Wednesday, November 18, 2009

Color Me Puzzled

Never before have I seen and heard such a disparity of opinion and certainty as in the current economic and investment arena. The economists are generally glum and fact based. The sell side investment wags are buoyant and perky. The Chief Investment Officer of one investment house stated, "we feel like this market still has some room to move higher. We're still at levels that are lower than we were before Lehman Brothers. We are vastly better off than we were then."

God help us if this gentleman should ever think we are not doing vastly better. Since the time of the Lehman collapse things have improved as follows:

We have lost 6.2 million jobs

The unemployment rate is 10.2% versus 6.2%

Real GDP is down 3%

Housing starts are down 30%

Auto sales are down 23%

Bank Credit has contracted 8% or $500 billion

Household net worth has declined $7 Trillion

Home Prices are down an average of 10%

Office vacancy rates are up 3.5% to 17.2%

Apartment vacancy rates are up to 11.1%

Consumer confidence is down 11 points to 47.7.

The U.S. budget deficit has tripled on the back of a government engineered "recovery".

Never has a market recovery been so powerfully driven by deflating employment, credit, wages and rents.

The macroeconomic challenges of our country are daunting and fundamentals are out the window as ad hoc solutions are pulled out one after another. Seems like a shell game of trying to buy time for the great and powerful Oz behind the curtain.

John Barnyak