Is there a Mystery

The Dollar as the Common Denominator

Stocks, Currency See Close Relationship; 'The Sheep Effect'
http://online.wsj.com/article/SB125710221903421357.html?mod=djemTEW#articleTabs%3Dcomments

Let's take the three basic forces - (1) people tend to extrapolate from the recent past; (2) the US gov't is running an outsized take of US GDP and this in the past has always portended a slowdown of the real economy; (3) there is an outsize effort to try to obfuscate the overindeptedness of the consumer and the economy, and the overspending of government; (4) there are lots of specific governmental policies that militate against employment, etc.

Thus, while Shiller was on CNN saying that the human factor made economics difficult, the above factors all lead in one direction.

Admiittedly the timing and the resiliency of the existing economy are questionable; but, the direction is clear.

The US doesn't want to address spending too much on social spending and the economy can't ever recover with the government taking the amount of it that it is - that is, until a very sorry bottom or policy change takes place.

Thus, the value of a few US assets may be sustainable; but, otherwise, the US is at the top of the pyramid and the value of its assets and currency will be falling.

It's as simple as the farmer who can save and plant 10% of his/her past crop vs. the farmer that can save only 6-8% or the farmer that can plant 12%. Thus US is the 6-8%. 10% is needed for equilibrium and over 10% there's growth.

Sadly, the Obama admnistration (not unlike the UAW and other unions) believe current consumption trumps all. So they take from what needs to be saved and reinvested. Perhaps this is wrong. But, the situation with GM and the current healthcare proposals would say the opposite! Who knows, maybe there's a fairy who can wave its magic wand and produce abundance out of squandering?