Don’t Bet on a Recovery

It is astounding how many economists, government officials, and Wall Street strategists construe the current economic conditions as evidence of a bona fide recovery. It is a testament to the power of the rose-colored glasses handed out by our nation’s leading universities that such a feeling could be widely held despite the clear and present danger that compounds daily. The myopia leads us to enact policies that actually exacerbate our problems. The “remedies” are postponing, perhaps indefinitely, a true recovery.

The High-End Market Moves Down

The non-recovery seems to be gathering momentum. Almost every day we receive fresh evidence of economic non-growth and non-vitality.

It’s true; the economy does manage to get out of bed every morning. Some folks applaud this fact and declare, “Aha! A recovery!” Other folks, like your California editor, observe that the economy usually crawls right back into bed after brushing its teeth. Your editor sees no recovery. He sees a coach potato with a very bright smile. He sees an economy that still lacks essential qualities like jobs, corporate revenue growth and credit.

Equities 2010: Which stocks will rock?

The outlook for equity markets in 2010 is as muddled as ever after a year that only can be described as enigmatic. Equities had one of the best runs ever off of the March 2009 low, but it sure didn’t feel bullish or that we were in the midst of a recovery. Once there were actual signs of recovery, the market corrected.

The Zombie Economy

The zombies are taking over!

Stocks went up 4 points on the Dow on Friday… Gold went up $10.

Noise. Distraction. Headlines. Opinions.

The important trend is the big one – the shift of resources from the private sector to the public sector.

During the bubble years, the private sector made a big, big mistake – taking on far too much debt.

Discovering Recovery In Wall Street and Washington

The recession is over. Everyone says so. Well, not everyone actually…just economists…especially economists from Wall Street and Washington.

In a research note entitled, “Return to Normalcy,” John Silvia, Chief Economist at Wachovia, gushes, “With the war against the Great Recession over, our newly reappointed head of the Federal Reserve now seeks to take us back to normalcy in the financial markets. Let’s trust that he too ushers in a decade of prosperity.

A Real Economic Phenomenon

The depression is alive and well, thank you.

The Dow rose 91 points yesterday. Gold fell $6.

Officially, the crisis is over. Everyone says so. Central bankers and Treasury officials have been congratulating themselves. It’s been a year now since the end of the world didn’t happen. These fellows take credit for it.

Economic Recovery to Hurt US Treasuries

Most economists now “expect the recovery to remain firmly on track.”

That’s the word today from the National Association of Business Economics (NABE), the group officially tasked with deciding if the economy is growing or receding. The NABE forecast 3.1% GDP growth this year, largely in line with their last broadcast back in November.

Economic Recovery: Demanding More Purchasing Power

What a delight it would be to have some inflation! Yes, dear reader, that’s the real reason that fiscal stimulus appears to work. That is, that’s the reason inflation can sometimes boost employment. It creates inflation. And inflation lowers wages. Lower wages make it cheaper to hire people. And they make US output more competitive on the world market – so exports tend to increase.

Monetary Stimulus Produces Phony Recovery

Got money?

You might find it hard to hold onto. Americans with money are caught in a vise. On the one side is the de-leveraging economy. On the other is the government.

The depression squeezes everything – asset prices, businesses, earnings. And it’s going to be with us for years – no matter what the papers tell you. Get ready for a 20% decline in stock prices, says our old friend Marc Faber. Another analyst puts the current P/E at 22…also implying a loss of about 20% just to get down to ‘normal’ levels.

Economic Recovery: The Unresolved Mysteries

What a marvelous recovery! But there are so many unresolved mysteries! GDP growth over 5%…but, mysteriously, no jobs…and no rally in the housing market.

And now, to compound the mystery, Mr. Obama has come forward with a $3.8 trillion budget.

The markets like it. Stocks rose 118 points on the Dow yesterday. Gold went up $21. Investors see more hot money on its way…a Vesuvius of it…

Breezing Through the Government Spending Freeze

Now, here’s some good news:

“US cattle herd falls to ’58 levels.”

That’s good news because it means that maybe we’ll be able to make some money from our scrawny ‘sand fed’ cows in Argentina. We bought the farm down there 4 years ago. Then, we had about 1,000 head. But we called in an expert – a tall, good-looking blond fellow named Juan Anderson. He told us to reduce the number of cows so they’d get enough to eat in our desert pastures. Now we’re down to 600 cows. That leaves us with a crew of 7 gauchos with not enough work to do. So we’re planting grapevines and walnut trees. Plus, we’re going to build a masterpiece – a cottage of stone and adobe, with solar heating and a vaulted roof. But that project is for the future…stay tuned. In the meantime, we’re trying to keep the gauchos busy…and hold down the losses.

Dow 10,300: Mimicking the Bounce After the Crash of ‘29

Let’s call it a victory. Despite spending most of yesterday’s trading session in the red, the Dow Jones Industrial Average staged a late-day rally to eke out a 42-point gain. Nevertheless, the selloff that started early last week has erased all of the Dow’s progress since November 9, 2009 – a day on which headlines gushed that the Group of 20 nations would continue to save the world by maintaining their economic stimulus efforts. Investors celebrated that news by rallying the Dow 203 points to 10,227 – a fresh 13-month high.