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Monday, December 30, 2013

The "Recovery"

Everything is getting statistically better, right?  Look at the Stock Market.  Look at bond yields.  Look at GDP.  Look at the declining unemployment rate.  Look at Gold.  Look at Corporate profits.  They must be selling to someone.  Right?  Right?

How to justify the outlandish position that it's all a statistical mirage?

Well there's an old joke about a bar where ten underemployed temp workers are drinking dollar beers, when Bill Gates walks in and orders a 1000 dollar bottle of Dom Perignon.  Suddenly, statistically, everyone in the bar is a multi millionaire and the average bar patron is spending 100 bucks on expensive drinks.

What if that describes the US recovery?

What if the recovery consists of hedge fund managers shelling out 150 million dollars for a Jeff Koons Ballon Dog here, and 300 million dollars to buy another Hedge Funds managers' summer home in the Hamptons there.  It adds up.  A few hundred million here and there, spread around amongst 500 billionaires and you're talking real money.

Unfortunately none of it is Multiplying in the real economy.  How do I know that?  LOOK:

And even "lower" upper class dudes with only 100 million are spending wildly indiscriminate amounts on luxury vanity items that employ almost nobody, and create no new jobs.  Yet the purchases count towards GDP.

Meanwhile the Fed keeps pumping fantastic sums into the Banks where these people all work.

How can there be a real recovery when Wages and Salaries as a percent of GDP looks like this:

Maybe that's clear to you.  But not to me.

As far as I can see if you're in a business selling Vanity Massages to these top 1 percent - good for you.  You're in the recovery.  Everyone else: Not so much.

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