Will the Real Economy Please Step Forward

This little scene in the garden caught my eye as the sun found only enough room to illuminate the leaf and not the blossom.

The spin being put on the economic numbers on both sides of the border continue to puzzle me. I think I know what they are trying to do. If enough consumers are convinced that the recession/depression is over, they will start spending again and the economy will truly recover. But who are they trying to fool. Jobless numbers are up, foreclosures are up, default on credit cards is up, real wages and take home pay are down, and we, the consumer, are trying to save and get out of debt because we got a really good scare when we lost equity in our homes, our jobs were threatened, and our retirement investments went sideways. We will not be frivolously spending our money again any time soon. And we, the consumer, drive 70% of the economy. The few good numbers in the economy are only the result of billions of dollars of stimulus money. When this stops, things bog down again. Take the "Cash for Clunkers" program in the USA. In August, vehicle sales went sky high and the end of the recession was announced. What they were doing was pushing all future car sales into one month. The program stopped and Sept was the worst year ever for car sales. So, you see, public spending is not the answer. In fact, it only exacerbates the problem. Those handouts were tax payers money and that has to be paid back.
As for the up-turn in the markets, we must be extremely cautious here. The price to earnings ratio is at a dangerous level. In other words, those buying stocks are paying unprecedented amounts for the earnings those stocks are achieving. How long can that last? It can't. For those of you who have endured my prognostications on the economy since the crash of one year ago will know, I have been predicting an even bigger fall and it will come when investors in the markets suddenly realize that they are buying a 'pig in a poke'* and they will get out in droves. Those who do not will be very sorry indeed.
The end of the recession/depression will happen when consumers will get back on track with their spending and at the present 8% savings rate in the US, this could take up to 20 years. When we boomers and consumers are certain that our financial house is once again in order, and our savings and equity are at a comfortable place, we will again start spending. But this time it will not be on credit like it was during the 'bubble' that led up to this fall in the first place. So, if that is true, we will not see another 'bubble' for a very long time indeed.
Meanwhile, stay out of debt and keep some cash on hand. Gold would be even better. Just remember, you can't take it with you. :)

*Pig-in-a-poke is an idiom that refers to a confidence trick originating in the Late Middle Ages, when meat was scarce but apparently rats and cats were not.
The scheme entailed the sale of a "suckling pig" in a "poke" (bag). The wriggling bag would actually contain a cat — not particularly prized as a source of meat — that was sold to the victim in an unopened bag. A common colloquial expression in the English language, to "buy a pig in a poke," is to make a risky purchase without inspecting the item beforehand. The phrase can also be applied to accepting an idea or plan without a full understanding of its basis. Similar expressions exist in other languages, most of them meaning to buy a cat in a bag,