There was a flicker of hope on Wall Street, last week, when the GDP grew at an annualized rate of 3.5 percent. Obama was quick to crow that the jump was, “[A]n affirmation that the recession is abating and the steps we’ve taken have made a difference.”
The Dow, that harbinger of mob psychology jumped 200 points pushing it over the mystical 10,000 mark. (Friday it plunged 250 points when it became obvious that public wasn’t impressed. Consumer confidence was still hiding in the basement and showed no inclination to come upstairs and join the celebration.)
Barry Grey did a masterful job of deconstructing the jump in the GDP. He points out that, “Sixty-three percent of the 3.5 percent increase in the GDP was due to temporary government tax credits to consumers that have either expired or are set to expire next month.”
Of course the GDP is going to jump when public funds to the tune of $11 trillion are pumped into the economy. Grey goes onto say, “The outcome is a short-term boost in growth—one that is still insufficient to bring down the jobless rate—which paves the way for even greater financial and economic convulsions in the coming months.”
There was one bright spot that did surface last week. We learned that economic inequality is no longer a problem. Lord Griffiths, vice chairman of Goldman Sachs proclaimed that “The public must learn to ‘tolerate the inequality as a way to achieve greater prosperity for all.”
Just when you thought trickle-down economics had croaked it pulls a Jesus and rises from the dead. It’s the old story: liquefy the top and the liquid will flow down to the starving masses.
And it’s true; liquid is trickling down. Unfortunately, the liquid isn’t money.
It will be interesting to see what fantasies Wall Street chases this week.