Is the Recovery Happening?

I used to love Meredith Whitney. I admit it. She may have often been the most hated woman on Wall Street, but I couldn't help it. I respect ballsy people and this lady had some serious stones on her. She was even called the godmother of the financial crisis after her infamous skewering of Citi's toxic sludge laden balance sheet.

Those were the days, but times have changed. My girl sold me out and is now singing the magical recovery tune along with the rest of the talking heads. What recovery, Meredith? Show me... where?

Don't get me wrong. I want the recovery to happen as bad as anyone. The problem is reality refuses to comply with my wishes. I am wondering why one of the few people who had the guts to stare the American public in the eye and give us our medicine is now singing Kumbaya. I get why the all is well, citizen crowd continues to spout their rose colored version of the truth. I just don't get why Whitney has joined them?

In her own words, Whitney states that she still sees a strong likelihood of municipal bond defaults, anticipates another 10 percent drop in housing prices, and believes inflation poses a problem that is just over the horizon. In fact, if you read the original interview with Maria Bartiromo, you will see Whitney addressing issues that point to the myriad of troubles ahead of us.

With the sugar rush of QE2 now slowly being withdrawn, the likelihood of darkness is far greater than this light they are calling us to. Perhaps I've grown encrusted in my permabear fur, but where is this recovery the parakeets keep squawking about?

Can any of you monkeys help me out? I keep hearing about things getting better but we're still confronted with the same structural rot as a country that we were three years ago. Is it really possible that the DJIA has become our de facto economy? I am puzzled and confused...can someone help me out?

The housing market is still in the shitter and getting worse, unemployment numbers have been improved more by the expiring benefits of millions than by actual employment, oil and food inflation are as bad as they've been in 30 years...yet, all is well, citizen...remain calm.

Really?

Would someone please enlighten me and point to what actual improvements are happening? What is your personal definition of a recovery? If you're bullish on the economy, I would love to hear your reasons for it...

Comments (18)

Mar 26, 2011

nah i don't think so; the next two great trades are all the inflation-related ones and the European debt crisis...all the macro data in the U.S. is mixed and true economic growth is not happening.

QE2 as a sugar rush is a pretty good analogy....the nasty withdrawal is inflation, and I am glad I'm not Bernanke 2-3 years from now trying to combat it. A lot of the more thoughtful funds in the future will focus on this theme, but they have to time it right.

If you believe that banks are a pretty good indicator about how efficiently money is being pushed around in the world and reflect one of the more macro businesses out there, notice how only probably 2-3 of them are doing reasonably well. And the ones that are doing well are mainly sitting pretty as a result of shrewd moves in 2008 while scrambling to figure out revenue generation for the future; the world is still deleveraged now from the crazy days so even low-quality growth is not being amplified.

Mar 26, 2011

Totally disagree that withdrawal of QE2 will result in inflation. Sure, commodity prices will most likely continue to increase through the summer. But this is not a real measure of inflation. Take a look at real wages; they are down 5 out of the last 6 months. Add onto that rising food and energy costs and real income for most Americans is decreasing.

Some headline numbers look good, but (as I've mentioned before), if you look under the hood you can see everything is just plain ugly. Existing home sales were up last month (and plummeted this month), and if you dig through the data you can see that the share of these sales which are speculative purchases is increasing relative to new home formation.

Mar 26, 2011

No, we're borrowing money to artificially inflate GDP. GDP is not a true measure of economic/fiscal health.

Mar 26, 2011

I really want to leave an upper decker in Obamas toilet.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Mar 26, 2011
heister:

I really want to leave an upper decker in Obamas toilet.

Stop blaming only Obama.

The Bush administration, an overly greedy Wall Street, and an overly retarded Main Street are to blame also.

Mar 26, 2011
Ske7ch:
heister:

I really want to leave an upper decker in Obamas toilet.

Stop blaming only Obama.

The Bush administration, an overly greedy Wall Street, and an overly retarded Main Street are to blame also.

Who said it was because I blame him, in reality it is because I am an asshole.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Mar 26, 2011

Sorry, Clinton gets credit for the surplus, Obama gets credit for the economy. He owns it now. Fair? Not really, but you have to take the good with the bad.

Mar 26, 2011

I agree. Unemployment is still high, inflation is a concern, the amount of fed policy that has been needed since '08 is daunting. QE is still theoretically not sound, and we will see the effects one way or another. Countries don't print their own money to buy their own debt without consequences.

Housing is sluggish at best. Corporate earnings, more dependent on global demand then ever, have become the media's barometer for the U.S. economy. Its been one of the slowest recoveries historically despite zero interest rates, "stimulus" packages the size of Mexico's GDP, and corporate and individual tax cuts. Not to mention the government's huge debt which will need to be adressed sooner rather than later.

We will see.

Mar 26, 2011

Perhaps its only a "recovery" because of how bad it actually was.

Mar 26, 2011

Fucking Gatorade at my local bodega has gone from 75 cents to 85 cents to 95 cents within less than a year. Not that 20 fucking cents matters, but it's the principle. Oh wait, energy and food don't count towards inflation.

Mar 26, 2011

I think that the consequences of quantitative easing are not going to be pleasant, and I'm really concerned about a possible QE3 this summer

Mar 26, 2011

No recovery.

I live in a nice suburb of DC but I travel a lot to locations in flyover country. Always a depressing mess. Pawn shops within a block of the town centers. the heartland of America is in terminal decay. The only reason that DC is doing awesome is that we are the parasites that are leeching off the rest of the economy at the point of a gun (if you doubt this, try not paying your taxes, and try resisting as they expropriate you).

Mar 26, 2011
ivoteforthatguy:

the heartland of America is in terminal decay.

This began a while ago, and I've seen it in a number of places as well. I'm thinking that in addition to the US economy, they are affected by the progression towards a unitary state that frankly doesn't care about them. These areas are a good litmus test though, as they are the last to recover, so when building picks up there, it should indicate a full recovery.

jbert112:

Perhaps its only a "recovery" because of how bad it actually was.

Methinks so, and MMM is likely correct: the DJIA as it stands is the new normal. We're coming off of a bubble that was almost the entire economy, so it can improve from here on out but will not go back to fall 2006 levels anytime soon.

ANT:

Sorry, Clinton gets credit for the surplus, Obama gets credit for the economy. He owns it now. Fair? Not really, but you have to take the good with the bad.

Agree. Part of politics is playing 'hot potato' and as stated above, the current state of things isn't entirely the fault of the current president, regardless of whether he's liked or not. I would venture to guess that the Bush administration was hoping that the fallout of the housing bubble would hit incoming administration. It's similar to Clinton hoping that the terrorism or dot com issues would explode only after he got out of office: he got half of his wish. 'Plausible deniability' aside, these guys know what the fuck is up and have a legacy to protect...

I regard Whitney's earlier speculation of a double dip as nothing more than covering her ass so that IF it crashes again she can say 'I told you so'. The overall morale and work ethic of the average person is what is key, so I think that even Meredith understands that spreading panic is just the wrong thing to do. My perception is that her innate pessimism and worldview are in conflict with each other and she's playing it safe because the 'big picture' is a bit unclear right now. I'm not the biggest fan of the president, but I want him to do good for the good of the country.

Please Obama, do the right thing.

Mar 27, 2011
ivoteforthatguy:

No recovery.

I live in a nice suburb of DC but I travel a lot to locations in flyover country. Always a depressing mess. Pawn shops within a block of the town centers. the heartland of America is in terminal decay. The only reason that DC is doing awesome is that we are the parasites that are leeching off the rest of the economy at the point of a gun (if you doubt this, try not paying your taxes, and try resisting as they expropriate you).

A+ answer, SB...however, I have noticed something very interesting throughout my own ventures through the heartland. More than a few small towns have turned themselves completely inward in terms of their food supply and resource management. When my signal died and I needed to make a call a few months back in Ohio, I found a town straight out of the 1950's. It was surreal, beautiful, clean, kids playing in the middle of the street, adults waving at your car as you drove by. There was no internet cafe and the library had dial-up. Everything was very, very scant from the modern perspective but people were actually happy and content.

This isn't to say that we should all go back in time, but this one place certainly makes a bad situation work out well for them. The farmer's market in the middle of town was one of the best scenes I've seen in a long while. I think it is a lot more about attitude than about simple dollars and cents...we often forget that living in urban jungles.

Mar 27, 2011
Midas Mulligan Magoo:
ivoteforthatguy:

No recovery.

I live in a nice suburb of DC but I travel a lot to locations in flyover country. Always a depressing mess. Pawn shops within a block of the town centers. the heartland of America is in terminal decay. The only reason that DC is doing awesome is that we are the parasites that are leeching off the rest of the economy at the point of a gun (if you doubt this, try not paying your taxes, and try resisting as they expropriate you).

A+ answer, SB...however, I have noticed something very interesting throughout my own ventures through the heartland. More than a few small towns have turned themselves completely inward in terms of their food supply and resource management. When my signal died and I needed to make a call a few months back in Ohio, I found a town straight out of the 1950's. It was surreal, beautiful, clean, kids playing in the middle of the street, adults waving at your car as you drove by. There was no internet cafe and the library had dial-up. Everything was very, very scant from the modern perspective but people were actually happy and content.

This isn't to say that we should all go back in time, but this one place certainly makes a bad situation work out well for them. The farmer's market in the middle of town was one of the best scenes I've seen in a long while. I think it is a lot more about attitude than about simple dollars and cents...we often forget that living in urban jungles.

I was thinking the same thing the other day. Overall, our standard of living has greatly improved since the 1950's. No one is going to die from hunger in America. The quality of clothes has improved and cheap in comparison to income. I think too many people seek happiness from others, rather than inside of themselves. The only thing that keeps everyone in the grid is the need of water, electricity, and sanitation.

Mar 27, 2011

she is my dream wife :( i luv her

Mar 27, 2011

Here's a nice documentary about the future of the U.S. economy from the Euro perspective on Youtube: Overdose: The Next Financial Crisis

There's need to be more check and balances put in place on WallStreet before people can trust again. The underlying trouble mechanism that started the the crash still have not changed on Wallstreet.

Bunker down in 2012 when stimulus wears off.

Mar 28, 2011
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