The US recovery is little more than an economic 'sugar-rush'

[Geee]

UK Telegraph:


For Wall Street’s commission-based optimists, many of them with a mountain of stocks to sell, and their own home loans and credit card bills to service, such credit growth is Exhibit A when it comes to making the case that America is now out of the economic woods.

If only it were so. The trouble with this latest US recovery is that it amounts to little more than an economic “sugar-rush”. The recent growth-burst is built on monetary and fiscal policies which are wildly expansionary, wholly unsustainable and will surely soon come to an end. When the sugar-rush is over, and it won’t be long, the US will end up with a serious economic headache. Investors should keep that in mind.

As somebody with extensive personal and professional ties to the US, I’m fully aware of the dangers of under-estimating the grit and determination of the American people. It is undeniable, though, that the latest wave of euphoria to have spread across corporate America, and into the echo chamber that is Wall Street, is ultimately based on quantitative easing and a series of unaffordable tax cuts.

It seems likely the Fed will fully implement QE2 – the latest $600bn bout of money-printing - following the $1,700bn programme already completed. This is in spite of protests from countries as diverse as Thailand, Australia, South Africa and China, all of them complaining that America’s unprecedented monetary expansion is causing dangerous bubbles in markets going way beyond US equities.

[Pepper]

See no problem with Bernanke's QE2, as long as it's a programme.

[pollyannaish]

It's really weird. Maybe my community just lags way behind (actually it always has) but I'm just not seeing things getting better. Higher gas and food prices, underemployment, stagnating or declining private business and absolutely necessary government employment cuts are keeping things very tough for people here.

 

We may have jobs, but things are very unsettled.