Bottoms up!

The so-called economic recovery is just another sham

Check out Bottom Feeder, my new blog!

It’s official. According to a survey released earlier this week by the National Association for Business Economics, the vast majority of economists believe the recession is over and the recovery has begun. Which can only mean the worst is yet to come.

Such wishful but wrong thinking on the part of economists, financiers and politicians has a long and storied history in the United States. Writing about the Great Depression, the late John Kenneth Galbraith—one of few American economists to consistently buck this trend—called such practices “incantation.”

Wave your magic wands, everybody, and it’ll all go away. Except it’s not going to go away.

The U.S. Bureau of Labor Statistics currently pegs unemployment in California at 12.1 percent. In Sacramento County, the jobless rate is 12.3 percent. These numbers are expected to increase, not decrease. Moreover, they’re not even the real numbers, which are much higher.

As the respected Web site Shadow Government Statistics points out, today’s unemployment figures no longer include those whose unemployment benefits have run out, the so-called discouraged workers who were “defined away during the Clinton Administration.”

When discouraged workers are counted, the current national unemployment rate doubles from 10 percent to 21 percent. We can expect a similar doubling of California’s numbers, which means the state’s real unemployment rate is approaching 25 percent.

To be fair, the National Association for Business Economics is not completely unaware of the situation. “The key areas of concern involve the large increases in federal debt and unemployment rates that are expected to remain very high through next year,” the survey notes.

Fantastic! A jobless recovery.

At the September 12 tea party in Washington, D.C., even the dogs had an opinion.

Photo By Mark Williams

About that federal debt. Currently, the gross national debt stands at $10 trillion, including $1 trillion added in 2008, the last year of George W. Bush’s reign. Another $1 trillion in debt will be piled on this year. California’s annual budget deficit is expected to be $40 billion for fiscal 2009-2010. It’s a massacre, as federal, state and local programs are being cut right and left, just when ordinary citizens need them the most.

Yet the happy talk continues. Here’s Noble Prize-winning economist and New York Times columnist Paul Krugman waxing enthusiastic about the “recovery” in August:

“So it seems that we aren’t going to have a second Great Depression after all. What saved us? The answer, basically, is Big Government.”

I suppose that depends on who you define as “us.”

If you’re talking about Wall Street’s largest banks and investment firms—institutions that Trends Research Institute founder Gerald Celente refers to as the “white shoe boys”—you’re sitting pretty, thanks to $14 trillion of taxpayer-backed liquidity the Federal Reserve System has pumped into the market through its quantitative easing program.

If you’re talking about everyday people, well, hang on to your hats.

Celente, writing from the perspective of 2012 in the fall issue of Trends Journal, insists, “Big Government propping up big losers did not stop the ‘Greatest Depression.’ What looked like recovery to Krugman & Co. was brief respite.

In short, it’s going to get worse, a lot worse, before it gets better.

Still, Celente and others see a silver lining delineating these clouds of doom and gloom. The angst of the folks riding onboard the Tea Party Express is real, but the train has been hijacked by the very people who got us into this mess. Similarly, those believing that President Barack Obama is somehow going to pull our fat out of the fire need merely look at the plethora of Wall Street insiders staffing his administration.

However, slowly but surely, as we all realize we’re in the same leaky boat, we’ll stop calling each other names and come together. The sustainability movement you’ve read about in these pages will catch on as ordinary Americans, strapped for cash and credit, realize that the days of rampant consumption that have destroyed the environment and what was formerly called the American way of life are over. From out of the ashes, Celente predicts, a new Renaissance will emerge.

He’s been right more often than not.