Story Comments

MEBinFLA

I agree with Mr. Luskin's general thesis, i,e. that the economic data to support the conclusion that the economy is on its road to recovery is lacking. Anything Bernacke says (i.e. recovery in late 09 or 2010) has to be viewed in the context of (the actual data_ and his endless number of bad predictions and failures at the Fed and throughout the government financial "regularoty system". Wasn't it uncle Ben who said in tehe Summer of 2007 that the "subprime crisis" was a manageable problem that would cost no more than $100 billion?

This "recession", which will soon be recognized for what it is, a problem greater than the Great Depression, has been a story unfolding for over a hundred years. To think that we can print enough money in the basement of the federal reserve to re-inflate the economy is akin to prescribiing massive quanties of vodka for an alcoholic. No one has yet to honestly estimate the total amount of Federal liabilities which are hidden in a manner that makes...(Read more of this comment) Enron look like a children's game. Even if we re-inflate, history provides a number of examples of rampant government money printing to reinflate the economy, including that horrible period in the 1920s when the German government printed so much money that it took a wheelbarrow of cash to buy a loaf of bread.

The rebound is part technical, largely psycholigical and griven by that emotion that Wall Street investors will cling to until their last breath, greed. Of course, when the Fed continually creates rolling asset bubbles, what is a fund manager or investor to do. The choices are -0- interest or spin the wheel of wall street. And the Fed purposively does this because it knows that there is a direct correlation between asset values and consumption, but therin lies the problem. An economy built on consumptive model, rather than production, will soon devour itself.

And to what end. Our federal reserve has simply become the worlds largest hedge fund, acquiring "toxic" assets at inflated values by printing money without congressional approval to throw the Hail Mary pass to avoid a societal implosion greater than has been seen in hundreds of years. You cannot inflate an economy through leverage at a rate (per GDP) larger than before the Great Depression and then expect a pretty picture when the leverage comes out because trust evaporates and there is no one left who has the ability to repay more debt.

And yes, the taxpayer, as usual, takes it up the you know what to bail out irresponsible decision making. That is not capitalism. It is communism. State control of markets. Don't kid yourself for a moment.

And in end end, those who will be most affected will be the foreign investors and governments who hold most of our debt. I hope Mr. Geitner can speak Chinese. If not, he better start studying immediately for if their support for our treasury market disappears or the dollar is replaced with another currency as has been and will continue to be discussed, all I can say is look out below, for then America and greed will be revealed for the second beast described in Revelations 13. The first was the Roman Empire and the parrallels are too numerous to enumerate.

So enjoy the little rally while you can (the same thing happened in the Great Depression-we will eventually go even higher ) and bask in the greed of nonrecourse financing. Unfortunately, it is this kind of shortsighted thinking that often leads to greater long term disasters. With no plan to ever repay this massive debt, we should be appalled and outraged over the legacy we are leaving for the generations who will struggle with an even greater burden than we have today. America is bankrupt financially now. It does not take a Harvard economist to realize that the solution is not more debt. It may buy time, but the costs continue to mount until a disaster so monumental occurs that the economic underpinnings of the society are ruined. I hope what I have said is not true. Unfortunately, history offers many similar examples of just how true it is. But we never think it could happen to us. But remember, those once in a 100 or more year events do happen and I am sure that all those living when they did could not have believed it for a moment. So for now hope has a foothold over fear, but hope without solid ground is mere folly.

MEBinFLA(Show less of this comment)

damon1leo

"For sure, the economy has stopped acceleration to the downside. Home sales are accelerating. Consumption has recovered substantially from the horrible Christmas season. Monetary deflation has stopped. Job losses have stopped getting worse. And earnings downgrades have stopped getting worse."

What evidence do you have that the economy has stopped decelerating? The world economy is continuing to decline. Imports and exports continue to decline in all regions(asia,europe,americas)
Home sales have increased slightly from January but are still down 41% from a year ago. Along with a slight up tick in sales numbers values have declined even further with further declines to continue. A major problem as deflation continues. The next major problems will be the billions (probably combined losses of 200-250 billion)of credit card and commercial real estate losses in the second or third quarter results.
You through out this word substantial increase in spending from Christmas sea...(Read more of this comment)son? How about throwing out facts to support your theory. The consumer is more wisely and will not have the access or use of credit cards. The spending will have it's limits to the upside due to the credit limits being cut. Also, the savings rate has finally increased to 5% last month but down to approximately 4.5% this current report.
Monetary deflation has stopped? Really, is the market up 110% from its recent lows that we are back to our all time high. We are still down 46% from the high,10% from January. Many people are having there salaries cut 5-10% by their employers to avoid layoffs. 10 states have unemployment of over 10%. The earnings downgrades have already been established. Business and analysts (if they even deserve that title) are evaluating the current conditions before further revisions to guidance.
This current market rally was from an oversold position which continued with window dressing for quarterly funds numbers. Get back to me April 1st when the funds start taking profits and we see a 10-15% correction. (Show less of this comment)