Reality versus propaganda

Today GM reported a 24.9% drop in sales from last year. Nisan down 27%. Volkswagen down 7.9. Honda drop 33%.

If no one is buying cars, then no will be employed to make them. Consequently, US figures for private sector employment showed a decrease in employment of 10K. 10,000 more people unemployed. What is more the wages of those still in work is falling.

And yet on the basis of this news the Dow Jones market rallied 3.5%. And the financial news media said, “Stocks rally as economic hopes rise”.

In their defence what they would point to is a survey released today showing Purchase manager’s ‘confidence’ rose a little. But is their ‘confidence’ due to seeing ‘light at the end of the tunnel’ for us all? Or are they just confident that falling wages will help boost short term profits before, in the longer term, there just aren’t any buyers left because no one is being paid a wage sufficient to buy anything?

A rather comprehensive report from the Economic Policy Institute showed that wages for most workers are now ‘growing’ at less than half the rate they did before the Banking crisis. 0.5% this last year. Versus 1.3% before. I put ‘growing’ in commas because when you take inflation into account wages are shrinking. And for lower paid men wages have gone down even before inflation.

Over the last decade and a half wages, when adjusted for rising costs, have gone down year after year in America for the lower paid. During that time the productivity of those workers has gone up by 11%

Work rate UP. Pay for that work DOWN. And that was during the boom times. Compare this to their Japanese counterparts and you see a trend. The figures are reliable. I don’t think anyone disputes them. Thus they are part of the true picture of the boom years. What they clearly show is that the bankers did not generate wealth for everyone. All they did is find a way for people to turn a blind eye to their impoverishment by taking out loans on the basis of inflated house prices. The stupidity of which they are now living with. Of course the bankers who arranged the deal aren’t suffering at all.

Face it, there is no longer much of a connection between what the markets do and what is happening to ordinary people. There was a time when the markets had some relevance to wider prosperity. But no longer. The markets are a fiction created by a few big players whom it suits to have the stock market be seen to be rising. They trade back and forthbetwen them , often their own stocks, and with such low volumes, they don’t even have to buy and sell that much to ratchet up an empty market place to new apparent highs.

But if you look closely at thesestock market highs and gains, they bear little or no relation to economic conditions in the wider world. The shares which drove the rally were the bank – Bank of America, up 5.2%, Wells Fargo up 4.25% and Citi up 3.53%. Other shares rose too but far more BoA and Citi shares were traded than any other.

This rally was NOT about economic hopes of a recovery for all those people either out of work or being paid less for working harder. It was certainly not a recovery supported by those people suddenly starting to buy things.

There just isn’t any broad based production or consumption recovery going on. The figures for car sales only confirmed what house sales had already made abundantly clear. But what is more alarming is the absence of any impetus in the medi to deal with this reality. The prefer it seems to write Pravda-esque part line propaganda.