Hi Tom-

Hope you’re enjoying the sweet calm of the storm’s eye and the Dow once again at 9,000 (only 5,000 points below where it was when the economy was “healthy”). By the way, it’s probably an excellent time to get back into 100% cash, as the world awaits what the implications of a stock market recovery without any real signs of improvement in the fundamentals actually will be.

But since Goldman Sachs, JP Morgan, Morgan Stanley and Citigroup are once again paying bonuses and partying like it’s 2007 (actually a little more so), it seems like a good time to think about exactly when all these awesomely great financial times might affect actual people. What with 20% U6 unemployment, record numbers of Notices of Default and credit card chargeoffs all continuing to show unbroken trendlines of getting much worse, it seems like now would be a good time for The Consumer (as Wall Street and the Mainstream Media like to refer to human beings) to maybe start seeing some upside on all this Hope and Change and whatevs.

Those extra-pumped folks on The Street like to talk about “V-Shaped” recovery—meaning, since we took a steep path down to Dow 6400, we should see a nice steep path back up to A-OK. And for their purposes (bonuses, Hamptons vacation home-buying, private jet travel) they seem to be right. I, for one, am super happy for them.

The “U-Shaped” recovery folks (mostly .gov mouthpieces talk about this scenario) seem to think we have some more work to do on the insolvency crisis among the states, the unemployment crisis, the foreclosure crisis and other little “hitches” in the ol’ giddyup before we’re all good again.

But now, Bill Clinton’s former Secretary of Labor Robert Reich has stepped out of line with the .gov policy of gradually un-defrauding the populace in friendly little bite-size chunks, by stating that he sees an “X-Shaped” pattern. Whuh?

Says Professor Reich: “The X marks a brand new track — a new economy. What will it look like? Nobody knows. All we know is the current economy can’t “recover” because it can’t go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin.” (Emphasis mine)

Yikes, he might be right, Tom. And, he’s really no bigger than your thumb.

See, the recovery everyone seems to be imagining would necessitate a return to 2004-2007 home prices (otherwise foreclosures are gonna get worse), easy free-flowing credit (otherwise how are folks gonna buy stuff when they’re broke and unemployed and all), healthy banks and a national debt that doesn’t stretch out hundreds of years on the timeline.

More Reich: “The so-called “green shoots” of recovery are turning brown in the scorching summer sun. In fact, the whole debate about when and how a recovery will begin is wrongly framed.” (My emphasis again)

Sucks to be the American People, Tom.

Big X’s and O’s, lil buddy,

The Abyss