Bill Bonner (The Daily Reckoning, UK):

The ‘recession’ did more damage than they think

Claptrap! Nonsense! Balderdash!

Everywhere we look, someone is saying something ridiculous.

Which is good news to us. This Daily Reckoning was getting to be serious work…what with the world facing a total financial meltdown and all.

So, we’re pleased to be able to lighten up by, once again, telling you what an idiot Tom Friedman is. You already knew that? Well, it doesn’t hurt to repeat it…

We hadn’t seen much of the old Tom recently. His recent editorials in the New York Times were no smarter than before, but a bit subdued…as if some chemical trace of good sense had slipped into his system, perhaps from a paper cut. But now, he’s back, big as life and twice as stupid.

We’ll come back to Tom in a moment, but since this is a financial service, we should probably begin with the financial news.

The Financial Times is looking over its shoulder. The recession is over, it says; time to take stock of the damage.

“Beyond the Crisis… With most of the world’s economies officially out of recession, the FT launches a series examining the legacy of worst global economic crisis since the 1930s,” says the FT. But according to the figures below the headline, the crisis wasn’t so bad. The US economy walked backward only 3.5%. Now, it’s making progress again.

The FT editors should keep their eyes on the road. The ‘recession’ did more damage than they think. And it isn’t over… There’s more trouble ahead.

The ‘recession’ in the US has wiped out…

…ten years of stock market progress. Actually, stock prices are no higher than they were in 1998…

…ten years of employment progress. You have to go back to the ’90s to find a time when so few people were working in America…

…ten years of income gains. The typical household had less real, disposable income than it had 10 years ago.

In other words, a whole decade has been lost. Baby boomers are now ten years older, and less prepared for retirement than any previous generation in US history.

In Florida, joblessness has reached 11.2%. The jobless picture gets even grimmer when you consider the effect of long-term unemployment on the unemployed.

“It’s a killer disease,” says Thomas Cottle of Boston University. “People are going to be damaged and may not recover in their lifetimes.”

The FT elaborates: “The longer people are out of work the more their skills decline and the less appealing they become to employers.”

That puts the boomers in a bad spot. If they lose their jobs now they may never work again. Which means, they will face retirement with very little money…and a keen interest in making sure the feds keep the money flowing their way. They may not recover in their lifetimes…

Housing starts are at a 10-month low. Mortgage applications are at a 12-year low. As far as we can tell, both housing and employment figures are getting worse.

In short, the ‘recession’ is far from over, even if the feds are able to jive up the GDP figures from time to time.

Click here for the rest of Mr. Bonner’s insightful analysis at The Daily Reckoning, UK edition.

“What if the crisis of 2008 represents something much more fundamental than a deep recession?” he asks.

So he’s just now figuring this out.  Well, when the family fortune you marry into shrinks from $3.6 billion to a mere $25 million, I guess it’s natural to start wondering such things.

But since it’s Tom Friedman we’re talking about, it’s also natural to reach the wrong conclusions.

We have created a system for growth that depended on our building more and more stores to sell more and more stuff made in more and more factories in China, powered by more and more coal that would cause more and more climate change but earn China more and more dollars to buy more and more U.S. T-bills so America would have more and more money to build more and more stores and sell more and more stuff that would employ more and more Chinese …

We can’t do this anymore.

Yeah, I know — I too had to read it a couple of times so I could follow the logic, such as it is.

Is Friedman saying the whole globalization model as he’s portrayed it for the last couple of decades is falling apart?  Not that he would admit that, of course — “We’ve always been at war with Eastasia!”

Note too how he writes with the conviction of the converted.  I suppose if the family fortune you marry into has shrunk by more than 99 percent, and that family fortune is based on shopping malls , and you’re already of a world-improving mentality, it’s natural to adopt an outlook that meshes the worst of consumer-culture contempt and climate-change hysteria.

It is also natural in light of those circumstances to be utterly blind to the real causes of the crisis.  He writes about China’s purchase of Treasuries as if it were a phenomenon in isolation.  There’s zero acknowledgment that what we face is a debt crisis — a crisis of excess credit fomented by the Federal Reserve that metastasized through the financial system and then the wider economy.

Friedman actually quotes an expert who says, “We have not generated real wealth,” without realizing what’s actually happened in the 20 years he’s been extolling the virtues of globalization (as he defines it):  The art of money-shuffling was elevated above the craft of producing real goods that people can use.

No matter.  Friedman speaks for the Davos crowd he’s hung out with the whole time that’s managed to screw things up so royally.  And their message now is:  Suck it up.  Learn to live with less.

You know, I think most people are probably able to figure that out without Tom Friedman’s help.  But he’s bound and determined to help anyway.

Source: The Conviction of the Converted

More than a year ago, the folks at Energy Bulletin ran a revealing test on Google Trends to see how many people were searching for “global warming” as opposed to “peak oil.” The results were disappointing. (Four days later came my way-too-premature prediction that Peak Oil was about to become a household word, but we won’t go there now…)

I ran the same test this morning and came up with similarly depressing results. And it’s not just people searching on the web. Confirmation comes from that ultimate arbiter of what America’s clueless nomenklatura are thinking — New York Times columnist Tom Friedman:

We’ve added so many greenhouse gases to the atmosphere, for our generation’s growth, that our kids are likely going to spend a good part of their adulthood, maybe all of it, just dealing with the climate implications of our profligacy. And now our leaders are telling them the way out is “offshore drilling” for more climate-changing fossil fuels.

Madness. Sheer madness.

Friedman has achieved such mythic status that the Times evidently feels he’s beyond any need for an editor. But if he had one, that editor would no doubt ask Friedman what he means by “the way out.” The way out of what? Presumably a shortage of fossil fuels. But Friedman makes no mention of a fossil fuel shortage in the sentence preceding. He’s talking about “the climate implications of our profligacy.”

Sloppy syntax, fuzzy thinking.

Friedman must believe, like Congressional Democrats, that a magical government program can bring about solar-powered cars and jets faster than it’ll take to bring new offshore oil fields online. Of course, if the Democrats are clueless, the Republicans are liars, with the repeated assertions that opening up offshore drilling will bring back cheap gasoline within weeks. It won’t. But it’ll buy us a little more time until something other than oil emerges in another 10-15 years as the transportation fuel of the future. And we’re gonna need all the time we can get to forestall catastrophic changes in the way we live.

Source: Peak Oil vs. Global Warming