Looking behind recovery numbers

The present Wall Street catch word of choice is “expectations,” used to cast economic results via a comparison with a subjective modus operandi.

Unfavorable corporate earnings and other economic data of the current period are compared with alleged economist expectations, which are normally expressed ex post facto conveying a favorable spin.

The valid and objective presentation of corporate earnings and economic data is only by comparison of delineated actual results of the current period with actual results of the same period of the previous years (preferably three to five years). Corporate earnings should be adjusted for extraordinary credits/charges and changes in accounting methods.

Paradoxically, rogue Wall Street conglomerates responsible for the crash have fared best in the aftermath thanks to the largesse of Congressional TARP legislation, 0 percent Federal Reserve funding, and enterprising public relations from the ubiquitous expectations stratagem. Partial repayments of TARP bailout funds have been enabled by open-ended 0 percent interest costs, not available to the rest of the economy. Virtually the entire business model of today's Wall Street barons is in siphoning off paper profits from non-productive trading operations. Unfortunately, loans to cash-strapped productive businesses are not viewed as favorably.

Tinkering with bank reserve requirements of little consequence is another recent diversionary tactic designed to distract attention from any substantive financial reforms, e.g., antitrust legislation and separating the toxic combination of commercial banking with Wall Street hedge fund type entities engaged in destructive derivatives trading and other disruptive practices.

George Black

Iowa City