Whose Recovery?

A Reuters dispatch this morning from European Investment Correspondent Jeremy Gaunt in London may be an indicator of who thinks what about the current economic crisis:

Leading investors have taken their holdings of stocks back up to levels last seen just before the collapse of Lehman Brothers, a series of Reuters polls showed on Thursday.

In other words all those guys who "sharply accelerated a global stock retreat" (Gaunt's words) after the Lehman debacle are "back in the game" (my words). One of these "guys" is Michael Dueker of Russell Investments, described by Gaunt as "head economist for North America." His words are:

The stock market is telling us that the worst has passed for the economy and particularly for the business cycle.

Last month I gave David Viniar, Chief Financial Officer of Goldman Sachs, a Chutzpah of the Week award for this kind of declaration; and I really do not want to repeat myself. Nevertheless, I feel that there can never be enough reminders of just how wide the gulf is between the interests of Wall Street and those of Main Street, a gulf that only appears to be taken seriously by China, perhaps because, for all of their economic prosperity, there is still a bit of Marxism in their worldview! The other important economic story this morning came from Reuters reporter Lucia Mutikani in Washington:

The number of Americans collecting long-term unemployment aid fell to the lowest in three months in mid-July, according to government data that implied a slowing pace of layoffs as the economy stabilizes.

Presumably, Wall Street is more interested in the fact that the rate of increase is decreasing, rather than the blunter fact that unemployment is still increasing (regardless of the rate)!