...."What some of us might not have realized was that the U.S. stock market had also decoupled from the U.S. economy -- and run off with Asia."

That is outright silly, Andrew. The U.S. economy and the health of the U.S. economy is key to global revival. That is what will drive the stock market, not a billion Chinese, Indians, or all of South America pushing material through a sewing machine. You can have the cheapest labor cost, but unless you have a "market" for your product it will stay on the shelf.

Everyone in the world is counting on exports stimulating their economies...China #1 in that regard. The key is the U.S. comsumer and sheThe U.S. continues to be nervous about the outlook for employment, and is keeping spending close to the vest.

There is no velocity to money and banks keep hoarding cash. Together with the general negativity of this White House towards business, along with confiscatory legislation working its way through the process, there is zero reason for any thoughtful person to be optimistic that what we are seeing is the proverbial "dead cat bounce" off an extended downtown.

If the liberals running the Executive and the legislative branches of government into the ground with continued anti-business rules, regulations, taxes, and mandates, the world will see a deep depression in business. Citizens will lose confidence in their currencies and Gold will be king! And the stock market will be in the toilet.

Eventually, it's the "economy stupid"!

There is a secret pipe that runs from the US Treasury, through the Federal Reserve trading offices, into the NYSE. This pipe contains liquidity. When the pipeline breaks, Wall Street goes into a swoon like when the oil pipeline system which reaches into the Northeast was broken during Hurricane Katrina. So the President used the SPR, and put that oil on ships to keep the system liquid. That is how the bailout works, okay? Now the oil dealers in the Northeast realized they could game the system, by counting borrowed oil as their own oil, they told the tankers coming into port, no thanks, we're full, and prices came down. No one wants our oil, the poor tanker captains said!

Now the consumers say money is cheap why am I paying so much for credit? The money crack spreads were widening, which didn't make sense because demand wasn't driving the market. Then someone said we should audit the SPR (not) and someone said we should audit the Fed (not). Now the banks say we have to price credit according to risk, but the Fed doesn't see any risk, they price credit at zero. They know there's plenty of liquidity, but it behooves them to pretend there is a shortage of some kind to allow pricing distortions By pricing credit cheaply they can stimulate the economy, by pricing oil cheaply they can protect the ratio of petrodollars it takes to run their false economy. Of course the shell game only works for a little while, and then the price of oil goes up despite the lack of demand, and the price of credit goes up, despite the lack of new lending

Now the President saw the money pipeline was broken and he shipped money to the NYSE, where the traders gamed the system, as good traders do. Eventually the credit spreads widened despite the lack of consumer spending and no real economic recovery. One day the traders were supposed to give the money back, or the books would be squared, but it was in the best interest of everyone, and not the sellers of credit (savers)to have a fair and free market. Sadly all the real wealth was extracted from the system to pay the gamers of the market, the rentiers, the Goldman Sachs boys in their pin striped suits, and when the stock market finally collapsed because they had bought all their own stock, and no one had any money to buy anything, there was no bottom to the bottom to save them all from themselves. Sadly.

Excellent.

See also Karl Denninger's blog post:

FOMC In English

http://market-ticker.org/archives/1579-FOMC-In-English.html

That is outright silly, Andrew. The U.S. economy and the health of the U.S. economy is key to global revival. That is what will drive the stock market, not a billion Chinese, Indians, or all of South America pushing material through a sewing machine. You can have the cheapest labor cost, but unless you have a "market" for your product it will stay on the shelf.

True enough, but isn't a certain critical mass of fairly-compensated people engaged in value-added activities (e.g. real work) necessary to have a market in the first place?

Funny how that was conspicuously absent from your post. I wonder why.

As an engineer in the automated manufacturing trade, I have seen the complete collapse of manufacturing infrastucture in many parts of the US over the last 20 years. This is, no doubt a reaction of the monied and powerful to all those annoying skilled workers and their temerity to expect a living wage. It's no surprise, of course- the only reason that state of affairs was ever tolerated in the first place was our need to demonstrate the superiority of American Style Capitalism (anyone even know what that is anymore?) over Communism.

Funny that the standard of living of American workers plummeted even more severly once the Cold War was declared dead.

The sad thing is, manufacturing depends of the establishment and maintenace of a large and highly skilled workforce. Once a factory town is closed, their workers, as well as all the allied suppliers have nowhere to go. Why in the world would millwright's kid bust his ass for 10 years to make journeyman craftsman when there is no place left for him to ply his trade like his dad and grandfather before him?

Besides the loss of employment opportunities is the loss of American security, of which skilled labor is a critical component. I shudder to think about what would happen if we suddenly needed an emergency industrial mobilization like we did during WWII. Maybe we can get a good deal on some Chinese-made tanks.

I bet banks wouldn't be hoarding so much cash if there was something worthwhile to invest it in.

There is some evidence that the Obama administration is at least aware of this situation, and has made some encouraging moves towards recognizing the need to build up critical manufacturing skills and infrastructure.

The upshot of this recession is that people will be forced to learn how to live with less. I hope that once they realize that the world won't come to an end for want of a few shiny Chinese-made baubles, that we can move towards a more sensible pattern of sustainable construction and growth.