting sleepy, very sleepy...

(Stocks in this article: AMEX: SPY, AMEX: DIA, Nasdaq: QQQQ)

Federal Reserve Chairman Ben Bernanke testified before a joint Congressional committee today, and said the economy may be in store for economic contraction. While many of you are surely insulted by that statement, the vast majority of America is protected by it. Still, one wonders, is protecting the American public from themselves more important then telling the truth?

It's plainly obvious now that from the top down, the administration is perhaps less stupid than we (you and I) originally thought, and in fact rather cunning. Since the spring of last year President Bush, Treasury Secretary Paulson and Fed Chairman Bernanke have been actively snowballing us, which is another way of saying "protecting us." Boy they drew the ire of more than a few clear thinking strategists and economists over the last few months!

But, in the end, it's becoming increasingly obvious that the Washington crew has at least partially protected the American public from self-fulfilled prophecy. If the boys were to come out and say, batten down the hatches folks and get to work building your bomb shelters, then we would surely have seen the worst economic downturn in history. I know what you're thinking, that we're not far from that anyway... Still, if they came out and said something less dramatic, but admitted recession seemed possible or even likely, then you can be sure the situation would be some degree worse than it currently is.

But Are We That Stupid?

Yes! Still, the efficient market figures everything out, and had the government shot some straight talk at us, we probably could have handled it. You (George) have to tell us the economy is in a downtrend, but that you are taking aggressive measures to mitigate the trouble and to drive new economic expansion. We, as Americans, are hopeful people. We would have been fine.

When you lie, exaggerate, or "protect," on one topic, you create an atmosphere of mistrust for every topic. We could argue that the Bush Administration had already lost credibility after no weapons were found in Iraq, and so we could say nobody believed the cheerleading from Paulson anyway. There were enough of us shouting from the rooftops that recession was on the way, and while it took the masses some time to hear us, they eventually did.

Thus, I have to say that in the end, the policy of the administration here is flawed. America admires straight talk and strong leadership. Judging by the results of elections the world over, it seems the world does as well for the most part.

See the disclosure at the Wall Street Greek.