What Caused The Dave Effect?

Clearly the effect on Dave is itself the cause. At the 3:15 mark in the interview, former Chairman of the Federal Reserve Alan Greenspan explains the cause of effects, or is he explaining the effects of the cause when he makes the following proclamation.

“…data shows that not only are stock markets a leading indicator of economic activity, they are a major cause of it – 6% of the change in the growth in GDP results from changes in the value of stocks and homes.”

Mr. Greenspan goes on to explain how the increase in the payroll tax and resulting reduction in take home pay for many hardworking Americans is already figured in and “consumers are actually holding up more than one would expect given the payroll tax increase.” Mr. Greenspan goes onto explain “if the stock market can hold up through this, then the effect will be rather minor” when referring to the sequester showdown in Washington.

Here’s what the folks over in Bentonville, Arkansas said about the effect of customers having less money in their pockets is having on Wal-Mart’s business according to a report on leaked e-mails just out from Bloomberg. Maybe Greenspan just “had his mind changed” on the payroll tax impact on consumer spending.

“In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” Jerry Murray, Wal- Mart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. “The worst start to a month I have seen in my ~7 years with the company.”

The full report from Bloomberg: http://www.bloomberg.com/news/2013-02-15/wal-mart-executives-sweat-slow-february-start-in-e-mails.html

Bloomberg on how Wal-Mart sales are leading stocks lower:


 

Dave has written at length about everything from Bowleing for Simpson dollars entitlement cuts to the Chicago’s plan zero-bound Past = Present = Future, 0 = 0 = 0, vostro = nostro time travel retirement plan and now, if you can put your faith in the words of the man who when asked if he was wrong replied with the word “Precisely”, then we know that the thesis of “cause and effect” is really the thesis of “effect and cause”. What is the cause of increased economic activity according to the Maestro? The stock market going up IS the cause of the economy going up… according to the data.

If you’ve been going for 40 years based on the data, what could go wrong? By the way, what is the cause of the stock market going down or does it only go in one direction? If you listened to Greenspan above, you know “the stock market is the key player.” You probably thought it was the market participants, not the market itself that were the “key players.”

Applause all around for those who understand that to gain a depth of understanding of the government’s role in economic endeavors it’s neither the cause of the effect or the effect on the cause that really matters. Edumecation is the answer. Potatoe… potataaah, tomatoe… tomataaah, neither… niether… either… ither… let’s call the whole price discovery thing off. Allow former V.P. Dan Quayle to spell it out.

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