Du devoir des gouvernants

It’s now been a year since the dark days of early March 2009, when, although no one knew it at the time, the stock market hit rock bottom. From there, all of the indexes went on a tear through the rest of the year, moving almost uninterruptedly higher before easing slightly in the first two months of 2010. At this writing (March 5), the Dow is still up 60%, the S&P 500 68%, and the NASDAQ 83%. Virtually no one was calling for this kind of rally a year ago. But it happened. So investors are either seeing the “green shoots” supposedly sprouting from the moribund economy or believe that they’re about to break ground any day now. That sentiment is continually reinforced by government officials and media talking heads who almost universally proclaim that “the worst is past,” “we’re back from the brink,” or other words to that effect. It’s often said that stock market action is a leading indicator, reflecting what investors think the economy will be like six or nine months down the road. Are they right? Will good times soon be here again? Or is this just a big dead-cat bounce? Jobs: Now here, we’ve clearly turned the corner. Everyone says so. For evidence, all we need do is look at the declining rate of job loss in the country. Uh-huh. Perhaps it’s rude of us to point this out, but a declining rate of job loss is still a job loss. It is not the same as job creation. The hard reality behind February’s “encouraging” numbers is that 14.9 million people remained out of work. 8.4 million jobs now have been lost since the start of the recession. In addition, there is a net need for 100,000 new jobs a month, just to keep up with first-time entrants to the workforce. Even if the economy were suddenly to start churning out new jobs at the robust rate of a half-million a month – and the chances of that range from zero to none – it would still take nearly two years to return just to pre-recession employment levels. (Near-term employment figures may blip up, as the government hires one and a half million people – who knew we needed ...

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