In our previous commentary we stated that most economists use “rising stock market prices to demonstrate growth and profits, and politicians are happy to exploit this nonsense. But neither growth nor profit are appropriate measures.”
Robert Reich, who held positions in three national administrations, pretty much said the same thing. “What passes for business reporting in the United States,” he reminded us, “is too often a series of breathless reports about the stock market. When the Dow rises precipitously, the business press predicts an end to the Great Recession. When the stock market plummets, the Great Recession is said to be worsening.
“Pay no attention,” Mr. Reich said. “The stock market has as much to do with the real economy as the weather has to do with geology. Day by day there’s no relationship at all. Over time, weather and geology interact but the results aren’t evident for many years. The biggest impact of the weather is on peoples’ moods, as are the ups and downs of the market.
“The real economy is jobs and paychecks, what people buy and what they sell. And the real economy – even when viewed from a worldwide perspective – is as precarious as ever, perhaps more so.” –
We also saved an article written by Richard Clark late last summer. He was being blunt about the lies being told to Americans by those in authority – at all levels – and he began his story by asking: “Why are the pundits, pols, and Wall Street fat cats lying to us?”
“Politicians and pundits, bureaucrats and bankers, reporters, regulators and rating agencies,” he wrote, “they all swore that the trillions of dollars Washington spent on bailout and stimulus schemes would save the economy – and with it, your income, your stocks and your real estate. They suggested very strongly that, by now:
– the economy would be roaring back,
– the vast majority of us would no longer have to worry about losing our job or finding a new one,
– our home equality would be rising again, and that our banks would be safe and lending money again.
“And they now have the unmitigated gall to claim that things are actually ‘working out’ just like they promised:
– The Obama administration, the Fed, and Congress have claimed credit for ‘ending’ the debt crisis.
– Wall Street pundits have been declaring that the recession is ‘over’ and that it’s safe to buy stocks again.
– Corporate CEOs are claiming that their revenues are growing and their bonds are as good as gold.
– Moody’s, S&P and Fitch, who failed miserably to lower their ratings on Freddie and Fannie, AIG, Lehman, Bear Stearns – or any of the other companies that crashed and burned in the last two years – would have you believe that NOW their sugar-coated ratings, still bought and paid for by the companies they rate, are ‘for real.’
“Unfortunately, despite all the siren songs by Washington politicians and Wall Street fat cats, the facts most Americans can see with their own eyes paint a very different picture:
– The housing slump has returned with a vengeance …
– Unemployment is sky high …
– Consumers – 70% of the economy – are slashing their spending …
– Despite the Fed’s efforts to keep interest rates low, it’s actually getting harder to borrow money.
“So why do there continue to be such glaring discrepancies between what we see with our own eyes and what all the pundits, pols and Wall Street fat cats are telling us? Here’s why: Nearly everyone who most of us trust to lead the economy or manage our money has serious conflicts of interest – powerful incentives to make sure we do not know the truth:
– Politicians and bureaucrats need us to believe they’re saving the day otherwise they could lose their jobs …
– Financial fat cats and CEOs need us to believe it’s OK to buy their stocks again – otherwise their shares in their companies might very well crash in value,
– Rating agencies like S&P, Moody’s, and Fitch need us to believe their ratings are reliable … otherwise the companies they rate will stop paying them for their ratings, and the agencies themselves would go belly up.
“Remember that as this crisis was developing and maturing, these rating agencies gave to our most notoriously failed corporations their highest ratings, right up to the bitter end: AIG …Bear Stearns … Citigroup … Fannie Mae … Freddie Mac … Lehman Brothers … Wachovia … Washington Mutual and others all were rated very highly, right up to the moment they had to be taken over or bailed out in order to avoid bankruptcy.
“And because ‘the customer is always right,’ and their paying customers were and still are the companies they rate, you can be sure that all the other ratings they’ve issued – especially for the biggest companies that pay the biggest fees – are also suspect.
“This begs some questions. If the economy is recovering, then why, according to the American Bankruptcy Institute, has the number of U.S.. companies filing for bankruptcy each year TRIPLED since 2006, and why is it setting new records this year? PLUS, the number of personal bankruptcy filings is soaring as well – up an average of 35% per month so far in 2010! Why?
“So let’s face the truth:
– The worst of this recession is NOT behind us.
– The alleged recovery is a sham – a temporary respite bought and paid for by Washington and Wall Street.
“According to U.S. Government Accountability Office (GAO), the government’s own watchdog agency, Washington has spent a staggering $ 3.7 trillion so far on the effort to bring us a recovery. But now that bail out money is running out. And America’s great financial judgment day is about to dawn. We’re talking about an economic catastrophe that will:
– Erase what little home equity Americans have left, wiping out up to 100% of the nation’s #1 source of retirement money, sentencing millions to poverty and driving foreclosure rates through the roof.
– Push banks like Citibank, Bank of America, Wells Fargo, JPMorgan Chase, US Bankcorp, SunTrust, Capital One, and many others back to the edge of the precipice.
– Greatly diminish the U.S. dollar’s buying power and end the greenback’s reign as the world’s reserve currency.
– Kill what little consumer spending is left in the economy, slash corporate earnings and leave the stock market a smoking ruin.” –
Instead of listening to Mr. Reich and Mr. Clark, Americans continue to believe the lies put forth by pundits, pols and the business press. In December the National Retail Federation – the mouthpiece for those pundits and pols – announced that container ports in the U.S. are expecting a 9% increase in imported cargo at year’s end, and further predicted that volumes for the whole of 2010 would be 17 percent higher than last year. That was a lot of nonsense – but people fell for it.
Will Rogers often ridiculed gullible Americans by saying, “I only know what I read in the papers,” – and the gullible never caught on. They still don’t. Millions of jobless Americans were provided employment by FDR’s Emergency Shipbuilding Programs, but is anyone aware of that heroic effort?
Have Americans been dumbed down to the point where they can no longer think rationally?