April 21st, 2009
05:41 PM GMT
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NEW YORK - It was too good to be true and in our hearts we knew it.

A slew of U.S. earnings reveal the extent of the economic gloom.
A slew of U.S. earnings reveal the extent of the economic gloom.

In early March stocks embarked on an explosive six week rally that seemed to signal the global crisis was ending.

Oh, there were plenty who warned that it was just a bear market bounce. But it was much more comforting to think the aggressive action taken by policymakers around the world laid the seeds for a speedy recovery.

This week reality hit.

As hundreds of U.S. companies report earnings, it is clear we are far from being out of the woods.

The American consumer is still in a world of pain.

Monday, Bank of America CEO Ken Lewis warned that credit was bad and getting worse. More and more consumers are falling behind on credit cards and loans.

Tuesday, Delta warned it expects more empty seats in the second quarter as consumers cut back on flying.

And it is not just vacations that are put off. Merck is seeing lower sales on many of its major drugs. Caterpillar, the company that makes the diggers and tractors that build new homes, sees no recovery in profits or sales.

And we aren't even half way through the week!

Trader Yra Harris of Praxis Group in Chicago told me this morning: "I can't listen to this concept anymore of green shoots. It's nonsense.

"You still have to clear out this issue of the solvency or insolvency of financial institutions because that what the real health of the market is dependent upon."

The U.S. government is going to try to do that when it releases the results of its bank stress tests on May 4.

In theory that should clear the air, but I am hearing a huge amount of skepticism already and we don't even know the details of what the tests consist of.

And there is something else I'm worried about. In order to be credible these tests will have to identify losers. What happens when they do, will be unsettling to say the least.

The bears were in hibernation in March, but they are awake now. And they smell a trading opportunity.



soundoff (10 Responses)
  1. jea

    Well, hellooo... we don't need a brain surgeon to figure that the economy will be in the doldrums as long as we american consumers don't have any money to spend! Only the Feds,and Wall Street investors believe that if we give money to the banks credit will flow like rivers in spring. Give me a break, let's face it once and for all, the banks(all of them) sucked us dried with bs credit lines that no one could actually pay and now we have this. Well the money train is over and we don't have a dime to spend!!!!! So go a suck the blood of some third world countries with the capitalist dream, because there is none here anymore. On the other hand, it feels so good not having to spend money on bs anymore!

    April 22, 2009 at 12:40 am |
  2. dan in Tucson

    Greed street is good at making people believe that all is well when it isn't. They don't make money unless they can convince people to invest. It is time to slap them down with tight regulations before they destroy any more lives.

    April 22, 2009 at 2:27 pm |
  3. Seruserry - Dubai

    Hi
    Well the recession started in US from December 2007 and we are in early 2009 still sees no silver lining in the clouds. The arguments of green shoots of recovery is not be in sight as some may think where are we heading. Now the FED has no option left under its belt. The interest cost is almost zero and we have enough bail out package, TARP , stimulus etc what ever name u call. Now the result of stress tests of the banks will be known public what next...... no body really don't know. I personally feel that we have spoiled mother earth in terms of carbon emissions, extracting oil, metals, and other minerals beyond our needs and the nature has taken a note of the same and is avenging all of us by this recession. Let us learn from this recession and follow more of financial discipline and reduce the global imbalance of trade deficits, and last but not the least ACCEPT THE REALITY be more realisitic. bye.....

    April 23, 2009 at 8:24 am |
  4. Bonita Rogan

    All I've been hearing for the past two months is there is help out there for those of us who are facing foreclosure, but where is all this help? My husband and I have done everything to avoid our upcoming foreclosure. We have trieds to work out payment arrangements with our mortgage company, HSBC, who will not assist us at all. We have contacted HUD, and the HOPE program, plus gone to a foreclosure workshop to find out what to do to save our home. I believe this so called help is nothing more than a sham for the american people. Those of us who have or will be losing our homes have been waiting for the president to come out with a plan to help us, so where is it? The news organizations have been talking about this for months now, and all of a sudden we hear nothing, but we continue to see homes being foreclosed on every day, yet not one story on how the government helped one family save their home from foreclosure. This is shameful. We are supporting all other nations and yet we can't seem to get the idea that we help our own first. Bailing out the banks only made things worse. The banks continue to hoard all the billions that our tax dollars gave to them. Why? So they can still receive their big bonuses. Why doesn't the Obamha administration keep their word? Please tell me, where is the help?

    April 23, 2009 at 1:20 pm |
  5. Dr. Virginia Lubell

    You have got to be kidding! We can never go back to what was because what was was based on nothing except financial imagination. We've got to ask ourselves ... who has been the winners in all of this?

    Bank of America is increasing fees to my credit and debit card (increase to 4% of the purchase for any overseas purchases) which tells me banks are still making heaps of money off consumers.

    Personally I think there is further unsettling news coming shortly. Nothing has been 'fixed' at all.

    April 26, 2009 at 1:34 am |
  6. gene staples

    Staples Recovery

    Use what we have first to stabilize our country. We have lots of low sulfur coal in the power river basin of Wyoming, and Montana, develop a system to clean up the emissions and sell it or trade it to China and Russia. They are going to burn coal and lots of it with or with out the technology to scrub the emissions. Open more mines with every mine open would come with lots of good paying jobs, plus a fleet of hall trucks, drills, draglines, backhoes all built by Caterpillar, John Deere etc, more jobs in manufacturing. Then build more electric coal fired power plants again more jobs in manufacturing good paying ones, but use only us workers. This would create lots of railroad jobs haling the coal and machinery, and building materials to put this plan in effect. After you stabilize the negative spiral of our country then give tax credits to any one who could develop the alterative power sources and then implement the power sources in a stable country, not a country in economic turmoil.

    May 1, 2009 at 12:59 am |
  7. gene staples

    Staples Recovery

    “Quote if we can put a man on the moon we should be able to build a coal fired power plant that has clean emissions, end of quote.”
    Let’s get started and get our construction people of this great nation busy by building more coal fired power plants and retro fitting the old ones with the clean technology.

    Use what we have first to stabilize our country. We have lots of low sulfur coal in the power river basin of Wyoming, and Montana, develop a system to clean up the emissions and sell it or trade it to China and Russia. They are going to burn coal and lots of it with or with out the technology to scrub the emissions. Open more mines with every mine open would come with lots of good paying jobs, plus a fleet of hall trucks, drills, draglines, backhoes all built by Caterpillar, John Deere etc, more jobs in manufacturing. Then build more electric coal fired power plants again more jobs in manufacturing good paying ones, but use only us workers. This would create lots of railroad jobs haling the coal and machinery, and building materials to put this plan in effect. After you stabilize the negative spiral of our country then give tax credits to any one who could develop the alterative power sources and then implement the power sources in a stable country, not a country in economic turmoil.

    Every spring the good lord gives us a large surplus of fresh water that needs to be managed better. Flood if harnessed properly could be a great source of electricity plus we could recharge the aquifers of the Midwest that are going dry. Remember the dust bowls of yesterday; we don’t want that happing again do we? Canals and diversion dams could be put in place to make this happen, again good paying jobs for us workers only.
    Every fall we hear about droughts, no water, were did it go? By building more dams you would build a better hydro cycle, more rain, more snow, basic geology. Why can’t we manage the water the good lord gives us?

    May 1, 2009 at 5:40 pm |
  8. dan in Tucson

    Stock are in NO WAY, an indicator of how well people are doing out there. Everyone I know is hurting in one way or another. Businesses are still cutting jobs and salaries. You still can't pay all your bills due to the pay cuts and banks greedy loan shark rates.
    I could give a rats behind about the greed street junkies. They aren't happy until they have it all, and then that is still not good enough. I hope the market crashes and burns. Take the banks with them. I don't trust either of them anymore. My mattress has more interest than the banks give you.

    May 4, 2009 at 3:01 pm |
  9. Adrian O

    There is only one thing for certain, no-one knows the bottom or top of a cycle – and anyone who forecasts any suggestion that they do is likely just as much profiting from the process. The world ravels and unravels itself repeatedly and cyclically in one massive pyramid and ponzi scheme called the financial markets. Forget fancy words like leverage, short selling and derivatives, it is all simply about access to credit and then the musical chairs process of whom remains creditor when the cycle peaks – for the last man standing is the loser. And so it goes for individuals, businesses, economies and, most, importantly (as it is the most self indulgent concept of all), countries. Go figure, and remember always that someone will be banking on the hope that you don't.

    May 13, 2009 at 4:38 pm |

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