Why the “Nascent Recovery” Won’t Last
by ilene - April 27th, 2010 3:30 am
Why the "Nascent Recovery" Won’t Last
Courtesy of Charles Hugh Smith, Of Two Minds
The "nascent recovery" continues to be nascent a year later. Why? Because it’s constructed on sand and hyped by smoke and mirrors.
The "nascent recovery" will soon be revealed as "failed" rather than "nascent." How long can "nascent" be deployed as cover for a "recovery" constructed of propaganda, manipulated statistics and "confidence-building" spin?
As my esteemed blogging colleague Mish pointed out not long ago, "nascent" continues to be the word of choice in the MSM, as if no one dares declare the "recovery" real for fear that such a claim will be easily revealed as utterly false. So to keep the spin machine intact, the "recovery" will remain "nascent" as cover for the less rosy reality.
Let’s run through the fundamental reasons the recovery is bogus, not nascent.
1. Propaganda and "confidence-building" are constantly substituted for reality. The problem, we are repeatedly told, is a "lack of confidence." Consumers’ and corporations’ accounts are bulging with idle trillions awaiting "renewed confidence" to gush back into the economy, creating millions of new jobs and trillions in new wealth.
Here is a typical example:
Forecasters optimistic about economy, job creation
How many MSM stories have you read which refer to the "162,000 jobs created last month" as evidence that the "economy is turning around? Dozens, if not hundreds. How many note that the 162,000 number is entirely bogus, boosted by temporary Census Bureau hiring and tens of thousands of fictitious "birth/death model" phantom jobs?
The spin, hype and forced good cheer is essentially unlimited. As I write, stocks are up on news that Caterpillar reported an 11% decline in revenue to $8.24 billion, a huge "miss" since analysts polled by Thomson Reuters had forecast $8.84 billion in revenue.
The "surge in profits" didn’t come from sales; it came from squeezing costs, a strategy which has some upper limit of effectiveness on goosing the bottom line.
Machinery sales surged 40% in the Asia-Pacific region, but of course no one explores the source of that "surge:" out of control spending on empty cities and luxury highrises in China. If that unprecedented real estate bubble in China ever pops-- and can any bubble continue forever?--then Cat sales will go into freefall.
That’s not "confidence building" so it goes unsaid, despite being glaringly obvious.
2. Tax/borrow and spend is alive…