I rolled out of bed sometime in the afternoon because one of the good things about being some crazed survivalist/blogger is that you answer to no one except the wife and bill collectors. I wasn’t surprised to see that there was a stock rally today because the world’s suckers, er, I mean investors, are panicked and looking desperately for places to park their imaginary and soon to be worthless electronic money while the global financial economy collapses. What does shock me, always, is how these rallies have nothing but rainbows and pixie dust at their base.
As I write this the market is up 237 points. Why? As the AP screams in their headline the market is “surging” on U.S. jobs data and chinese exports:
NEW YORK (AP) — Stocks surged Thursday after reports on the U.S. job market and Chinese exports lifted anxiety about the global economic recovery.
[…]
Markets around the world rose after China said exports rose 48.5 percent in May, while imports jumped 48.3 percent. The increase in trade provides some relief to fears that debt problems in Europe would halt a global economic recovery. The 27-nation European Union is China’s largest trading partner. China has said it wanted to cool its economy to keep it from getting overheated and forming speculative bubbles. Traders had grown concerned that China would inadvertently slow growth too much and hurt a global rebound.
“China so far has been able to pull this off,” said John Apruzzese, partner and equity portfolio manager at Evercore Wealth Management in New York. “There’s more focus on Europe but I think it’s more about China.”
[…]
While investors worry about how Europe’s debt problems could hurt the rest of the world, there are also concerns about the job market in the U.S. An unemployment rate of 9.7 percent remains one of the biggest obstacles to a strong domestic rebound.
The Labor Department said new claims for unemployment fell by 3,000 to a seasonally adjusted 456,000. While that figure fell short of economists’ forecast, investors were heartened by figures showing total claims last week dropped by the largest amount in almost a year. Total unemployment benefit rolls fell by 255,000 to 4.5 million.
On its face the drop is good news but there it could also indicate that people have run out of their state benefits and are moving to longer-term federal benefits.
Still, the drop in total claims provides some hope that laid-off workers are starting to find jobs. It was welcome relief after the Labor Department said last week that private employers slowed their hiring in May to the lowest levels since January.
Huh? So let’s take these one at a time. China is claiming their exports were up nearly 50%. So what? China is basically claiming we broke Americans and broke Europeans are buying more cheap Chinese goods and that in return they’re buying more expensive American and European ones? Sure.
Good news? Maybe for China (if it’s true) but how do China’s potentially cooked books help the “global recovery” when Western economies are in worse shape than ever? Debt problems are “spreading like cancer” and the long predicted Municide of the American markets by out of control government spending is right on the horizon.
So even if China’s Communist Party could be trusted to not cook their books, China having a good export month while the west drowns in debt is only a good economic indicator if you’re an official in the Chinese Communist Party. But investors are so desperate for some good news that can help them pretend their illusionary wealth is still real and able to fund their clients’ “modest” lifestyles (like retiring to Florida while paying their adult children’s rent) that they’ll take what they can get. A rainbow drawn on paper by a Chinese commissar who tells them to believe the Chi-Coms rather than their lying eyes.
The job data spin is equally asinine. Just a couple of posts ago I showed you the hundreds of Tennessee unemployed who stormed the the unemployment office when their benefits ran out. Those people didn’t get the Senate’s expected extension of benefits. Wonder why politicians didn’t extend benefits to these long term unemployed? This market rally, based on manipulated unemployment numbers, is why. The government cutting people off after its policies made people dependent on the government teat is just the pixie dust government data pushers needed to get the market to swallow the turd sandwich that is our economic outlook.
A little pixie dust and a rainbow is all it takes to get suckers to start pouring their money into a collapsing and worthless system. Of course, all these gains will be gone next month. But the government and the markets kept the show going one more day so everyone is happy.