Why Are Stocks Up When Everything Is SO Bad?

Here is an interesting article detailing why and how the markets are rising when the real economy is crashing.-Lou

The Real Economy Versus the Make-Believe World of the Government and Financial Giants

In the real economy, unemployment is at Depression-era levels (see this, this and this).

In the real economy, bank loan loss rates will be higher than the Depression.

In the real economy, government revenue is at its lowest level since the Depression, and most states are on the verge of bankruptcy.

In the real economy, the world economy is crashing faster than during the Depression (and see this).

But in the make-believe world of the government and the financial giants, the recession is over.
How do they do it?

Well, as I noted a couple of days ago, the boys use:

High-frequency trading, program trading-based frontrunning, and other computer-based manipulation of the markets
Creation and manipulation of bubbles
The Plunge Protection Team
Intervention in the gold, currency markets, and bond markets
Bear raids, naked short selling, and credit default swap holders driving companies into bankruptcy

In addition:

Years ago, the government reporting some basic economic indicators like M3, and moved away from real economic indicators like U-6 unemployment and inflation and substituted economic indicators like "U-3" and "core inflation" to cover up what is really happening

Normal accounting and reporting rules have been suspended, so that companies can pretend that worthless derivatives, CDOs, subprime mortgages and other "toxic assets" are worth perhaps time times more than they are really worth. Indeed, as of 2006, "President George W. Bush has bestowed on his intelligence czar ... broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations." One or more treasury department officials also actively allowed banks to "cook their books"

Bernanke is apparently almost single-handedly responsible (using the Fed's network of primary dealers) for the current rise in the stock market

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