Friday, February 11, 2011
One of the biggest mainstream news cheerleaders (or worst depending on your point of view) for the stock markets and pushing hard this utter BS notion of 'recovery' is the website 'MarketWatch'. Today they had an article called "The Bull Market is Here to Stay: Eleven Signs the Economy is on the Right Path".
Since I know that no one else in MSM or the blogosphere will take the time to really break down and dispute such an asinine article, "Ants & Grasshoppers" will take on the task. Here were the 11 'signs' of so-called 'recovery' according to the commentary:
1) Improving earnings
MarketWatch mentions that "Of the 290 S&P 500 companies that had reported fourth-quarter earnings as of last week, 236 saw higher earnings per share than in the previous year's report."
When that revenue is coming from overseas because here in the US, the economic situation is so bad that we can't even currently sustain our own businesses, its hard to look at improved earnings as anything more than rich Wall Street fat-cats getting richer and detached from real America's economy
2) Shipping stocks surge
MarketWatch mentons rail giants Union Pacific and CSX Corp. have both significantly outperformed the market in the past 12 months and that United Parcel Service is forecasting record 2011 earnings.
Notice again, that to MarketWatch, the success of the US Economy is based on the strength of the stock market and little else. In its commentary, at no time will it mention that the market is nothing more than inflated bubble created by trillions of taxpayer dollars funnelled into it by the Federal Reserve while forcing average Americans into the market by denying prudent savers anything close to a living interest rate of return.
3) Americans using plastic again
MarketWatch treats this as a Good thing. A perfect example of why mainstream financial news is utterly warped. They write " (It) implies (people) believe they'll have the cash in a few months to pay off debts."
No.. No.. NO! It implies people are in such Horrid financial straits overall and have no nestegg left, that they are Forced to put everything on their credit cards to survive- food, mortgage, medical expenses, other credit card bills, property taxes, etc.. just in the hopes they can get through this economic bleakness. And increased debt burdening individuals is Never good for anyone except Visa, MasterCard, AMEX and Discover.
The audacity of MarketWatch to cheerlead individual indebtedness!
4) Inflation talk
I know this sounds contradictory but to the markets and especially government, inflation is a good thing. They want prices to keep going up, not dramatically so, but certainly more than wages. This forces people to borrow more, use credit cards, work longer & harder which means more tax revenue.
Remember what I wrote in a previous posting-- This nation can Not survive without you being in debt. Without a nation of indebted citizens locked into student loans, mortgages, car loans, credit cards, etc., the entire economy collapses.
5) Dollar is declining
To MarketWatch, "A weaker dollar boosts American competitiveness with exports... a weak dollar also boosts the foreign profits of multinational corporations."
Umm.. it also makes it more expensive for Millions of everyday Americans to buy products and services. Everything goes up. For example, OPEC bases their pricing on petro-dollars, or in simple terms, the US Dollar. The weaker the dollar, the more pieces of green paper needed to cover the value of the oil to sell to us. The price of gas has risen lately not due to scarcity but because of the weakening of the dollar.
The fine folks at MarketWatch think dollar declining is a good thing.
6) Manufacturing and mending
MarketWatch scrapes some weak statistics together then admits " the U.S. is not the manufacturing economy it was decades ago"
Well why isn't it? We all know the answer- business wants everything on the cheap. It is now commonplace for a business that supposedly is US based to make its products elsewhere, particularly in third world nations to exploit the poverty of those areas by paying dirt wages. Then those 'American' companies will set up bases in nations like Ireland which has a corporate tax rate 50% less than the US and set up offshore accounts in the Caribbean and Switzerland to avoid paying further taxes.
No real recovery possible until good paying jobs are produced.
7) Improving job market
Here's another example of where MarketWatch admits things are bad but still wants to call it a positive. They write "Granted, we have a high unemployment rate..."
Yes we do. 9% unofficially which is that low Solely because 200,000 more individuals gave up looking for work in January than had been in December '10 and through warped statistics, when people give up, they aren't counted as 'unemployed'. Last month a pathetic 36,000 jobs were created. Unofficial unemployment in closer to 19% when counting all statistical factors which the Bureau of Labor Statistics avoids considering...
8) Stocks are up nicely
This is the part of the posting where I am consuming large amounts of Tums, Rolaids, Pepto and anything else I can find as this is being written...
Stocks are up?!.. Who Bleeping Cares!
The market for most of US history was an accurate barometer of the economic state of the nation. The stronger the market, the stronger the economy. Like I said previously, the Federal Reserve has given Wall Street trillions of dollars in free money to help the US and global markets. This money does not trickle down or translate into any Real benefit to the bottom 98% unless you are a Professional investor.
The current stock market's accuracy in relation to representing the general economy and Main Street, is equivalent to a thermometer reading 85degrees on a snowy, blistery cold day.
9) Fourth-quarter GDP was strong
MarketWatch is delighted that "the economy grew at an inflation-adjusted annual rate of 3.2% in the fourth quarter" Read that closely- 'inflation adjusted' and an 'annual rate' to describe a particular quarter. Total gobbletygook.
The New York Times explained it well, "The latest output number was slightly below analysts' expectations of 3.5 percent. Nor is it anywhere near the levels of previous recoveries at this point in the cycle. So more needs to be done."
Nice job turning a so-so statistic into a reason for 'Recovery', MarketWatch
10) 2011 GDP outlook is improving
MarketWatch says "the economic committee of the American Bankers Association increased its GDP estimate for 2011 by about 10% on the year. Specifically, the group said gross domestic product should expand by 3.3%, up from its previous estimate of 3% that it made in June. This is just one group, and it is way too early in 2011 to know what the year will hold, but it's still noteworthy nonetheless."
First, yes its just one group of bankers-- and yet MarketWatch based its Entire reasoning for point #10 on it. Second, as A&G has demonstrated in previous posts, Economists are almost always wrong. They were all wrong in not predicting the downturn of 2008 and they've been wrong about the economy since, giving overly inflated and optimistic projections and repeatedly being found to be inaccurate.
As was written a moment ago, economists boldly predicted GDP in 4th Q of 2010 would be 3.5% . They were Wrong. It was 3.2%. Do the media attack and criticize economists for being consistently inaccurate? Nope. They just cheerlead the numbers provided and give economists another free pass.
11) Wall of worry persists
I thought this was the funniest.. 'Wall of worry persists' is not a reason the economy will improve. Yet it is listed as an 11th "sign the economy is on the right path". As MarketWatch puts it, "a healthy dose of skepticism will keep the recovery honest"
People best wake up to this reality-- There is no recovery for the economic bottom 98%. And there will not be for some time until you have government stop ignoring the bottom 98% and start enacting sincere economic policies that bypass Wall Street and big business, with singular focus on Main Street.
You will not have recovery until good paying jobs are created which allow a person to live & consume for today and still save for a future. You will not have a recovery as long as homes which are most people's nesteggs continue deteriorating in price while their property taxes and utilities go Up. You will not have recovery while states, cities and municipalities crumble upon themselves under massive debts they can't begin to repay while threatening to deny paying pensions to millions of working Americans who spend a lifetime paying into them.
A stock market at 12,000 or 25,000 isn't going to make your life better.
Posted by Susquehanna at Friday, February 11, 2011