Something we have to think about in this rally and comments about a bottom.

Unemployment stayed down for years. Spending stayed down for years. Debt to a decade to get under control in the 30’s.

A bottom doesn’t mean a recovery in the economy or employment or spending a depression. It takes years to get debt under control.

Thus, many on the media are equating this to a recession where a recovery starts employment back up, spending back up, profits on domestic spending back up, tax revenues back up, etc. But, that is when debt isn’t driving the drop in spending.

This is the problem the federal government has. They are openly saying that their job is to do the spending that individuals, businesses, cities and states aren’t doing. That is trillions of dollars and it can last for years.

The President based his cutting of the budget in 1/2 on an 8.1% peak in unemployment. If, as they project, unemployment will grow for at least most of 2009, his projection is so far off it isn’t funny.

Add that the trust funds are going to negative within a year at the current rate payroll tax revenues to them are falling. These trust funds are where we get our “off budget” spending funds from. Not only don’t we have nearly as much money to borrow from them, we have replace those lost loans with either more foreign loans or more monetizing of debt.

That too, will blow a huge hole in any hope of cutting the deficit in 1/2 by 2012 with current trends and how long it takes debt to be brought under control.

Look at the total debt chart, here, again, and see how long it took for debt to peak after the depression started and then how long to over correct and then how long before we resumed what might be called normal debt burdens.

http://www.financialsense.com/Market/panzner/2009/0326.html

Too many are looking at this as a recession. A depression lasts a long time even after it hits some type of bottom. Also, stocks can move up as more and more companies disappear and those left adjust and become profitable or have overseas operations that are profitable.

Also, not of what I have just written takes into account any dollar devaluation that can change things as well.

Related Posts:

• It is possible to create an “eye” in this storm of economic and financial crisis.
• Leave your comments here if you don’t think we’re heading to a depression:
• This recession is far from over! We’re just lucky that it did not turn in to a full depression.
• 3Q company earning reports will crash the market.
• Do not equate what the market does to the Depression we are in.

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