Some time ago I compared the state of the U.S. Economy to that of the European powers in 1939 immediately after war was declared. At the outset of what became World War II, a period of peace persisted for many months. This interval of relative calm became known as "the phony war" since little in the way of hostilities occurred. In truth, the period of quiescence may just as easily have been said to have marked a phony peace since it soon gave way to years of unprecedented carnage.
Here in our own time, if we are to believe the MSM, government, and, of course, Wall Street, the worst economic contraction since The Great Depression has been effectively vanquished and replaced by a new cycle of growth and recovery, albeit muted. I would like to offer that what we have been in since late winter/early spring of this year has been a phony recovery. It is bogus for the following three primary reasons:
1.) Whatever tepid growth has occurred over the last six months has been stimulated by temporary government spending, and such growth as has occurred has only been in relation to earlier quarters when the economy was, in effect, falling off a cliff.
2.) The consumer, who we all know makes up more than two thirds of the U.S. Economy, can not and will not be spending in anything like the patterns exhibited before 2007. Without the consumer in full health-and they are far from such a condition- there can be no recovery.
3.) The balance sheets of the great credit intermediaries remain deeply impaired even after massive transfusions of taxpayers dollars. However, none of the "toxic assets" have been removed from the system. Instead they have been rendered into a kind of suspended state. All the while the toxic assets have acted as collateral backing trillions of dollars of "loans" to the banks that have subsequently either hoarded their fresh funds, recycled them into government paper, or deployed them into yet more gamed security speculation.
In the meantime, the powers that be are going to great pains to make the case (generally with such weak evidence as "look at the rising stock market") that the economy is coming back to life. Attempts to dig beneath the surface-and not much digging is required-of the economic data to reveal what is actually happening are assiduously avoided. Witness the putative housing market strength, which, like so many other seemingly rosy data points, is easily refuted as being the result of accounting and reporting trickery, and of course, and once again, more government prestidigitation.
The title of this blog entry, cognitive dissonance, refers to a well known phenomenon where what one experiences and feels is at distinct odds with what one is being told is occurring. Of course it is generally a rare event to hear the unvarnished truth at anytime from anyone; it's just not really in mankind's nature to "tell it like it is." Sometimes this tendency is down to "good reasons" such as the inability of one to ascertain what's what. After all, it isn't always easy to parse the data. However, sometimes getting a clear handle on matters isn't all that difficult, and it is at such times that we must confront a darker explanation of why mounds of steaming bullshit have been substituted for a narrative that more or less comports with reality.
So, if we accept that the economic recovery narrative is, in fact, an easily dismissed fiction, we then must decide whether the fantasy "they" are attempting to sell us is the result of their inability to understand the data, or is instead the result of their having a vested interest in us not seeing things as they really are. In both instances, "We The People" are well and truly !%*ed, but the latter condition is, in my view, far more disturbing than the former.