Let's Get Real About The Economy

Far too many economists and politicians have been engaging in "happy talk" lately. They have been telling us the recession is over and our economy is turning the corner towards prosperity. That is simply not true, and I'm glad to see a noted economist bravely speaking up to say so.

Economist Nouriel Roubini is widely credited with predicting this financial crises that has thrown us in to recession, so it might be wise to listen to what he is saying. And what he is saying is we are already sowing the seeds of the next financial crises, even though we're still in the midst of this one.

Roubini is especially concerned about the growing gap between the "bubbly and frothy" stock market and the rest of the economy. The stock market has risen 45% over the last six months, while consumers are workers are hurting.

Roubini says, "The crises is not yet over. I see an economy where the consumers are shopped out, debt burdened, they have to cut back consumption and save more. The financial system is damaged...and for the corporate sector I don't see a lot of capital spending because there is a glut of capacity."

Roubini is right. The modern stock market has little to do with the real economy. It used to be that investors bought long-term stocks that provided the capital for industry to grow and create jobs. That is no longer true. Today's market is more like a casino for the rich, and has little to do with providing industry capital for growth. It just creates short-term wealth for investors, brokers and companies -- and none of the three are interested in job growth.

Regardless of what the "happy talk" pundits and experts tell us, there is not going to be a quick turnaround of our economy to good times and wealth (except for the rich). Our economy has lost 7.2 million jobs in this recession. There's no way for this economy to heal until most (or all) of those jobs are replaced. Sadly, the economy is still losing hundreds of thousands of jobs every month.

Even in good times, our economy can only produce between one and two million jobs a year. And don't forget that the population is growing and there are more graduates looking for jobs each year. Even if the economy started creating jobs instead of losing them, it could take several years to put America back to work. That's a best case scenario. The fact is that a lot of the jobs lost will never come back, because they're either outdated or have been moved to other countries where workers can be more easily abused.

The recession may technically end soon (as defined by economists), but the recession-based hard times for ordinary Americans will be with us for quite a while -- possibly years.