Tuesday, September 15, 2009

Bernanke Says the U.S. Recession is Over: He's Kidding, Right?

"Federal Reserve Chairman Ben Bernanke said on Tuesday that he thinks the recession likely has ended but a recovery will be moderate at best.

"From a technical perspective, the recession is very likely over," Bernanke told questioners at a Brookings Institution conference, but he cautioned it may not feel like it's over.

"I've seen some agreement among the forecasting community that we are in a recovery," Bernanke said, "But the general view of most forecasters is that the pace of growth in 2010 will be moderate."

This article above from The New York Times is beyond scary, it is laughably absurd. For Inspector Clouseau of the Fed to make such truly bizarre comments underscores why the United States is suffering through the worst recession since the Great Depression and why, sadly, this incompetent needs to be fired immediately.

First, who cares if the recession is "technically" over? The pedantic distinctions of academics and economists who fiddle and fart around with calculations written on blackboards to amuse each other and no one else don't matter to real people looking for jobs, trying to pay bills, or attempting to get home loans or borrow money to start a business. Economic conditions are worse---AND GETTING WORSE---and even Bernanke himself says so.

Unemployment is still growing in Mr. Bernanke's technical economic recovery. Even he admits this. So how can you have an "economic recovery" when economic conditions continue to deteriorate from an already nosebleed 10% unenployment rate? How can you say the patient is getting healthier when their vital signs continue to slide towards growing sickness? Do we believe Mr. Bernanke's mere words or all the statistic and analytic evidence staring at us from the news? I'm reminded of the old quip from Groucho Marx when he was caught with a blonde in his bedroom by his girlfriend:

"Who are you going to believe? Me or your own eyes?"

Second, GDP growth is not a valid measure of national economic health for a wide variety of reasons most notably that the Feds and corporations play games with the numbers. Of course Washington and Wall Street always have an incentive to make conditions appear better than they really are. (Can you think of a reason why either would ever want to report things worse?)

Personal and corporate income growth is the ultimate measure of national wealth for the obvious reason. How much money people make determines how rich they are. Don't you feel richer when your paychecks get larger and you have more money in the bank? It's common sense except down on the Potomac.

Despite Mr. Bernanke's "likely" recovery, personal income in the United States continues to decline. Even the Federal Government's own Bureau of Economic Analysis says so. Read their latest 2009 report here. Doesn't the Chairman of the Federal Reserve know this? Does he not read his own government's reports?

Third, virually every fundamental measure of economic growth except GDP growth is negative. Where should I start? How about bank failures? The FDIC itself is warning that a new wave of bank failures is coming---after they just closed 92 banks this year and seized 25 last year. I'm sure in Ben Bernanke's world an economic recovery brings with it a host of new bank failures. Shouldn't banks be able to earn there way out of an economic recovery, especially when they are borrowing money to lend out at 1% or less?

Doesn't everyone know the old 1/2/3 rule about banking?

Borrow at 1%

Lend at 2%

Be on the golf course by 3.

I'm very happy that our Fed Chairman thinks the current recession, the worst since 1930 which of course started completely on his time in office, is over, solved by his brilliant leadership and TRILLIONS of wasteful Federal spending, all borrowed of course. This, of course, is the same man who didn't see the current recession coming when many of us (me included) were warning of the pending disaster years in advance. Bernanke has literally has been wrong on every major economic issue of the day. Read this article for proof. It's uncanny---but unfortunately true.

Even a broken clock is right twice a day. Bernanke's record is actually worse than a timepiece with no hands and no motor. Think about it.

To paraphase the old E.F. Hutton line:

"When Ben Bernanke speaks, people listen and wince in painful disbelief."

Robert J. Abalos, Esq.