Despite a 24/7 campaign of carefully managed "good news," 76% do not believe the U.S. "recovery

oftwominds.com
Suppressing the Cognitive Dissonance of a Bogus Recovery
A massive outbreak of economic cognitive dissonance is being suppressed with wave after wave of manufactured "good news." Every visibly negative bit of data is run through a media and Central State assembly line to refashion it as "good news" and "evidence" that the "nascent recovery is taking hold." Whatever cannot be rejiggered is simply buried or suppressed.

The fact that five corporations control the the vast majority of the U.S. mainstream media certainly aids that manufacturing process.

Let's run through a few of the most blatant examples of suppressed dissonance:

1. If the economy is recovering so strongly ( +3% GDP growth in the first quarter!) then why are tax revenues down? Federal budget deficit hits April record: The April deficit soared to $82.7 billion. Total revenues for April were down 7.9 percent from a year ago. In the seven months of this year, corporate tax receipts are up 8.9% to $77.1 billion. The same cannot be said of individual income tax revenue, which is down 11.6% in the first seven months to $500.8 billion.

Through the first seven months of the current budget year, which began on Oct. 1, the deficit totals nearly $800 billion. That is down only slightly from last year's deficit during the same period of $802 billion. Revenues total $1.2 trillion in those seven months, down 4.5 percent from the same period last year.

How can tax revenues be falling when the economy is "growing strongly"? As for those corporate profits: corporate profits register biggest year-over-year gain in 25 years.

As this chart from the Federal Reserve shows, non-financial corporate profits were almost 14% of GDP before the global meltdown. In a $13 trillion economy, that's $1.8 trillion.

But much of the "good news" in Corporate America is not quite as rosy as presented.

2. Rising corporate profits mask falling sales. Consider Walmart's last report, which caused the financial media to quiver in ecstasy because the retailer logged a 10% increase in profits. But behind the hype, (profits rose $0.3 billion on $99 billion in sales, whoopie), Walmart same-store sales drop; gross margins decline.

You have to read to the very last line to get to the sobering reality: same-store sales dropped in the U.S. and gross margins declined. Both are bad news, yet you'd never know it from the lead paragraphs and talking heads.

3. Corporate profits are boosted with special charges and other accounting trickery. It takes a forensic accounting analysis of corporate filings to discern what's real and what's been juiced to boost quarterly "earnings."

Meanwhile, corporations are loading up on debt again: Junk bonds-- essentially risky bets on future corporate earnings--made up the biggest share of corporate debt sales on record last year. That hardly suggests prudence on the part of the companies loading up on tens of billions of dollars of high-interest debt. Load the company with debt, goose profits, cash out the big bonuses and then let the balance sheet implode. More...