Tuesday, June 7, 2011

Al's Emporium: An Economic Coma


Al's Emporium: An Economic Coma

By Al Lewis

Imagine a man in a coma after a car crash that should have been fatal.

He'd been barreling down the highway with a turbo-charged V8. But now they've got him on life support, and whenever you ask how he's doing, they say he's recovering.

A year goes by: Yep, he's recovering. Two years: Yep, he's still recovering.

How's his pulse? Recovering. Breathing? Recovering. Brain activity? Recovering.

In medicine, this would be called quackery. In psychology, it would be called denial. In economics, it's called forecasting.

The Great Recession officially ended in June 2009, putting the two-year anniversary of the not-so-great recovery somewhere around now. Nobody is planning a party.

Since the recovery began, economic data have been routinely spun with phrases such as "better than expected," "not as bad as last year" and "stabilized, but still moving sideways."

The Dow Jones Industrial Average fell from more than 14000 to nearly 6500 and then popped back up to more than 12900. And they call it a raging bull market.

How's housing? Recovering. How's unemployment? Recovering.

Last week marked one of the few moments when the market responded with a collective "Really?" and sold off. And that was before Friday's dismal jobs report.

"People don't really believe this is a sustainable long-term recovery, except for the people who are selling stock on CNBC every day," says Al Angrisani, former U.S. Assistant Secretary of Labor under President Reagan. "There's this great promotion machine out there that's way ahead of reality."

Mr. Angrisani, now a corporate turnaround consultant, has been studying job seekers throughout the recovery. His latest study concludes job seekers are more discouraged now than they were a year ago.

Discouraged workers eventually fall off the unemployment rolls and aren't even counted in the official unemployment rate, now at 9%. And even people who've secured jobs that were spawned in the recovery have to keep looking for ones that will pay them better. "It's pretty grim," Mr. Angrisani says.

The Federal Reserves injection of trillions of dollars into the banking system seems to have prevented a larger economic collapse. And its unprecedented bond- buying program, known as QE2, clearly propped up the stock market. But where's the genuine, job-generating economic growth?

"I'm talking to people who think that by the end of the year we're going to be in another recession," Mr. Angrisani says. "And then there are people in the Wall Street investment crowd who think the Dow is going to 16000 because the Fed's going to do a QE3.

"What's happening isn't working," Mr. Angrisani says. "The money went to the top and not to the bottom. You can't keep cutting taxes. You can't keep printing more money. You need an entirely new set of tools."

The money needs to get to the small-business owners and entrepreneurs who actually create jobs. But somehow it's still just going to financial parasites who have a vested interest in maintaining our economic coma.


Al Lewis is a columnist for Dow Jones Newswires in Denver. He blogs at tellittoal.com; his email address is al.lewis@dowjones.com.

(END) Dow Jones Newswires

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