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  • The Liberals and Libertarians are Still Wrong About the Economy [Edit or Delete]0 comments
    Jul 7, 2011 10:10 AM
    It's funny how the liberals and libertarians continue to dismiss this economic recovery as being 'weak' when it has been anything but weak. Their favorite  arguing point is either falling housing prices, debt, or the lack of job creation while  deliberately ignoring the eleven strait quarters of blowout profits and earnings for S&P 500 companies, the booming stock market, record worker productivity, or record exports. The truth of the matter is things like falling home prices, deficits, job loss, or PIIGS has had no discernible impact on profits & earnings. Same for the Japan earthquake, increased poverty & food stamp usage, pain at the pump, oil prices and other economic and societal 'ills' that libs love to obsess about. 

    The modus operandi of an economic gloomer is to make lots of predictions until by coincidence one of them comes true so they can take credit for it. 
     
    Consider that:
     
    Between March 2009 and present EVERY earnings season has been blowout with between 75-90% of S&P 500 companies beating estimates
     
    [i]S&P 500 corporations on average are reporting outstanding first-quarter 2011 earnings. With 83% of companies having reported earnings, the S&P 500 is on track to post earnings growth of 19.1%, compared with the 12.2% growth that Wall Street equity analysts forecast just before the start of earnings season on April 8, according to Capital IQ consensus data as of May 5. Notably, this now represents the sixth consecutive quarter of minimum double-digit earnings growth for S&P 500 corporations.[/i]
     
    The major indexes are up over 25% on a year over year basis an yet the PE ratio of the S&P 500 is still just 15. Furthermore, earnings have doubled since the March 2009 lows. As you can see from the chart (static.safehaven.com/authors/du_plessis/...), PE ratios and the stock market rose in tandem from a low of 10 in 1991 to a high of 40 in 2000. Nowadays, stocks are rising at a greater rate than they did in the 90's yet PE ratios refuse to budge - a testament to he strength of economic fundamentals despite all the whining by the media and blogs about job loss, debt, housing and stuff like that.
     
    Exports continue to make new highs quarter after quarter.
     
    Profits are at record levels, too.
     
    50% (and rising) of S&P 500 earnings comes from foreign consumption.
     
    Interest rates still at near 'crisis low' levels yet for the aforementioned reasons the US economy is in anything but a crisis lol. Permanently low interest rates and limitless liquidity is  bullish for virtually all asset classes like commodities, munis, bonds and stocks. 
     
    You can thank the expediency of the Bush administration and Bernanke in addition to pro-growth economic policy and globalism for this huge v shape recovery.The lib and libertarian bloggers wanted policy markers to embrace a 'new era' of fiscal restraint and responsibility , and thankfully they were dismissed. What was supposed to be a 'wake up' call about excessive leverage and greed was ignored. A crisis was wasted yet again, and  wall st. the globalists are loving it. Nearly three years since TARP there have been no further shocks to the system. A $750 billion dollar band-aid solution that succeed beyond anyone's wildest expectations.

    And regarding the debt ceiling I'm certain there will be a bi-partisan agreement before the deadline to raise it yet again as an 'emergeny measure'. 
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