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Old 09-15-2009, 11:12 AM
 
12,870 posts, read 13,109,624 times
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Finally, the most dangerous myth of all; that The Crisis itself has passed.

On one hand, government has the right to take credit for "the economic recovery;" it's totally responsible for it. I mean that. One hundred percent of global economic activity is due solely to fiscal stimulus. And according to Gluskin Sheff's David Rosenberg, an estimated 80% of world gross domestic product growth is due to government contribution.

Unfortunately, government intervention and support of credit markets has, to a large degree, been successful. Credit spreads have narrowed in unprecedented fashion from a year ago as credit buyers have fallen all over each other to buy corporate and government debt. Wait, what do I mean by unfortunately? Well, unfortunately, we're rapidly moving right back to the same place we were before the real issues facing us in The Crisis became apparent. In other words, all that has happened is that the doctor (the government) has been successful in treating the symptoms of the disease (failed institutions and widespread insolvency), but in doing so the disease itself (too much debt) has actually worsened.

Inevitably, there will come a point when the symptoms of the disease stop responding to treatment. About the Great Depression, someone once said, "Just when we thought it was over, it was really only begining." (minyanville)

read the 5 myths here:
http://www.minyanville.com/articles/.../index/a/24478
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