The issue is that none of the problems that caused the mess have truly been fixed. The media today is trying to make it look like the near complete collapse of the rigged economic system never even happened. This is so the con game can keep on going nearly uninterrupted.

The market rebound was caused by a change to the "mark to market" accounting rules that allowed banks to post a large jump in profits although there was really a continuation of catastrophic losses that could be hidden by the immediate markup of assets. Coupled with unprecedented loose monetary polices from the US Fed this led to the greatest con in economic history.

From March of last year on major investment groups has access to nearly unlimited funds at near zero interest rates that they could use to leverage the market to greater levels than in the years prior. The lines between investment banks and bank holdings was completely tossed away. Goldman Sachs used this new found access to capital coupled with electronic pre-market trading to drive major stock indexes up 30% in just a few weeks. Some small corporations like Diedrich coffee saw their stock shoot up 900% in the three minutes before the market bell at the end of March 2009.

Stocks were driven up to hundreds of times earnings on the basis of "economic recovery". Because the federal government now has a vested interest in seeing the shares of corporations they owned drive higher GP data was thoroughly manipulated to show growth when there actually was none. Government spending accounted for nearly 100% of the GDP number after nearly $14 trillion was pumped into the system by the Federal Reserve Bank.

There was no top end growth in profits or sales in 2009. Corporations were able to show profit by cutting inventories by epic proportions, nearly 10 times the levels of previous recessions, and by cutting payrolls to the tune of nearly 20% unemployment. The terms of less worse than expected fueled the late spring stock market rally even though the real data did not support the idea of recovery. A sharp V shaped recovery was already priced into the market at a 40% gain from the bottom.

The disconnect between Wall Street and Main Street grew to a chasm that would make the Grand Canyon look minuscule. In order to keep social unrest at bay the congress created an extended federal unemployment program that would keep payments going out for almost two years. Instead of reporting facts media outlets began to claim that the shrinking unemployment claim numbers meant that the economy was recovering even though these people were transferring off of the state rolls onto the new federal program. As millions of people were being added to the federal unemployment program headlined proclaimed "Continuing unemployment claims plunge".

The time expected to land a full time job if unemployed jumped to 36 months. The numbers of underemployed have swelled to the tens of millions. Foreclosures are still setting records and a record number of previously credit worthy individuals are just giving up on repayment. Yet somehow Wall Street has pretty much put us back to a few years ago claiming a great new Bull Market.

Even if business inventories rise by 200% in the second half of 2010 they will still be 50% below the levels of 2008. Even if we add 15 million new jobs this year we will still be at 7% unemployment. The hope of millions to even make half what they made before they were laid off is a pipe dream.

Here's a question: If Dow 14,000 couldn't be justified at the height of one of the largest speculative bubbles in the history of global economics, how can returning close to that level be justified at the bottom of one of the greatest collapses in global economics?

This level can not be supported. Especially with the new bull run driven up by the lowest level of relative trading volume in the past 100 years.

The problem with your thesis is that business can not exist without consumers and consumption can only exist with access to capital. The only capital that exits today is that which has been hoarded by the largest business on the planet. Through mergers and acquisition they can prop up share prices but every merger will result in a reduction of able consumers and good paying jobs.

The only accurate conclusion that can be reached is that the great recession was actually a retrenchment of the massively wealthy to build a new avenue for growth. To write off the American consumer for emerging markets. The scam was perpetrated to gain access to the capital required to turn North American business into global business so the reliance on American consumption could be eradicated.

Oh how far have we fallen that the only avenue to wealth is not the creation of goods but the purchasing of stock. Last year was a great time to work in meaningless paper. You could even see returns that would make a fund manager blush. So great for the millions of Americans wondering how they are going to find a job to pay for the house they didn't buy on easy credit. How nice it was for Wall Street to doom the responsible to make a quick buck off the irresponsible.

I remain with Iridium and have little to add as that commentary says near all.
As the blog writer has said many times - there are cherries to pick and I totally agree as you prove your point with results.

The big question that remains - is what we see, read and hear true - or is it an illusion?
The job market is improving, but little consideration has been given to the fact that the census is underway and that agency has been doing some hefty hiring. Those jobs are temporary. That is about the only item that Iridium left out.

Irridium / Will L,

I appreciate you sharing your thoughts, you bring up many good points.

Here are a few more items to chew on:

1) The mark-to-market idea was a guessing game and not necessarily any more accurate than the current valuations -- and this was, and is, very much true of current performing loans that are cash flowing and should not be marked down.

2) While many valuations are too high on many properties, most property owners of personal residences and other real estate that have owned them for long periods would attest to the fact that their properties book values are tremendously under valued. Case in point that I wrote about regarding Home Depot. Properties that they bought 10 to 15 years ago may be worth 200% to 300% more than the stated book value.

3) The near collapse of the world economy was foremost the fault of our congress, presidents, and the associated watch dog agencies that allowed such extreme leverage -- whether it be in the form of zero down loans, CDO's or derivatives. The risk taking home buyer did the exact same thing as the financial institutions -- they leveraged to the high heavens!

4) The governments flooding the market with cash was essential to keeping the 10% unemployment (or 16% depending how you figure it) from becoming 40% with 24 hour soup kitchens and bread lines unable to keep up with demand, not to mention the likely possibility of riots.

5) I am not giving Wall Street a pass -- to a large extent I agree with you.

Sheldon: I know that you agree on many points however, you must follow you star and keep on utilizing market investment strategy as you seem to be doing well. Only a fool would have a different attitude when you can manage in both bull and bear.. As I have also said many times, investing is not confined to Wall St.

On your evaluations -

#1 - what little I understand - voodoo at best.

#2 - Most of these don't have notes - or they are old and possess a great deal of equity. IF there is a problem in the commercial sector it is in NEW building less than 10 years old. I say IF, as this is either a well kept secret or it really is not as large as most think. A lot of this area is completely private funded with little bank involvement and that may be why the expected failures remain a yet. Coming off this and going into residential the latest is that the price decline continues. As you say though, if one is in a residence for the last twenty years the price decline is going to have a long way to go before it reaches that parity.

#3 Gee, you are being kind. I would include a lot of other world leaders and heads of finance. This fiasco was not confined to the U.S. alone.

#4 Bothersome. You can't keep the dole up forever, at least not on this scale. I think we are all seeing some restraint on "stim" programs and I expect it will spill onto more. I think that the morons that consider us morons have finally realized that even the printing press has credit limits and we are already in much too large a hole.

#5 Jay Gould thought so too! Nothing wrong with making an honest buck!