Wednesday, April 7, 2010

Sun Setting (Economically)

Illusion of Prosperity Entering Its Twilight

Even if the U.S. economy has hit bottom—extremely unlikely—there is almost no chance the recovery will restore the nation to economic health. No one knows this better than the Baby Boomers, vast numbers of whom have seen their retirement plans go up in smoke because of the wealth-destroying effects of the Great Recession. Tens of millions of them are parents as well, and they are just starting to realize that their children will experience a declining standard of living in the decades ahead. As recently as three years ago, before the banking system and housing market collapsed, few would have believed America could fall so far, so fast. Now, with public, corporate and private debt hanging over us that has grown far too large to redeem, only a fool in denial could fail to see the dark shadow that has fallen over the economy.Even so, the illusion of prosperity seems likely to persist, especially with the stock market's relentless rally, now entering its 14th month, to distract and disconnect us from the real economic world. A comment posted in the Rick's Picks forum yesterday:
"The cognitive dissonance about the land is now both pervasive and immense. The number of unemployed, underemployed, and otherwise financially and economically imperiled has ratcheted up over the last few years, and though the economic deterioration that began in earnest in early 2008 seems to have, at least by some modestly credible measures, abated somewhat in the last few months, the new normal, such as it is, is distinctly less healthy, less favorable to most, than it was."And yet, despite the immutable facts of a reduction in the standard of living for so many, we keep hearing talk of recovery—which is, by definition, absurd, since a recovery assumes the reclamation of a prior state. The only prior state that has been recovered is the one that Wall Street was operating in before the financial world, as we knew it, ended in a thunderous calamity. In fact, even that picture isn't entirely accurate since Wall Street has now, de facto, if not de jure, captured at least two, if not all three, branches comprising the Federal government. . ."

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