What's Noise, What's News: Friday August 17

What's noise:

The Fed kinda sorta cut interest rates, trying desperately not to appear as if it was doing so.  The discount rate's been dropped 50 basis points, but the fed funds rate remains unchanged.  For now.  The Dow jumped nearly 300 points in the first five minutes of trading: Hooray, recession averted, yada, yada, yada.  Leave aside for the moment that both the markets and the economy increasingly resemble a junkie going through withdrawal… Guess there's a reason they call it "injecting" liquidity.

What's news:

Mainstream economists have pulled a remarkable consensus out of their collective posteriors — a 50-50 or less chance of recession — even though by their own admission they have no idea what they're talking about (emphasis mine):

“What we’re going through now is unlike anything we’ve seen before. All financial crises have their unique characteristic — this one is characterized by a seizing-up in the home-mortgage market,” said Lyle Gramley, a former governor of the Federal Reserve System in the 1980s who's now with the Stanford Group, a consulting firm.

He puts the odds of recession at 50 percent…

Gramley’s concerned that there aren’t good measures right now of how much lenders are pulling back. “None of us knows for sure how much credit availability has declined, but to be sure it is substantial,” he said…

The lack of firm data about how bad lending conditions are leaves most analysts scratching their heads, worried but uncertain whether a recession is coming.

“I think it’s very hard to tell, and I think it’s less than 50 percent likely. Butthere’s no good data to support one argument or the other,” said Irwin M. Stelzer, director of economic policy studies at the Hudson Institute, a conservative think tank in Washington, D.C.

Of course Donald Rumsfeld complained once about lacking the "metrics" to measure progress in the "war on terrorism," but that didn't stop him from making all manner of reckless pronouncements for three more years.  Why should economists be any different?

Way back in May, The Survival Report's Mish Shedlock examined some different numbers and concluded we're already in a recession.  I see nothing that's transpired since then to alter that conclusion.