Tuesday, May 12, 2009

The Almost Daily 2¢ - Land of the Lost

So much is made of Japan's “Lost Decade” yet only in America (only during this era I suppose) could it go almost totally unrecognized that we have already experienced a lost decade of our own.

Nearly 10 years of both “real” and nominal stock market losses and comparably long trending weakness in our job markets and yet the assumption of recovery is has never been so fervent.

It could be the speculative energy or maybe we continue to fool ourselves into believing we have real wealth and not just debt and obligations, steadily depreciating “assets” and wishful thinking.

It’s hard to accept a trend that’s turned against you though as the decline continues many will likely find the good times of the past continuously fading to a more humble and fundamental current reality.

In the wake of the “dot-com” bust we conditioned ourselves to accept notions like a “jobless recovery” yet in light of the now more obvious fact that the “recovery” of 2003-2007 was a total fraud we still have yet to admit that that the economy never truly recovered.

Without all the easy lending, financial arbitrage schemes and “feel good” consumer spending the “jobless recovery” would have been simply been a “recovery-less recovery”.

Yet the Bulls suppose that they know better… “We can recover without the jobs…” and “the stock market is way undervalued” they say as if they are aware of a new paradigm within which the economy simultaneously shrinks and grows.

“The banking sector and housing will lead the recovery” says another trader on CNBC.

Yet another trader not only declares the worst to be behind us but that the broad stock markets will continue to rise for the entirety of 2009.

Fat chance.

Below is a simple reminder that our “jobless recovery”, our mega-double-crash stock markets and our massive deflating debt bubble are not independent events playing out simultaneously through happenstance but the organic trend of a topped-out late cycle generational unwind.