So what is happening with the economy?\u00a0 Employment numbers go up and Greece gets bailed out.\u00a0 Presto.\u00a0 The markets rise and the clouds of bad times dissipate.\u00a0 Or do they?<\/p>\n
Yes, economic recovery has been in the news all week. The president has modestly credited his own policies as the cause.\u00a0 A media intent on his reelection and with no real grasp of economic data has embraced the Recovery February storyline.\u00a0 And yes, the S&P is back close to its level of April a year ago, though that is still 13% below its decade peak in October 2007.\u00a0 But can you take the recovery talking and \u201cHappy Days Are Here Again\u201d singing to the bank?<\/p>\n
Buyer beware.\u00a0 Here are some of the unsettling facts.<\/p>\n
Jobs?\u00a0 Yes, up.\u00a0 The raw number of jobs has been rising despite occasional blips for most of the last two years.\u00a0 But the rise has not kept pace with the growth in the workforce, which means mainly the pace at which young people are coming of age.\u00a0 The labor force participation rate<\/a> \u2013 the percent of the adult population with jobs — is down to around 63 percent, considerably below the 66 percent of early 2008.\u00a0 And the trend is down, not up.<\/p>\n Europe rescued? Yes, Greece is being bailed out, again.\u00a0 Some time ago Greece\u2019s creditors accepted a 21 percent write down of their loans to Athens.\u00a0 Now they are talking of writing down as much as 70 percent on conditions of future performance that look laughably unachievable.\u00a0 This is default in slow motion.\u00a0 The idea is to allow banks holding Greece\u2019s bonds time to adjust — write-down by write-down — and to give the European Central Bank time to provide replacement liquidity.\u00a0 Since July, according to Alvaro Vargas Llosa in Forbes<\/em><\/a>, the ECB has increased its balance (meaning printed money) 38 percent.\u00a0 In the end the Euro may or may not be saved.\u00a0 But to European authorities the true test of policy now, it appears, is whether the European banks can be saved.\u00a0 And until they are secure again, which may take years, chances are Europe cannot grow.<\/p>\n