Quick! Get out the green spray paint and cover this up: “Durable Goods Orders in U.S. Unexpectedly Decreased“.

Orders for goods meant to [last] several years dropped 2.4 percent, the worst performance since January, the Commerce Department said today in Washington. Excluding transportation equipment, orders were little changed. Restrained consumer spending and near-record excess capacity mean companies will probably not boost investment in new plants or equipment in coming months. The report indicates the jump in auto sales from the Obama administration’s $3 billion trade-in program may not give other industries a jolt, raising concern any factory rebound will be uneven.

No problem, the banks will still be able to game the stock market and give the government their share, so all is well…

In essence, the government has passed the baton on to the banks so they can keep the party going.  This phenomenon has been most evident in bank earnings.  Banks are in the business of lending, but an odd thing has occurred while bank earnings soared – they were doing no lending!   Banks have been hoarding record amounts of cash as the government floods their balance sheets via various programs and bailouts.  Many assume that the banks are either attempting to loan the money or simply letting it sit on their balance sheets earning nothing.  But Moonraker’s analysis raises a more nefarious possibility – the banks are effectively creating a ponzi run stock market in which they use the bailout money to drive various market prices higher and thereby juice their own earnings.  It’s quite brilliant when you think about it – until the music stops.

Who’s in charge of the music?