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THE AUDACITY OF HOPE TO BEAT THE RECESSION
This week (October 12-16, 2009) Dow Jones jumped over 10 000 points. When the Dow Jones industrial average first closed above 10,000 it was on March 29, 1999, The New York Times writes. At that time, the American economy was in its eighth year of uninterrupted growth, and the jobless rate was only 4.2 percent. For comparison, the unemployment rate in U.S. is now at 9.8 percent, and the employment as a share of the population is at its lowest level since January 1984.
That is why the media reported the latest news from the Wall Street with sober optimism.
The recovery of the world economy is slow and tense. People over the world try to see the good in generally bad news: For example, the decline of Chinese export is slowing, which commentators and economists interpreted as a good sign. Slowing of export decline makes "most people accept that China is now enjoying an economic recovery" (BBC, Chris Hogg). Same with the slow improvement of German economy - it is recovering, but recovery is in the future, perhaps in 2010.
This week the American bank JPMorgan Chase said that its profits surged to $3.6 billion in the third-quarter, well beyond the expectations. But the American biggest bank, Bank of America, posts 2.2-billion loss because of bad loans.
On Friday, the Obama administration said the deficit for the fiscal year is $1.4 trillion, the largest since 1945. At 10 percent of the gross domestic product, the 2009 deficit is the highest since the end of World War II, when it was 21.5 percent. The economists generally agree that the deficit should not exceed 3 percent of GDP.
Yet, after all these contradictory news, we learned about one virtual place of real success. This week Google reported a record $ 1.64 billion profit. It seems that the internet advertising market is bouncing back from the recession, the commentators said. But even in this success there are unpleasant facts: Internet advertising is cheap, Google is Internet monopolist, and in time of economic crisis the business tends to spend more money for advertising. Therefore, the good results of Google sells are just confirmation of the existing economic troubles.