In honor of today's single-positive-data-point-driven-triple-digit rally, I thought it would be a perfect time for another installment of "Scenes from a V-Shaped Recovery":

"Financial Depression Spreads Among Seniors" (Blacklisted News)

President Obama has U.S. taxpayers paying billions to meet the costly payrolls of 50,000 troops and 190,000 contractors in Iraq while 20-million-plus jobless are looking for work in USA and can't find it.

Among the hardest hit now are more than 2-million people age 55 and over, half of whom have been looking for work for six months or longer. For them, the Great Recession is a no-fooling, deepening Depression.

Many of these seniors have no families to care for them. Others are too proud to ask their families, churches, or relief agencies to help them in their time of need. Even so, many a proud, independent, well-dressed senior is a soup kitchen regular because it's either that or go hungry.

Many seniors have been loyal to a corporation for much or all of their working lives only to discover the corporation has no loyalty to them. Instead, their employer laid them off before the retirement age and hired a younger, cheaper worker to replace them or just shipped their job to an office or plant on foreign soil. Many seniors are right to feel betrayed.

“The unemployment rate for this age group actually reached 7.1 percent in May, the highest it's been since the late 1940s,” writes A. Barry Rand, chief executive officer of the AARP in his September “Bulletin.” That's more than double the 2005 rate of 3 percent.

"New Job Means Lower Wages for Many" (The New York Times)

After being out of work for more than a year, Donna Ings, 47, finally landed a job in February as a home health aide with a company in Lexington, Mass., earning about $10 an hour.

Chelsea Nelson, 21, started two weeks ago as a waitress at a truck stop in Mountainburg, Ark., making around $7 or $8 an hour, dependi... [Read More]

Yes, I'm sure it reflects confirmation bias on my part, but it's hard to ignore Howard Davidowitz's thoughts on the state of the economy given that he has in recent years been correctly pessimistic on prospects for a sustainable recovery.

Here is a brief snippet from a recent Bloomberg Television interview (posted below) with the long-time retail analyst, entitled "Davidowitz Says `Worst to Come' for U.S. Retail Sales: Video":

The consumer is totally wrecked and that's why there's no way this economy's coming back, because the consumer is 70 percent of the U.S. economy....

The consumer is out of money....They have no jobs. We've got 18-and-a-half percent unemployment and underemployment. The consumer's debt is 120 percent of disposable income...The consumer is wrecked.

According to USA Today, "Government anti-poverty programs that have grown to meet the needs of recession victims now serve a record one in six Americans and are continuing to expand.



Hmmm. Not exactly a V-shaped recovery, is it?

A documentary on the financial crisis which premiered in May, Overdose: The Next Financial Crisis, is now posted on YouTube. Based on Swedish writer Johan Norberg’s book Financial Fiasco, the film features insights from Peter Schiff, Gerald Celente, and others on the various factors that helped bring about the Great Unraveling, including the Federal Reserve's disastrous monetary policies, as well as the mistakes that are still being made. Although the material is probably old hat for many Financial Armageddon readers, it makes for interesting viewing, nonetheless.

Although it does a pretty good job of keeping economic reality under wraps, sometimes bubblevision TV -- er, CNBC -- slips up and brings guests on-air who haven't drunk the Kool-Aid that many Wall Streeters and Washington policymakers knock back on a regular basis. Such is the case with one senior executive who reveals the ugly truth about where things stand in "Most Executives Don’t See Recession Ending Until 2011" [italics mine]:

Business leaders have become increasingly pessimistic about the economy, reporting that they don’t see the recession ending for several months and don’t expect to hire more workers any time soon, according to a new survey.

The Business Optimism Index, a quarterly survey conducted by accounting firm Grant Thornton, dropped to 58.4 in August from a record 67.6 in May. Just 34 percent of the more than 350 senior executives surveyed said they expect the economy to improve in the next six months, a major drop from the 63 percent who said the same thing in May.

Three-quarters of the executives surveyed do not think the recession will end until 2011 at the earliest.

“The executive is seeing things for what they are, not what they would like them to be,” said Lou Grabowsky, COO of Grant Thornton, in an interview on CNBC. “When you look at the stability of the unemployment at 9.5 percent, durable good demand being down, the housing starts and new sales being down, as well as savings being up, you see a level of stagnation.”

Most people would probably agree on many, if not all, of the core services that a municipal government should provide. Arguably, the majority will involve protecting life and property, including upholdingthe rule of law.

Why is it, then, that bloated state and local government bureacracies with hordes of wastrels on the payroll pushing paper and creating hassles for ordinary citizens are targeting those activities which should be last to feel the pain?

Of course, most of us already know the answer, but it's still unsettling to read reports like the following, "Struggling Cities Shut Firehouses in Budget Crisis," from the New York Times:

SAN DIEGO — Fire departments around the nation are cutting jobs, closing firehouses and increasingly resorting to “rolling brownouts” in which they shut different fire companies on different days as the economic downturn forces many cities and towns to make deep cuts that are slowing their responses to fires and other emergencies.

Philadelphia began rolling brownouts this month, joining cities from Baltimore to Sacramento that now shut some units every day. San Jose, Calif., laid off 49 firefighters last month. And Lawrence, Mass., north of Boston, has laid off firefighters and shut down half of its six firehouses, forcing the city to rely on help from neighboring departments each time a fire goes to a second alarm.

Fire chiefs and union officials alike say it is the first time they have seen such deep cuts in so many parts of the country. “I’ve never seen it so widespread,” said Harold A. Schaitberger, the general president of the International Association of Fire Fighters.

The risks of cutting fire service were driven home here last month when Bentley Do, a 2-year-old boy who was visiting relatives, somehow got his hands on a gum ball, put it in his mouth, started laughing and then began choking.

“It blocked the air hole,” said his uncle, Brian Do, who called 911 while other r... [Read More]

In a new paper, "Guessing the Trigger Point for a U.S. Debt Crisis," George Mason University professor and economics blogger Arnold Kling speculates on when the U.S. might have to pay the piper for its many (fiscal) sins.

Here is the abstract:

Leading authorities in the United States, including the Congressional Budget Office, use the term unsustainable to describe the long-term fiscal outlook. By the year 2080, spending on entitlements alone could exceed total federal tax revenues. In the very long run (meaning from the year 2035 through 2080), the problem is primarily one of excess costs in health care, meaning the tendency for health spending to grow faster than the rest of GDP. However, in the medium run, meaning from 2010 through 2035, the aging of the U.S. population is the dominant factor.

This paper explores the possibility of the U.S. experiencing a debt crisis in the medium run, meaning somewhere between 2015 and 2035. It is impossible to state precisely the trigger point for a crisis. At best, we can make guesses about some of the key parameters.

As I noted in "A Bad Assumption," one factor that many mainstream analysts did not eally take account of before the financial crisis erupted -- and still seem to be downplaying -- is the importance of confidence in a system built on a dense latticework of promises. If at some point faith begins to waver on a large-enough scale, then things can fall to pieces, as Professor Cling suggests, rather quickly:

A debt crisis can be thought of as a sudden transition from the high-confidence regime to the low-confidence regime. In the former, investors have high confidence in the sovereign’s willingness and ability to repay its debt. In the latter, investors lack such confidence. The loss of confidence leads to higher interest rates, which in turn exacerbates the sovereign’s difficulties with repaying debt, and that in turn reduces confidence still further. Hence, the shift is disconti... [Read More]

I've often made fun of the so-called smart money. Among other things, many of those who hold themselves out to be experts on financial matters failed to see the financial crisis coming and totally missed the boat when it came to predicting the severity of the subsequent downturn.

Nonetheless, it might be time for a reassessment.

For one thing, there are plenty of charlatans, lucky-breakers, and analytically depraved "strategists" running around Wall Street and other financial enclaves who give the appearance of being tuned in to what is going on but who are actually quite clueless.

Clearly, these individuals shouldn't be characterized as "smart" in any sense of the word except with respect to their ability to fool a great many people some of the time.

However, those who have a serious wad of cash and who like to sling it around in markets were apparently more prescient than your average Wall-Streeter when it came to anticipating the ugliness that fell upon us during 2008, according to a firm that keeps tabs on what the wealthy are up to.

More importantly, as Pragmatic Capitalism notes in "The Super Rich Are Super Pessimistic," they are reportedly growing concerned once again about where things are headed:

One of the most glaring trends in the 2008 bear market was the increasing bearishness of the super rich. Generally thought of as more savvy investors and less susceptible to economic downturn, this group of investors proved more vulnerable than many previously thought. As the super rich pulled out of the markets in 2008 and pulled in their purse strings the economy ground to a halt.

Data released from Spectrem Group shows that the super rich are again becoming very bearish. Their Millionaire Investor Confidence Index plummeted to a new 2010 low and fell the most since summer of 2009. George H. Walper, Jr., President of Spectrem Group says the decline is worrisome:

“Millionaires posted their biggest decline ... [Read More]