Economics and Stock Market29 Oct 2009 04:08 pm

I have heard that one can cook some forms of sea life such as frogs and lobsters without their even noticing that they are in danger. The theory goes that if you heat the water slowly enough they will adapt and not recognize that the water is getting warmer and they will eventually die without ever putting up a fight.

I think this is the perfect analogy for what is happening in the American and European economies. Slowly, the standard of living is falling for the majority of citizens. While there does to be some slight recognition of times being more difficult, there is plenty of propaganda producing an astounding amount of short term memory which makes the water seem only a little warmer and the kettle remains the best place to be.

The housing market and economy were in complete denial that they were in a boom to be followed by a bust. We went almost instantly from saying such concerns were misplaced fear tactics by doom and gloomers to coming out of the worst recession since the 30’s. We went from no real sign of a housing slowdown to a bounce off a four year decline in housing.

In a matter of a couple of months we went from a denial of an economic downturn to the bottom being in from a financial free fall. Because of this news spin we never truly experienced the recession. Sure we individually felt the recession but we did not have this feeling validated by the media and its statistics.

Currently our experience once again does not match up with what we are being told. To most it sure feels like a recession, but the statistics are saying the economy is rebounding at a strong pace. Today’s GDP number is being touted as being the best in a few years with one article I read stating that housing added to our GDP for the first time in four years. Come on how can that be? It was less than two years ago that people were laughing at me when I said that the housing bubble was going to pop, now it was in ndecline for four years.

The stock market has skyrocket since March. The Nasdaq 100 has led the way with a near 75% rise in seven months. This is the steepest incline since the Great Depression. If the Wall Street Bull market is back than how can we be in a recession?

Well, according to market experts the market always rises before the economy and unemployment is always the last thing to rebound. Therefore, according to Wall Street the economic caution you display due to your pain and unemployment will cause you to miss out on the beginning portion of the great new bull market. As the old saying goes, “all we have to fear is fear itself”.

Yet, the reality of the situation is that the standard of living of most Americans has been on the decline for the last few decades. A greater portion of wealth has been going to fewer and fewer hands and wages of the majority of citizens has fallen way behind inflation.

The kettle has been getting warmer for three decades and we are as complacent as ever in our little melting pot. Each recession only happens in the past tense and each recovery is a jobless recovery. People seem to forger this fact as the media heralds each recovery as the first jobless recovery. And each boom is hailed as being a stronger boom as the previous one.

How long can this go on? Well you tell me.

In many of my previous posts I’ve talked at length of the inherent weaknesses of modern Capitalism and the push for a global world order. Yet, we have been encouraged to be a society of believers, and that our society is good and morally superior to all other lands. This training of patriotism and fear of others makes it difficult for us to look at our society as being capable of purposely acting in ways not in our best interests.

I, for one, am very conscious of the fact that the water in the kettle is becoming increasingly hot. Our economy and our government for that matter have become one huge Ponzi scheme.

I don’t know about you but I can smell the lemon butter sauce on the stove next to us.

Jim Guido

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