recession

As each day passes your editor becomes more baffled.

Things which appear to be common sense to us are deemed to be extreme views by others.

When we argue against government intervention or government stimulus programmes we do so because it seems obvious they can’t work.

Without covering old ground, a government stimulus package can only ever provide a short term boost to one area of an economy. It can never be long lasting. And it will always involve robbing from one part of the economy to feed another.

And furthermore, the boost will inevitably be made in the wrong areas of the economy. It always leads to a misallocation of resources.

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Your editor is on a double shift today. We’re switching between writing today’s Money Morning and filling in for Dan Denning at Daily Reckoning.

Over at Daily Reckoning we gave the Climate Change ‘tree’ a bit of shake. You can check out what we had to say later on today after our webgeeks post the article to the Daily Reckoning website.

But on this side of the building on Fitzroy Street we’re taking another swipe at the banks.

Last week we tipped our cap to Westpac for trying to make a buck out of the interest rate rises by anticipating the Reserve Bank of Australia’s next move.

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Now there’s a real decoupling. Friday’s unemployment figures came out in America. They showed that 8.2 million Americans have lost their job since the GFC began in 2007. The official unemployment rate (the one that under-measures actual unemployment) is at 10.2% and growing. The Aussie employment report comes out on Thursday.

Stocks rallied on this news.

Employment is said to be a lagging indicator. Economists tell you it’s the last thing to recover from a recession. Businesses don’t begin hiring until after they are sure the worm has turned in the economy. But right now, there is a pretty big decoupling between the stock market’s verdict on the economy (it’s all good, man) and the employment market’s verdict (it sucks, man).

But there’s no doubt the rising market has lifted a lot of spirits…and superannuation balances. Aussie Super data firm Rainmaker says the average super is now down just -0.8% as of the end of September. To be honest though, we found this data incomprehensible.

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“If we manage to escape national bankruptcy, we have set up a slavery far more oppressive than any previous form of bondage…”

BRITAIN’S BANKRUPTCY has been a long time coming.

“By our political folly we have a put a large part, probably the greater part, of the nation in possession of rights to draw from the public purse,” wrote Ernest J.P.Benn in his hilarious Account Rendered of 1930.

How hilarious? Forced to live with the “smudge readers” at passport control, policemen demanding to see one’s driving license down at the station, and Whitehall drones obsessed with how many pencil sharpeners their department controlled, Britain’s moneyed classes knew the lower orders could only travel, drive and wear white-collared shirts if kill-joy regulations applied to the gentry and their staff alike.

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