Photo by DigitalJournal.com The bull is back image:39889:1::0

At least, that’s a view, if not a coroner’s verdict. Maybe the sheer fiscal brutality of the situation hit like a bomb, and did all the damage it was able to do. There are going to be people and businesses roaming around in a daze for years, but that’s what happens when a bomb hits.

Economically, the U.S. is a bit like a large, plant eating dinosaur. It can take bullets and not pay a lot of attention. This time it got hit with a .50 cal. machine gun of its own design, and it’s still waddling along, despite the fact that the bullets did a lot of tissue damage and it does have a few noticeable limps.

The Toronto Star (Article courtesy David Silverberg) has a scathing analysis of the US economy. David Olive, the business columnist, isn’t a great admirer of George Bush, or the rest of the administration, but has managed to put these apparently soul-forged words of molten lead into an article:

Bush famously doesn't read the papers, so his sanguine aspect in delivering an economic pep talk June 6 did not surprise. Bush and his economic advisers seem oblivious to the 28-year low in U.S. consumer confidence, the 441,000 private-sector jobs lost over the past six months, and a financial sector still crippled by the housing crisis and that now denies loans even to the most credit-worthy individuals and companies.

On that particular Friday of Bush's "fundamentally sound" talk:

· The Dow Jones Industrial Index plunged nearly 400 points;
· Bush's own Labor Department reported a fifth consecutive month of job losses and that the jobless rate had surged to 5.5 per cent in May, the biggest monthly increase in 22 years;
· And there was a double-digit increase in crude prices.

Bush simply regurgitated old news, including the stimulus package of doubtful efficacy. He called for stepped-up U.S. domestic crude exploration, presumably off the California coast and in the Arctic National Wildlife Refuge (ANWAR), which Bush knows are political non-starters, and perhaps doesn't know would add little to global reserves even at full production.

And Bush sought for the umpteenth time to have his fiscally ruinous tax cuts skewed to the rich made permanent. The first Harvard MBA president, who most certainly didn't attend that school on an academic scholarship, might someday in retirement make the connection between the near doubling in the U.S. national debt that resulted from America's first wartime tax cuts and the steep fall in the greenback, helping drive up the price of U.S.-denominated commodities globally.

This comes after the mystic bit about the reincarnation of Herbert Hoover.

Olive, like a lot of foreigners, (myself included), doesn’t understand why an economic train wreck which has cost more than any number of Iraq wars is getting treated like a weather report.

The sheer amount of misery the current economic situation has caused the American public eclipses anything in recent American history. The subprimes, alone, would have cost more than about three Vietnam Wars, financially, and anyone’s guess, in human terms.

Apparently there isn’t any War on Economic Terror. Whole sectors can get trashed, and what happens are speeches.

It’s necessary to read Olive’s article to get the full impact, but there’s no shortage of support for his arguments from such daisy gathering neophytes as Forbes Magazine, to whom the administration seems to leave something to be desired:

"With such apathy from the [Bush] administration and contempt expressed by Paulson for those who differ with him on appropriate tactics, it is small wonder that blue-collar workers and their unions question the efficacy of U.S. trade policy," writes Forbes columnist Peter Morici, a professor at the University of Maryland and former chief economist at the U.S. International Trade Commission.

Morici might be being politic, or perhaps, being an economist, he’s not on the same planet, and not seeing things the same way.

I don’t entirely agree with the assessment of Paulson, whose portfolio, in other countries, would consist of a lunatic asylum.

Anyone whose job obliges them to sit in a room with that sickening collection of overpaid, useless, inept, corporate brats, deserves some slack.

The economic assessment, however, is spot on:

…And the stock market, while still worried about another big-bank implosion along the likes of Citigroup Inc. and Merrill Lynch Inc., is flirting with sustained recovery mode. All bets are off if oil hits $175 a barrel (U.S.) over the summer, eating further into household income, jacking up shipping costs for manufacturers and online retailers, and pretty much grounding the civilian airline industry. But a sense that the market has put most of the bad news behind it, including a housing market expected to finally bottom out sooner than later, means "the puke point has been reached" by traders, Barton Biggs, the former Morgan Stanley Co. chief economist who is more often a bear than a bull, told the Wall Street Journal earlier this month.

While many economists would have preferred that central bankers continue the rate-cutting campaign begun last summer, Wall Street analysts take it as a good sign that the U.S. Federal Reserve Board, the European Central Bank, and, as of last week, the Bank of Canada, have put a freeze on further rate cuts.

Fine, if true, but there’s not much left in interest rates to cut. Current US Fed rates, by world standards, are handouts. The alternative perspective here is that you give rates like this to people you think should be able to make money out of a 2.5% rate, even if there's no recent evidence to suggest they can.

If you were a commercial credit provider, the next step would be opening a hot dog stand. You’d make more money, have fewer proven nutcases on your books, and nothing to worry about but the occasional case of salmonella.

Now the strange fate whereby the US may avoid, at least technically, a recession:

John Authers, investment editor at the U.K. Financial Times, makes the useful point that avoiding an official recession – two or more back-to-back quarters of negative GDP growth – will be little to cheer about if we're still made to endure a prolonged period of negligible growth.

But it's still reassuring to find in Authers' recent assessment that "the chances of the `nightmare scenario' of an acute recession have receded significantly."

These are the final two pars of Olive’s article, and as sarcasm, it has its place in the sun, along with US health policies and other spectator sports.

To explain: Consecutive quarters create an official recession. If the numbers work out that way, it is a recession that even great intellects like politicians, fruit flies, and security credit rating agencies can’t ignore. That would have an effect on the US economy, which if able to wear colossal damage, does take some of its economic data seriously, four times a year.

Technically, it wouldn’t be a recession. The funds would be happy, birds would be singing, and rosy-cheeked, cherub-like bankers could frolic in the meadows of Wall Street.

If anyone’s looking for straws to grab, I’m selling a few, at 5000 euros each.

This is a realistic basis for appraisal of the state of the US economy by whoever's still alive on Where's Waldo Street? Based on ducking a technical recession?

When does Peter Pan show up?