The Summer of Recovery

Harken, if you will, to the glorious days of times gone past when the stimulus flowed like honey and the unicorns of government-created prosperity roamed the land dropping their spoor of jobs and skittles hither and yon. The manna fell from heaven on the Potomac and the people rejoiced. Thirty one million dollars were spent to replace two small border crossing signs at an isolated Canadian checkpoint (link)! Five million to study the sexual habits of the snail darter! Eleven million to build a bridge to Microsoft’s headquarters building! And of course, “Everybody in Cleveland got Obamaphone”. You could almost smell the optimism in the air as the citizenry basked in the generosity and largess of the state. Jobs were seemingly being created left and right (well, for specific constituent groups with favorable voting records, anyway) and the promise of green energy called everyone Forward! Forward! into a glorious and eco-friendly future. Out with the old traditions, the hocus pocus, and the backward ways (there is a reason they call them fossil fuels, after all). In with the new, the green, the rationally planned! Oh, the new prosperity was upon us like a starving Zombie on a morbidly obese shut-in.

Those were the halcyon days, where every newscaster breathlessly intoned that the Green Shoots of economic recovery were popping up all across the country like some kind of genetically engineered super-weed of wealth. Every story, every scrap of news was lovingly crafted and carefully fitted into the Green Shoots narrative. A hundred and seventy thousand new jobless claims? That’s less than the figure from three months ago… Green Shoots! Housing starts up 0.0001% from the previous month? Green Shoots! A man started a taco stand in Yonkers? Green Shoots! Everything was evidence of Green Shoots, and if in years past a piece of news would have been considered a worrisome sign of the dire state of the economy, well in this new, magical time it was simply more evidence of Green Shoots (unless you were one of those recidivist inbred morons too stupid to understand just what a wonderful thing was being done for you and your country, in which case your opinion didn’t count anyway).

I still remember the reassuring vision of little Timmy Geithner, flitting from news show to news show like a diminutive pixie of prosperity, endlessly repeating the magical words in that child-like voice of his: recovery… recovery… recovery...

Wise policies were creating millions of jobs with the easy swish of the President’s pen, all of them magnificently shovel-ready. In fact, “shovel-ready” was the descriptor of every new project, our previous Cro-Magnon leadership having apparently left unconscionable numbers of holes in desperate need of excavation. One had the sense of millions of fellow citizens briskly grabbing millions of government shovels and determinedly digging their way to prosperity.

Yes, it was 2010. The fabled and legendary “Summer of Recovery”. I recall its radiant splendor as if it were just four years ago.

. . .

A few months before this iconic summer, Time Magazine named Ben Bernanke as their person of the year, so all the people of the land could rest easy knowing that difficult times were being managed by the most competent economist evah, his skill so surpassing that he was depicted in the thin-line drawing style of our very currency, thus visually linking him to the greatness of Jefferson, Franklin, and Washington on our bills.

The White House itself went on an all-out media blitz, throwing around wild numbers of how many jobs had been created by the government like they were pancakes at a waffle house.

Administration Kicks Off "Recovery Summer" with Groundbreakings and Events Across the Country June 17, 2010

President Obama, Vice President Biden and Other Administration Officials to Highlight Surge in Recovery Act Infrastructure Projects This Summer

WASHINGTON, DC – The Administration today kicks off “Recovery Summer,” a six-week-long focus on the surge in Recovery Act infrastructure projects that will be underway across the country in the coming months – and the jobs they’ll create well into the fall and through the end of the year. The Recovery Act has already funded tens of thousands of projects and put about 2.5 million Americans to work, but summer 2010 is actually poised to be the most active Recovery Act season yet, with tens of thousands of projects underway across the country that will help to create jobs for American workers and economic growth for businesses, large and small.

Economists with PhD’s (from schools you could never get into) all agreed that the recession was over and lent the weight of their formidable academic reputations, professional experience, and general intellectualism to the messaging machine, declaring that the data proved the recession had passed, and the worst was behind us. Brilliant experts all agreed it was so!

Members of the media vied to see who could most vociferously deliver the administration’s message of Green Shoots, with the financial media winning the battle of the carnival barkers. Every story was spun like a top to support the narrative. No exaggeration was too outlandish, no economic report too dour to be spun into evidence of Green Shoots. I’ll never forget reading a story on housing starts showing that the numbers were the lowest they had been in twenty years and had stayed there for two months in a row, only turn on CNBC radio and hear Maria Bartiromo gleefully chirp that “Housing starts were up in yet another sign of economic recovery”… they were up one tenth of one percent from the previous month (well within the margin of error for the survey), and the previous month had set a multi-decade low. No sane person could possibly believe this was good news, yet here was Maria yelping about ‘improving housing starts’, conveniently failing to quote the actual nightmarish numbers. It was truly Orwellian.

There was one place you could find the truth of the situation, however.

Gold and silver were the lone canaries in the coal mine. At a time when every person with a microphone or a PhD in economics was shouting the all-clear at the top of their lungs, when all was awash in cheap money and even cheaper promises of prosperity, only two things were telling the truth. Gold was roaring from 1083 in January to a high of 1431 in December. Silver (the people’s money!) had opened the year at 16.81 and exploded to a December high of 30.70, nearly doubling in a single calendar year. Gold and silver were screaming “You cannot create value out of thin air! All this spendthrift waste comes at the high cost of devaluing the currency! These actions don’t create prosperity; they create a temporary simulacrum of prosperity!” Real money was telling fake money (and the purveyors of fake money) what the actual situation was.

It is no surprise whatsoever that the purveyors of fake money took note of this, and the following year orchestrated the May Massacre for silver, and then the September Slaughter for gold. Price has been effectively managed ever since. Problem solved!

Or is it?

If a patient has a life-threatening infection, secretly pressing ice blocks against his back and shouting that he is recovering because his temperature has dropped does not mean the infection won’t kill him- it means that the symptoms of the infection are being temporarily masked. Pretending that the (fictitiously) low price of gold and silver proves that there are no costs to the unprecedented expansion of the money supply and the explosion of the Fed’s balance sheet does not mean that there will be never be a price to be paid for this epic squandering of wealth and the massive malinvestment that these easy money policies encourage. It just means that the true degree of sickness is presently being hidden through the active suppression of the most obvious symptoms.

. . .

In retrospect, what should we remember about the legendary “Summer of Recovery”? We should never forget the complete lack of accountability of the media who, when reality inevitably showed how completely wrong they had been for months on end, simply moved on to different messaging in the fall- without shame, remorse, or a Mea Culpa of any kind. Never did we hear an explanation of why they spent so many months touting a fictional recovery; never did we hear that they were sorry for so monumentally betraying the public trust to report the truth. The “Summer of Recovery” provided the undeniable evidence that our official news gathering organs had completely devolved into a bad caricature of Baghdad Bob, and henceforth should be trusted accordingly.

We should never forget that the administration’s entire message for that summer was a blatant lie. After repeating the “shovel-ready” mantra endlessly to sell his big spending economic plans, Obama himself later admitted that “There is no such thing as shovel-ready”. For those paying attention, it was a preview of the regard for truth reflected in the “If you like your plan, you can keep your plan” sales-pitch later used to socialize 1/6th of the US economy.

We should never forget that literally billions were thrown down the drain at green energy companies that promptly went bankrupt after their fictitious business models failed, as they were inevitably bound to do.

We should never forget that we are still in the midst of this Orwellian doublespeak and data manipulation. Whenever someone (either through deliberate misinformation or rank ignorance) claims that the economy has recovered and that gold and silver prices are merely reflecting this, point them to this chart:

What it shows is quite simply that the official unemployment rate, which everyone claims as the cornerstone piece of evidence for an improving economy, is only falling because the BLS fails to count discouraged workers who drop out of the labor force every month, pretending instead to the fiction that these people have found work. Without this pathetic sleight-of-hand, unemployment is actually solidly in the double digits and has not appreciably improved for years now, despite trillions in deficit spending, ZIRP, the various QE’s, MBS purchases, POMO cash, etc. Recovery my ass.

We should never forget: The media was wrong, the economists were wrong, the administration was wrong, the Keynesians and their central banks were wrong. Gold and silver were right.

And they will be again. Stack while you can.

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Key Economic Events Week of 4/8

4/8 1:00 ET Goon Ghoulsbee
4/10 8:30 ET CPI and Core CPI
4/10 8:45 ET Goon Bowman
4/10 12:45 ET Goon Ghoulsbee again
4/10 2:00 ET March FOMC minutes
4/11 8:30 ET PPI and Core PPI
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4/11 12:00 ET Goon Collins
4/11 12:45 ET Goon Ghoulsbee again
4/11 1:30 ET Goon Bostic
4/12 8:30 ET Import Prices
4/12 10:00 ET Prelim UMich
4/12 2:30 ET Goon Bostic again
4/12 3:30 ET Goon Daly

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