The Independent Report 1
The Independent Report

Despite the fact that US gross domestic product and consumer spending have been limping along all season, the currency markets rode to an unfathomable rally still. The market managed to soar to pre-recession highs even as the economy remained in a tailspin. This dichotomy whatsoever makes zero sense. Individuals are still de-leveraging and the flow of credit has slowed to a crawl. The government’s U-6 unemployment body – the true jobless rate – now stands at an impressive 16.2%. Yet, the government admitted just two years ago that it had been systematically underestimating job deficits for the prior three years.

There is no reason to think that anything has changed. Additionally, one of the President’s closest economic advisors, Austan Goolsbie, has noted that approximately 1% to 2% of our population unemployed are simply just unaccounted for on a monthly basis due to a number of factors. And the ones who run out of unemployment benefits are no longer counted among the ranks of the unemployed.

However, according to the extensive research of respected economist John Williams, more than one-in-five Americans (22.7%) is currently unemployed or underemployed. The market hasn’t even noticed. After dropping to 6,547 in March of 2009 (at the peak of the financial crisis), the Dow shot back again above 10 rapidly, in Oct of that calendar year 000. None of the basics had changed; the US was still reeling from the worst economic decline since the Great Depression.

Yet, that didn’t make a bit of difference to the market. Wall St. seemed oblivious, overwhelmed by optimism and delusion. In February of this year, as the economy was grappling with high unemployment, a decimated housing market, and oodles of other negative indicators, the Dow was able to somehowsurpass 12,000. And it there stayed, virtually uninterrupted, just this week until. A rational mind has to ask, How could this happen possibly? It’s the consequence of a herd mentality, not fundamentals.

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Investors were bidding in the stock market in a delirious frenzy, wishing to recoup prior loss. Many hoped to enrich themselves, buying at what was regarded as an opportune time. And when everybody else is buying and making money seemingly, the herd will follow. Put Simply, lots of new money was flowing into the currency markets and pushing up the common, much of it the result of the Fed’s quantitative easing program. This influx of money clearly wasn’t the result of any kind of recovery, which is more obvious than ever before now.

Consequently, lots of people have gotten burned and more will suffer the same fate still. The relatively strong earnings reports that lifted the markets were the result of cost-cutting and layoffs previously, not strong revenue growth. And that is was placing even more downward pressure on jobs and wages, leading to weaker economic development and lingering recessionary effects.

Ultimately, the merry-go-round will finish up right back where it started. Wall St. is a pretty poor barometer of the economy’s health, since it is merely a wager on the near future performance of a select group of companies detailed on three major stock exchanges. Additionally, a lot of the country does not have any direct investments in the currency markets.

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