The Chart The Investment Bankers Didn't Focus On...

As I sit here reviewing this week's macro economic data, this chart jumps right off the page. This week, compromised groupthink obviously took over the crisis management of the entire US Financial System, but that does not mean that the economic facts underpinning it cease to exist.

This month's Industrial Production growth number moved to negative on a year over year basis (see chart). On its own, this is obviously bad. Together, with a strengthened US Dollar, this is going to get worse. US Exports will be choked off by both the slowing global economic cycle, and the relative competitiveness of the US currency versus those currencies that are in the midst of swan diving internationally.

Hank Paulson obviously didn’t have an investment process like we have here at Research Edge to foresee this local or global slowdown. The chart below actually maps his time at the Treasury since he left Goldman. He, Lloyd Blankfein, John Mack, John Thain, and Vikram Pandit can run around getting the US government to regulate their clients (banning short selling). That is only going to make this worse. It's time to regulate those who don't know how to proactively foresee economic and/or systemic risk - the investment bankers.

KM

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