HOW BARE IS THE CUPBOARD?

If your cupboard is bare how can you share a crust of bread or a bowl of gruel? If your bank account is at a negative balance how can you give a loan or gift. If you have no morals how can you uplift others? The current administration and congress believe that they can accomplish all of these things. They have no bread, they have no money and certainly have no morals but they have outright lies and a whole sack of half -truths and minions willing to spread their lies and deceits.

We are told by these minions that the economy is in a turn around and recovery. Do we believe them? Apparently there are so many desperate people out there that they are so willing to believe anything that they will settle for a partial pewter lining and slavery, to hell with the silver and liberty.

In an article titled, "Can the Souffle Really Rise Again", British economy follower Ambrose Evans-Pritchard gave us some true and rather unsettling information.

"(1)Japanese data released on August 25 showed that exports fell yet again in July. They are down 39.5% to the US and 26.5% to China.
Japan is the world's second largest economy. It lives on exports. It lives on exports. It is also keypads of the supply chain for the Chinese economy. How can this hard data be reconciled with the extreme V-shaped recovery a;ready priced in by the markets?
By the way, Toyota is suspending a key production line at its Takaoka plant in central Japan. It is cutting global capacity by 1 million vehicles.

There is something wrong with the entire recovery tale, which ignores the fact that excess plant is still at the highest level since the great depression, capacity use is 70% in Europe, 68% in the US, 65% in Japan and as low as 50% in some countries according to the World Bank's Justin Lin.

Soaring "confidence" indicators have decoupled from reality. The world economy is still prostrate. GDP has shrunk 4%, 6%, 8%, even 12% or more in a large group of countries. There it more or less sits, like a deflated souffle.

As the Bank of England's Governor Mervyn King puts it: "It's the level stupid". The level of economic activity is years away from full recovery.

The Bundesbank's Axel Weber says it will take until 2013 for Germany to get back where it was. He also warns, by the way, that there will be a second wave of credit crisis as Germany's home grown troubles come to the fore.

I have no idea when stock markets and commodities-especially base metals- will reflect the hard facts on the ground, (ie, an end to the Chinese construction bubble). Timing is not my forte. Nor is the market.

But, I am absolutely convinced that those who think we can return to the status quo ante of the credit bubble as if nothing has happened are delusional. AS almost every central banker in Jackson Hole reminded us over the weekend, it is going to be a very long hard slog".

Thank you Mr. Evans-Pritchard!

What will be the next fairy tail from Obama?