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The Automatic Earth: May 23, 2009:
Ilargi: Couple of things for today, I’ll try to keep it short because I can see in the stats that that Memorial thingy is eating away my attendance numbers, and when you look up things and all and write about them and that takes some time, you might as well do it for a larger crowd. So I’ll be back on top of these topics, but I’ll touch on them today, since they stand out so much and so clearly.
First, the Washington Post today ran an article that looks to be heavily influenced by the green shoots, in the way they were defined by Randall Forsyth in Barron’s:
"...why the attraction of green shoots? One can only speculate that they must be in some ways intoxicating. Perhaps not the shoots exactly, or the stems or seeds, but the leaves of a certain plant. Those might be smoked or otherwise ingested to bring about a euphoric effect...."
The WaPo piece sort of puts the blame for the as-yet missing global economic recovery on Europe, whereas the US has done everything right, and aggressively so. It also groups Britain with continental Europe instead of the US, which is at best a questionable stance.
This whole idea that continental Europe is doing worse than the US and the UK, I’ve talked about it a lot, and I don’t want to again here, is a simple political media spin-driven image-building exercise aimed at making London and Washington look less bad, if not better. And I agree that available data, in between the hiding, massaging and outright lying, are often hard to read. But that is precisely the point. All the claims from Anglo media, as well as geniuses like Paul Krugman, Evans-Pritchard et al, who were shouting out about how the EU should follow those brilliant US policies, have so far proven to be inconclusive, if not indeed simply false. These people have nothing to show for their claims, except for the green shoots they smoke. I’ll get back to that in a sec. First, let’s return to an article I posted yesterday, Financial de-globalisation, savings drain, and the US dollar, and specifically, these two graphs.
Now, we all know that Europe is a hodge-podge of nations, with England and Ireland out there westward in more ways than one, with Spain suffering a bad English headache, and with Germany as the engine that drives it all. And yet, the WaPo dares claim that Europe will stifle growth and recovery around the globe, by which it means to imply the US. Look at the graphs. It's a politically driven bogus claim, intended to make Obama and his nation look less of a bunch of losers. A $800 billion deficit vs a $250 billion surplus. In one year.
That brings me to topic number 2. The green shoots, the recovery. There is no recovery, and any statement that says otherwise is false. I like Ed Harrison, but I read something he wrote today at nakedcapitalism that made my stomach turn and churn.
"And for the record, I have said I see a recovery happening probably in Q4 2009 or Q1 2010 [..]. The real question is how robust a recovery are we going to have [..]
Update: I would also add that it is far from clear that we will get a recovery at all.
Obviously, Ed wants it both ways and predictably gets stuck in his own words. Why write all those lofty recovery lines if it's not clear to you there's a recovery at all? Would some caution be in place perhaps?
Look, all sorts of numbers go up in spring, and not just temperatures. There's more work, always, so it's no surprise that 12000 less initial jobless claims were filed in the US in April than in March. It's a surprise the difference wasn't more substantial. What should be sounding loud red alarm bells, though, is that continuing claims kept on rising, setting a record for a 16th straight month. There may be shoots somewhere in there, but they sure ain't green.
Also, if you dump $4 trillion directly, and another $10 trillion indirectly. into an economy the size of America, it would be a sign of complete breakdown, mayhem and collapse if not at least some numbers were embellished somewhat. And those "donations" don't yet fully include what's waiting in store through the nation's guarantees of what goes on behind the curtains at AIG, Freddie and Fannie, the FDIC and, ultimately, the Fed. But those are data we won't find out about until it's literally too late.
All in all, it's safe to say that whatever passes for a recovery in the US, a theme that rests on the shaky foundations of largely hidden triilions in spent taxpayers money and numbers massaged enough to resurrect Lazarus, has nothing at all going for it. What will Americans buy cars with, and homes, in the next year? With money borrowed from their neighbors, that's what. That's your green shoots. There is no recovery in the US economy, we merely have a slight pause bought at the expense of many trillions of dollars. Which is a very steep price indeed for maintaining an illusion (and one western Europe is not at present paying). Also, US unemployment numbers are now worse than Europe, where being jobless is not such a punishment for many.
Ask yourself: what'll the US do when more bail-out money is needed? (which is a sure thing). How many trillions do you have left in your back pockets to keep the American Dream going a few more months? Dude, don't bogart that green shoots joint, pass it over.
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