A Tidal Swell of Delusion Lifts Stocks
By: Rick Ackerman
Friday, 17 August 2012
With U.S. stocks blithely on the rise against a darkening global economic picture, we keep telling ourselves it’s only a movie, it’s only a movie, it’s only a movie. Except that it isn’t a movie. It’s an epochal tide of delusion; it is quite real; and if it hasn’t yet reached flood levels, it will soon, inundating stock markets around the world. For now, though, even as those once-tireless engines of growth, China, India and Brazil, grind their way toward economic limbo and the growing likelihood of synchronous global recession, it is still evidently possible for the Wall Street Journal to fairly rejoice over July’s modest 0.8% rise in retail sales. Hallelujah! At long last, Americans have opened their wallets. After a three-month string of declines, the Journal need hardly have reminded us that three-quarters of U.S. GDP is consumption-based and that a sustained uptrend in retail sales is therefore crucial to reviving consumer confidence and, in turn, economic growth.