The Bearish and The Bogus

[Sheps]

The BEARISH:

Economic reality in the U.S. today is frightening.

The rich are getting much richer.

The poor are getting much poorer.

And the middle class is disappearing.

The bearish signs for the economy cannot be denied.

The record trade deficit just got worse. A lot worse. It is now, when annualized, in the neighborhood of THREE QUARTERS OF A TRILLION DOLLARS A YEAR!

Exports, despite the weak peachback, are shrinking.

Imports, while being priced in higher foreign currencies, are still being snapped up by the US consumer, who is up to his arse in debt, has zero savings, continues to live far beyond his means and has absolutely no retirement nest-egg for his (get set to laugh) "golden years."

The US budget deficit is becoming an outlandish joke. Despite the White House proclamations, the government is still spending like teenagers with dad's credit card. The budget deficit is now in the HALF A TRILLION DOLLARS A YEAR range...but would look even worse if it were calculated like the private sector calculates budget shortfalls. And, with the Iraq quagmire worsening, don't look for any break in the budget deficit anytime in the foreseeable future.

High oil prices - today near $48 a barrel - are causing a real economic hardship among lower income Americans. I wonder if Fed governor McTeer is laughing when he recalls that his ************ for a better economy was for Americans to buy more gas-guzzling SUVs?

Personal bankruptcies are in the 1.6 million a year neighborhood. That's the same neighborhood they've been in for the past four years. Consumers know that it's time to bail out before the bankruptcy laws become tough...instead of the current "no big deal" situation.

The jobless numbers are getting worse. More and more people are discovering that they can easily be laid off by corporations who are busily outsourcing jobs to cheap labor markets overseas.

Pension plan underfunding is reaching crisis proportions. The airlines plan on eliminating all pensions for retirees. Corporations are suing retirees, demanding an end to pensions. The Congress has voted to give a two-year vacation to corporations in terms of funding employees' pension plans. The government agency that bails out failed pension plans is $23 billion in debt and in need of its own bailout. And this is happening at the same time that CEOs are giving themselves eight-figure compensation packages.

The dollar is shrinking. And, given the size of the twin deficits, it will continue to shrink.

The budget shortfalls of state and local governments are the worst they've been in 50 years. The writing is on the wall for service cuts and fee increases (property taxes).

There is, undeniably, a housing bubble.

There is, undeniably, a debt bubble of more than $35 trillion in the U.S.

Stock valuations are absurdly high.

Insiders are dumping shares as if there is no tomorrow.

There is real inflation in so many things, ranging from housing and food to all commodities and health care.

Corporate profits are decreasing.

Wages are stagnant or decreasing.

All in all, the economic fundamentals are looking exceedingly grim. And that light at the other end of the tunnel is just the BEAR TRAIN headed this way.

The BOGUS:

The Fed denies there is inflation.

The CPI numbers and PPI numbers are an example of blatant lying at its finest.

The Fed measures house price inflation by looking at rental costs.

The Bureau of Labor Statistics claims there is a 5.4% unemployment rate. Yeah, sure. Double that figure and we'll be close to the truth.

Pro Forma earnings statements are a crock.

Tech company earnings that don't expense stock options are a bigger crock.

All corporate earnings statements that delete certain "items" (like debt servicing costs) are the worst crock of all.

The SEC protects investors. Yeah, right. Their biggest task of the day is figuring out which thumb to stick up their fanny.

The fact that program trading often accounts for more than half of the market action on any given day tells you just how manipulated these markets are. Must be quite a kick to play around with other people's money, bidding MORE than the ask price on any routine buy program.

Any statement from Treasury Secretary Snow fits into the "bogus" category, particularly when he says that the administration supports a strong dollar policy.

As always, I am just providing a brief overview of how incredibly pathetic the U.S. economy is becoming.

The American economy, in fact, is based on not much more than overconsumption and the accumulation of debt.

It is unsustainable.

It is a WalMart economy, buying and selling stuff made in other countries.

The buying, unfortunately, is being done with money that the consumer does not have.

Puplava's Perfect Economic Storm is here.

Grantham's Economic Black Hole has arrived.

And the only ones who do not see it are the speculating lemmings.

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Okay, we all know that today's monthly US trade deficit number was an all-time record of more than $60 billion for one month.

Clearly the record trade deficit is worsening....as is the US record budget deficit.

And what do the White House spinmeisters and the financial media cheerleaders have to say about this incredibly outrageous trade deficit?

In simple terms, they insist that this humungous trade deficit shows that U.S. consumers are so wealthy that they can continue to buy anything and everything from foreign countries. The spinmeisters go on to say that the U.S. and its big-spending citizens are clearly the engine that is driving the global economy. And they conclude by insisting that this record trade deficit shows just how great the U.S. economy really is.

Guess they don´t think about the fact that U.S. consumers are saving nothing and going deeper and deeper into the debt abyss to continue to buy things they don't need with money they don't have.

Guess they don't see the long-term impact that this horrendous trade deficit will have on the U.S. dollar.

Guess they don't worry about foreign investors taking their money home, instead of continuing to invest in U.S. dollar denominated equities, goods and services.

Instead, they just continue to spin.

And spin some more.

Wondering how they will spin a Second Great Depression,