So it seems to be the popular view now that the recession is over, indeed aren’t the stock market and Gdp growth proceeding quite nicely?
Why (or is) this information inaccurate? According to all Austrian theory we’re pretty much screwed due to the heavy govt. intervention of this recession… Well are we?
Unemployment is the highest it’s been in 30 years. A freaking generation of human existence. Debt is enormous and unserviceable. Assets are overvalued in all walks of life. International shipping is grinding to a halt.
But the Dow’s at 10,000 today, right, so it’s a recovery?
Dow at 10000 for first time in a decade, indeed!
Except in real terms, a Dow 10,000 now is the equivalent of Dow 7,500 ten years ago. So we’re not just flat for the past decade, we’re actually still down about 25%.
Let’s see what happens when the inflation game stops.
Err… year. My bad. I was caught up with the 10 year depreciation of purchasing power relative to DJIA.
I don’t know how bad is the situation in your area but here in Lombardy, the engine of Italy, it’s pretty dire. There are two down-to-earth things that still hint at the fact: first one is the number of trucks/lorries on the road. It collapsed at the beginning of the year and it hasn’t picked up yet. In fact it may have even got a bit worse. The highway authority reports a drop in heavy traffic between 25 and 33% according to area which is probably not too far off the mark. Second indicator is spare parts delivery times. They have increased dramatically since the beginning of the year for any supplier. If the economy had picked up in the meantime delivery times would have dropped… right? Yet the government keeps telling us “we are out of it, go out and spend, spend, spend”.
Like Gerald Celente said this “recovery” has nothing to back it up, just huge piles of dollars, euros, yens, pounds, whatever conjured out of thin air without nothing to back them up. This money is trickling into the system: it is inflating the stock market just when it was contracting to more healthy proportions, it’s inflating GDPs all over the world and is starting to cause some real world inflation. Like I always say I am yet to see the price of anything go down in my lifetime (except for computers and tyres)… in fact groceries have increased since the beginning of the year by a fair margin. Unemployment is a tell-tale sign that this isn’t going to be pretty when the world will crash land from its vacation.These people will rightly demand either a job or a subsidy and there will be less of both. We are witnessing a new type of economical crisis: the “jobless recovery”… I’ve already bet with friends that GDPs next year will soar while real life economic conditions will worsen all over the the world. Care to take a wager?
Wolfram Alpha!
I’m near Detroit, Michigan. It’s as bad here as it is anywhere, primarily because so much of the population is historically dependent upon the domestic automotive industry.
I haven’t noticed that around here, but I believe you. There are literally miles of empty freighters (or some not-so-empty, with non-perishable commodities on board) parked outside major port cities like Singapore etc.) and when nobody is producing, nobody is shipping, nobody is buying and nobody is selling. Dire.
The “jobless recovery” is a fiction - at least as far as honest recoveries are concerned. I’m in agreement with you, that this is what is playing out right now. It is going to be painful as heck. And it’s going to take twice as long as anyone suggests.
rocks.
There is a lot of monetary inflation which will give the illusion of recovery for as long as credit expands exponentially. When the Federal Reserve decides to stop credit expansion, we will see where the economy really stands.
Why would the Federal Reserve decide to stop credit inflation? The banks have just resumed the process of credit expansion, hence for them, there is a recovery. Do you think Bernanke will betray both his banker friends and his government friends?
Since a big chunk of the government deficit is just servicing the debt, a rise in interest rates would send the deficit skyrocketing. This isn’t good for anybody (who matters).
This comment will probably betray a lot of ignorance on my part.
Why wouldn’t the federal reserve just let the market recover on its own and resume its extortionist tampering later? Why would the fed allow bubbles to burst and instead just back off the precipice, letting the market readjust slowly?
What, you mean you people want even MORE help? I thought the gubment fixed the auto industry? All those government bailouts and “clunkers” programs weren’t enough? Greedy beggars! [;)]
Didn’t Keynes think that we could just keep inflating our currency and everything would work out great? Hasn’t quite worked out yet in practice… maybe this time will be different? [:|]
Well here’s a question I think I can answer. 1. If they did that all of the neo-classicals would, as the saying goes, “flip shit” and all the mainstream economists would cry bloody murder and the administration would lose alot of credibility which it should currently only have in negative amounts. 2. Who says that the people running the fed are Austrians? Even if they secretly know the failings of their entire section of government its alot easier to lie to yourself an say you’re part of the “glorious” recovery 3. A time where billions are being handed out daily is truley unparalleld time to own a printing press… F*** the economy pull in a few million in bribes! 4. If the economy got out of this pit on its own it would prove beyond doubt the fed is worse than useless, its incredibley detrimental in all areas of the economy.
media spin ftw. No one knows what is going on with the fed and no one knows what keynesians say the fed is supposed to do, so they should be able to get away with doing anything.
maybe. Then again their practices have made them awfully rich…
The money the fed prints won’t mean anything if the dollar goes down the toilet and the economy never recovers
Maybe, but the fed could just raise its interest rates back to where they should be and say “voila we have fixed the economy how great are we” as the economy recovers on its own.
[:|]
Some experts predict that the recession is over, but we will have a jobless recovery, what kind of bull is that?
Yay, the Dow hit over 10,000 today! The next line on the news was that unemployment has slowed?!? It didn’t stop, it slowed down, so a jobless recovery actually becomes completely moot in the face of jobs still evaporating, just at a slower rate.
Another awe inspiring facet of our supposed jobless recovery is the “experts” say that they expect GDP to increase by only about 3% per year. Wow, freakin’ amazing!!!
LoL, it’s things like this that really bring out everyone’s inner cynic.
Also, as far as Detroit is concerned, they nearly had that riot over the weekend because of poor stimulus spending. They were mad that the handout from their buddy Barack wasn’t going to all of them. Leeches, I swear.
Because, at some point the inflation will be noticeable in the price level. When that begins to get out of control, the Federal Reserve may decide to end credit expansion. It will have to come inevitably. Either before hyperinflation or during hyperinflation.
So where can I go? I can leave America maybe but I feel like I’m trapped on the planet with these people…
I have thought about returning to Spain, actually. But, only after I complete my degree.
Undermines the premise of a FED. Also, market recovery requires friends of the FED to go bankrupt.
I think a good lecture that would answer this question is Robert Murphy’s “Does Bernake Have an Exit Plan?”, the banks still have trillion of dollars in reserves with the Fed, that money has yet to come into the market. They are basically just sitting there. That is the timebomb of this recession. Nothing is fixed until that is dealt with.