Say what? Geithner begs for higher debt ceiling, says it will restore world confidence… Deficit now three times last year’s record… so Congress buys 8 private jets… A currency sea change? Bill Jenkins on the dollar’s surprise rally… Jim Nelson on the best sectors for income investing… John Williams digs deeper into Friday’ jobs report… four data distortions you need to know…

“It is critically important that Congress act before the [debt] limit is reached,” Tim Geithner wrote over the weekend in a letter to lawmakers, “so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations.”

Sounds like our Treasury Secretary is finally putting his foot down, insisting that Congress pull back its lavish spending programs and start addressing our incredible $11.6 trillion national debt.

Wait… what’s that? Oh, Geithner’s actually asking for Congress to raise the debt ceiling. If Congress

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This post is a guest contribution by Bill King*, well-respected and straight-talking author of The King Report.

Most of the Street heralded the 1% decline in Q2 GDP because it was 0.5% better than consensus - even though the US government admitted in the release that its GDP estimates over the past several years were consistently wrong! So why should the latest report be any more accurate?!?!

We feel compelled to address the scheme of past-month lower revisions producing better-than-expected m/m or q/q results, even though the aggregate metric is worse than expected. We have incessantly noted and commented on this scam but most of the trading and investing universe omits it.

We will again utilize basic math to illustrate the scam. If Q4 ‘08 GDP was 100 units, and Q1 ‘09 was reported at -5.5% and Q2 ‘09 GDP was expected to be -1.5%, the

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So where are we now in the 19th month of the recession/depression? Perhaps not where we expected we’d be. The Dow finished its best gain for July since 1989. The index was up 8.6%. The S&P 500 also had a good month. It finished up 7.4%. 

Boosting stocks, of course, was “better-than-expected” news about US GDP. This was typical second derivative stuff: the pace of decline slowed, but the figures were still heading in the wrong direction. According to the Commerce Department, US GDP shrank “only” 1% year-on-year in the second quarter, 0.5% less than forecast. And this was taken as reason for optimism!

The problem is the Commerce Department also revised down its reading of first quarter GDP to 6.4% from 5.5%. It will revise down the last quarter’s numbers, too. As underground economic number cruncher John Williams of ShadowStats.com points out:

The second-quarter GDP “improvement” was only in terms of relative

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What’s good for Goldman is bad for the nation.

We’re attending a financial conference here in Vancouver. Yesterday was actually the tenth anniversary of the Daily Reckoning. A group of readers took your editor to dinner and toasted him.

He was flattered… and grateful for the attention.

But we’re not kidding ourselves. Readers come up to us at conferences and tell how much they enjoy reading the DR. We wait for questions about Quantitative Easing, the Trade of the Decade, the Empire of Debt or other of our important themes. Instead, what they want to know about is:

“How’s your gardener doing? What’s Maria doing in Los Angeles? Did you ever figure out what happened to your missing cows…?”

Readers know what’s important. They want to know more about what really matters.

Still, we are foot soldiers in the lonely battle against economic claptrap; we must march on!

Yesterday came more evidence that

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They’re wrong. We’re right. Now the Wall Street Journal says “recovery likely in second half.” And Goldman Sachs (NYSE:GS) calls for a stock market rally similar to the rally in 1982. Who are we to say they are wrong?

Well… we’re the Daily Reckoning, that’s who. And we’ll say it: they’re wrong.

This ‘recession’ is already the second longest since the first leg down of the Great Depression. That downturn of the early ‘30s went on for 43 months. This one is now at 19 months – officially – which makes it longer than any other since the Great Depression.

Is it over? Is it going away? Is that all there is?

Nope. Nope. Nope.

Instead, we are merely proceeding as we should… into a “deepening structural depression,” as John Williams puts it.

Yes, he uses the D word too. Because a D is what we have. Not an R.

It’s a

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Bias to sell dollars fades away…  Trading in yesterday’s clothes…   More thoughts on China…   Shadow Inventory… And Now… Today’s Pfennig! Good day… And a Wonderful Wednesday to you! Tuesday ended up being a very nice day, except for the currencies. After signing off yesterday and telling you how I had watched the euro climb back to 1.4025, it just couldn’t hold that figure or add to 1.4025.. And all the thoughts that had held the dollar hostage earlier that morning, being the China going to G-8, and so on, just faded like a black shirt put through 100 washes!

So… When I came in on Tuesday, the euro was 1.3920… When I came in this morning, the euro was trading 1.3925… Trading with yesterday’s clothes on. Back and forth, back and forth, the currencies seem to be in a rut… So, what happened to all the thoughts yesterday that China was making its first

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Foreign central banks, proving that they are just as stupid and corrupt as I thought they were, continue to buy American Treasury and agency debt with both hands, and their holdings stashed at the Fed jumped a big $26 billion last week as a result!

I ended that with an exclamation point because when I multiply $26 billion a week times 52 weeks, I get $1.352 trillion, a headache and a feeling of impending doom, which I figure in some primordial, primitive way MUST be significant, thus explaining my use of the exclamation point.

The new total holdings of these foreigners, in that one account alone, is a huge clot of debt for which they have paid a cumulative $2.710 trillion, although with interest rates trickling upwards, they surely lost some money as the prices of bonds went down. Hahaha! Morons!

And so with all of this foreign money flooding into Treasury and

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You’ve heard the old axiom “Do as I say, not as I do”? Today, the Federal Reserve’s done one better: “Do as we say, not as we forecast.”

Despite all the mentions of “green shoots” of recovery sprouting about — the “tentative signs” that the recession is easing — the fine details of Federal Open Market Committee minutes released yesterday painted a clear picture: The worst is yet to come.

Funny how that works, eh? If Mr. Bernanke were to sit before Congress and say, “I expect unemployment, inflation and our economy at large to all deteriorate for the rest of the year; it’s even worse than we predicted back in January,” that would cause quite a commotion.

But that’s the beauty of fine print. These forecasts can be found at the end of the FOMC’s

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If I knew the definitive answer to that question I would make this article about one paragraph long and we’d all go out, mortgage the farm (if we could qualify for a mortgage) and then get filthy, stinking rich. By the way, don’t miss my secret, short-term profit-making strategy at the end of this article.

Today’s 3% rally in the three major US stock indices gives the impression that the future looks very bright for stocks and the market in general.

A better-than-expected profit report from Lowe’s Cos [LOW: 19.53, -0.19 (-0.96%)], an uptick in homebuilder sentiment and positive comments from analysts about U.S. banks revived investors’ confidence in an economic rebound.Stocks fell sharply last week on worries that a recovery might be further off than hoped, interrupting a rally that has left the Standard & Poor’s 500 index up 34.5 percent since March 9. Was Monday’s rally a

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Many years ago, when Dad and I used to look at official data and analysis, we knew they were flawed. So we developed our own. That’s how we figured out that the capital of savings and loans was grossly overstated and that thousands of S&Ls were headed for a massive bust. Our awareness of the flaws was also a key factor in helping us warn consumers prior to the failures of giant insurance companies during the 1990s. (See the review of our work by U.S. Government Accountability Office GAO.) It was critical to helping us warn you of nearly every major financial failure in the debt crisis that began more than two years ago. (See my blog for our forecast track record.) Plus, it’s one of the main ...