What a nutty e-mail!
"Just plain stupid and bad judgment," writes HuffPost reader Hal G. of Pittsburgh, who is definitely not one of my fans. "Why let yourself be used by the Taliban? That is what you do when you interview a woman living on another planet who tells you the U.S. economy is going to hell and you publish such gibberish. She's trying to destroy confidence in America and sounds like a real nut job. I'm sure she supports the Taliban. People like that are suicide bombers.Why give space to people trying to kill us us? Better, you should read the Newsweek cover story 'America's Back.'"
Hal, I'm sorry to say, is unhappy with my last piece, "Who Needs Kindergarten Economics?" In it, I quoted Madeline Schnapp, director of economics at West Coast liquidity tracker TrimTabs Research, a pretty savvy economist. Actually, she never told me the economy was going to hell, rather that "things feel and look better, but the economy is far from out of the woods." That sounded perfectly plausible to me.
In response to Hal's e-mail, Schnapp tells me she has never been a member of the Taliban, has no sympathies toward the terrorist organization and has no plans to blow herself up.
That recent Newsweek story Hal's referring to, "America's back," is based on the U.S. achieving what it described as "a remarkable turnaround." That followed an earlier cover piece the magazine did in July in which it declared "the recession is over." Clearly, Newsweek thinks things are looking honky dory.
Not everyone, though, shares Newsweek's glowing assessment of the economic rebound. "Fantasy journalism," says Olivier Garret, the CEO of Casey Research, a research-oriented economic and investment consulting firm out of Stowe, Vt. "You know when a magazine like Newsweek touts a bullish economic recovery on its cover, just the opposite is likely to be the case," he says. "It sees superficial signs of improvement, but it's ignoring the big picture."
In particular, Garret points to too much debt at all levels -- public, business and government. Ultimately, he observes, it will lead to increased taxes and higher interest rates, which, he notes, will put further strains on the economy.
Casey's thoughts aside, there are a number of telling signs that suggest America, contrary to Newsweek's exuberance, is simply not back yet, in fact, not even close. Some of the more conspicuous signs that strike me as unmistakable evidence of this fact follow. Among them:
Meanwhile, Garret sees additional signs of economic anguish. Among them: More foreclosures and delinquencies of real estate properties will plague construction spending; banks haven't yet cleaned up their balance sheets; private debt is no longer going down as it did in 2009; both short and long term rates should be headed higher, and many companies, he says, tell him they're reluctant to invest and hire.
He also sees some major corporate bankruptcies, worries about the country's ability to repay its debt, looks for rising cost of capital, which should further slow the economy, and expects a spreading sovereign debt crisis.
"No one, he says, "thought Spain, Portugal and Greece would increase their cost of capital by 100 to 300 basis points (or 1%-3%), but it happened in six months and it could also happen in the U.S."
Many economists are projecting GDP growth in the range of 3% to 4% in the first quarter and similar growth for the entire year. Much too optimistic, Garret tells me. His outlook (which would clobber the stock market if he's right): up 0.4%-0.5% in the first quarter after revisions and between 0% and 1% for all of 2010.
"Fantasy economies only work in the mind, not in real life," he says.
Given his bleak economic outlook, Garret expects a major market adjustment, say about a 10% to 20% decline in stock prices over the next six months. He figures it could be triggered by one event, such as as an extension of the sovereign debt crisis.
The executives of Casey Research are just not giving lip service to this gloomy view. They're backing it up by being heavily defensive in a rising market, namely weighting their stock portfolios with two-thirds cash. "If you want to survive, cash is the place to be," Garret says.
The bottom line: Has the media turned circus barker, trying to sell us on a phantom recovery? Garret's response: a booming YES!
What do you think? E-mail me at Dandordan@aol.com
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The media, big business leaders and our government still don't get it. Getting 25 million people working again requires new companies competing with the existing companies here at home and abroad. Expecting new industry green energy jobs of the type we are implementing today will take more than 8 years to have an impact on the 25 million people out of work. We can not wait 8 years.
We need to start building chemical plants, steel plants, energy plants, transportation systems, even new cities, silicon chip factories and the like to replace the factories that we buy our goods from in China. Until there is investment in America for Americans, hope is only a dream.
Tho alot of paycheck goes to pay interest, some is deductible
Jobs, first are those unemployed willing to change jobs, get their hands dirty in fact move? Second what ideas of the past that failed could now be opened up with this labor market and need, rebuild devastated city's? Third lets have the US government build ten Atomic plants plus a new city with a University close to them in the West. Yes there are ways to remove and store the spent fuel rods safely. Forth lets invest in America, the little guys that want to start business to feed the American need for everything from shoes to shirts, I am saying made in America from resources in America. Finally as of 1-01-11 every military operation in the world will be pulled back.
For instance: "under-employment." What's that, except a charlatan way to make your numbers look better? The plain word is: "lie."
Speaking of "numbers looking better (or worse, whichever is to your advantage as a thief), "credit ratings." Consumer, or institutional. Need I say more? No. The plain word is: "fraud."
Speaking of pure "numbers," we have euphemisms like "campaign contribution," "lobbying," and now "corporate freedom of speech" ... all claiming to have Constitutional protection, when the document itself condemns them all (and all other forms of misbehavior by "all civil officers") in a mere thirty-one words. Article 2, Section 4. The plain word is: "bribery."
"Microfinance!" Plain word: "usury."
What does recovery look like? Until I see millions upon millions of living wage middle class jobs being created, no recovery. The very concept of a jobless recovery in a society where most live on wage labor is Orwellian.
(S.) Titanic.