Everything is working out just like we thought it would. The stock market is performing as expected. The economy is on track. Even the politicians are doing what they thought they would.
Let's begin with the stimulus/bailout/boondoggle/BS plan. As anticipated, it has failed. That is, the economy is getting worse, not better. It has failed the test set for it by its own creators. Back when the Obama Team was arguing for a big bailout bill, it warned that without a bailout, unemployment would rise above 8% in 2009. 'Pass this bill today,' said Ben Bernanke, or words to that effect, 'or there may not be a tomorrow for the US economy.'
Congress dutifully bent its back to the task of adding boondoggles to the bill and then okayed the measure. And here we are, in the middle of 2009, and the unemployment rate is already at 9.4%.
Even at the time, it was obvious that the hacks in the administration had no idea what was going on. They were just guessing about the economy and taking advantage of the situation to pass out more money that taxpayers hadn't even earned yet.
As predicted, the spending didn't make the situation better; if anything, it probably made it worse - by delaying the process of destruction, and hence retarding the process of creative reconstruction too.
We recall our other forecast too: when the bailout doesn't work, they'll pass another one. And so, in yesterday's New York Times, there is David Leonhardt urging the pols to even bigger acts of absurdity:
"The economy really may need more help," he says.
Yes, it will need more help. Especially if it keeps getting the kind of help it's been getting.
The stock market is acting more or less as we thought it would too. The big bounce began on the 9th of March. It's been almost four months now...and the bounce should be getting near its peak...and beginning to fall again. Just look at a chart of the Dow since March. You'll see exactly that. Like a cannonball, it went up...and now it seems to be arching over for its fall to the ground.
Yesterday, the markets seemed to hang in mid air... The Dow was up 57. Oil stayed at $69. Only gold seemed to know where it was going - rising $13.
Bill Bonner
for The Daily Reckoning Australia
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About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Comment by Barack Geitner on 24 July 2009:
Yah...1929 all over again...ignorant voters put the same sheisters back in office, locally, statewide and nationally...so what is expected?
More of the same...wait until states problems become unmanageable (meaning they wont be able to pass their budget messes into the future any longer) This will trigger the next big "phase" of the econ contraction...
wait and see...wish I were wrong...but you cant fix a problem group...when the group makes the decision about what (if anything) to fix.
Comment by Kevin on 17 August 2009:
I agree that things are not getting any better. All these "experts" talk about the green shoots and the July unemployment numbers went down. Then they talk about how the stock market has gone up several months now in a row. They don't see what I see.
Millions unemployed, many of those on extended benefits. The unemployment goes down from 9.5 to 9.4. Don't they realize that it is because the/10% represents the people that have lost their extended benefits?
The only stimulus to the economy is Federal spending. Cash for clunkers Tarp, Economic stimulus, etc. The government is the only employer hiring and spending money. How long can this go on? Will we all be government employees?
This is not a recovery. It is a continuation of the repression we are currently in.