Confidence in What?

The Obama Administration has gone on a public relations tour to tout the positives in the economy. In toe, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner have been issuing positive news about the economy at a rapid pace. 

Today, the White House announced our economy is expected to grow by 3.5% by the end of the year. This, despite recent layoff announcements of 4.5 million jobs in the last 6 months and revised GDP declines by 6.6% for the last two quarters. This despite the fact that official unemployment has hit 8.5%. This despite millions of self employed construction workers are not counted in the national figures making the actual unemployment numbers around 12-15%. This despite $3 trillion dollars worth of expected losses in mortgaged value in real estate. This despite the revised government spending deficits raising to 1.89 trillion levels. This despite the fact that nearly $1 trillion of off budget spending. This despite the fact that the Federal Reserve is left buying government treasury bills because there are no other buyers for our debt.

Since the key to economic growth is confidence in the future, the Federal Government is creating confidence based on a media generated public relations campaign, not on underlying facts or supporting economic factors. The Obama Administration is fixing the problem by artificially creating confidence and spending trillions of deficit spending in the process. The Obama Administration is creating a confidence bubble that is bound to burst, just like the dot-com bubble, the housing bubble and the excessive leverage bubble.

But it won't work, and the target of this bubble is to encourage people to move the price of stocks up, so companies can issue new stock offerings in order to raise equity capital. This will not last and people should be aware.