Punchinello’s Chronicles

June 13, 2009

Is the Recession Over?

Filed under: Surely a Jest? — Punchinello @ 12:26 am
Tags: , ,

On the one hand, reading Bloomberg financial news:

June 12 (Bloomberg) — U.S. stocks advanced, erasing the Dow Jones Industrial Average’s 2009 loss, as Bank of America Corp. rallied on higher profit estimates and investors bought shares of utilities and phone companies.

But on the other hand:

Crude oil and gasoline fell for the first time in four days as a record plunge in European industrial production prompted speculation that bets on an economic recovery are premature.

So what’s the truth? That’s assuming someone might accept such a crazy notion as truth, or reality for that matter.

It’s fascinating to see that the “2009 loss” has been erased. You’d think that would put us back to where we were when things were good. The problem is that we fell through the 8,000 point in December, the year-end for 2008. Then we kept falling. So now we’re back up to where we were at the end of 2008, which was WAY below where we were in the spring of last year.

Since May of 2008, we’ve lost half the value of the DOW. Two days ago we had lost 33.5% and today it’s up to a loss of 33.3%. So on the basis of two-tenths of a percentage point, the spin is that we’ve erased the 2009 losses! Happy days are here again!

Analysts tell us that things look good. But perhaps the “fundamentals” aren’t looking so great. What’s that mean?

From what I’ve been learning, it seems to me that financial analysts look at things hour-by-hour. Their long-term view is maybe a 1-day period. Oh sure they like to talk about “futures” and what may happen next month, next quarter, or next season. But for the most part, they’re looking at right now.

If we expected to lose 500,000 jobs in a given month, but we really lost 480,000 jobs, we’re told that we had a positive gain in lost jobs. Over on the American Thinker site, Jeffrey Folks has an analogy that’s perfect. He says that the way the government spins information, it’s like losing half-a-million dollars in Las Vegas, then claiming you saved money because you could have lost a million!

Yup, that’s the newspeak of modern America. Interesting that we hear it from the press, the government, and the major financial institutions. Those seem to be the three entities also responsible for most of the trouble we’re in, right?

This whole baseline budgeting concept is the same way. Each year a budget is supposed to go up 4%, but this year they’re going to increase spending only 3%. Therefore, they “saved money” by not adding that extra one percent! Somehow this makes sense? To anyone?

Everywhere I read on the news, the recession is ending. The proof is what happened 2o minutes ago. We’re losing fewer than expected jobs, but we’re still losing nearly half a million jobs each month! The speed of collapse is slowing down, but we’re still collapsing. Production in Europe is way below anything anyone imagined, but that’s Europe. It’s not here.

Have you ever been so drunk you got sick? Have you ever been hanging onto the toilet, puking out your entire central organ system? If we follow today’s newspeak, then between the one bout of puking and the next, you’ve magically recovered! You’re not drunk anymore! You’re not even sick…oops…wait a minute…hold on there! GAAACK!

The recession is ending, I’m told. Why? Because the ongoing disaster isn’t as catastrophic as it was yesterday. Anyone care to think about the eye of a hurricane?

We could probably say that the hurricane is over when the eye passes overhead, right? I guess it depends on whether or not you metaphorically think we’re in a hurricane, or if we’re just having a minor rainstorm. I’m thinking those “fundamentals” are probably more important than the analysts would have us believe.

Keep in mind that when high-end financial managers, bankers and investors move money around, it’s a LOT of money! So if you can gain 0.01% by moving $10-million from one place to another, you actually make some money. But for the average person with only a couple of thousand dollars in the bank, does a 0.01% improvement mean anything?

Guess we’ll have to see what “they” say next week. It’s like a TV series, with each week’s episode ending on a cliff-hanger.

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