Bloomberg starts this morning by breathlessly announcing that the recession is over this morning and will still be over this afternoon and probably tomorrow because:

Cash Hoards Shrinking at S&P 500 for First Time Since 2009!

Yowzah! Happy fucking days are here again!

It sez the cash hoards are shrinking because Big Business stared into the void which is government economic policy and declared it to be ‘business friendly’:

Budgets are rising for new plants, distribution centers and stores from S&P bellwethers Cisco Systems Inc., General Electric Co. and Coca-Cola Co. While some of the money is being spent abroad, company officials say they are opening the purse strings at home now too. A rebound in economic demand, President Barack Obama’s efforts this year to court business leaders, and Republican gains in Congress have helped build confidence to invest and start adding jobs, executives and investors said.

“What you’re seeing is business and government learning to work together,” Cisco Chief Executive Officer John Chambers said in a Feb. 9 interview. “There are good steps starting to occur, but they are just initial steps.”

Cisco, the largest provider of networking equipment, had $326 million in capital spending in each of its two most recent quarters, the most since the height of the global financial crisis in October 2008.

Any minute now the waste- based economy will shift into high gear and what little remains of our resource patrimony will be fed into the fiery furnaces of ‘growth’: more highways, more carz, more consumer spending on food that makes people fat, more landfills, more, more, more. Any minute now.

Hey! Cisco spent $650 million whole dollars in the past six months! In a $14 trillion economy those millions really add up!

The billions Bloomberg refers to are going everywhere and nowhere: funds are flowing overseas following the television advertising aimed @ US lifestyle- wannabes who are too stupid to turn their noses up @ corporations’ crap products.

At the same time funds are leaking into  — executives’ tax havens. What is left unspoken by Bloomberg and the rest of the corporatist shills is final demand: both for goods and credit to obtain them. The world’s economies are debt- saturated. Who can afford to borrow? Bloomberg’s claim implies business is expanding and that credit to leverage business is doing the same thing. Meanwhile,talking heads @ CNBC are yelling that the business’s customers are retrenching. Both can’t be right.

Back in the real world, the housing industry which has taken America’s cash hoard and kept it is still shrinking. America’s wealth remains stranded in housing which continues to lose value. Retrenching is real. As credit’s returns diminish support for house prices diminishes as well. House prices have a long way to fall. Here is the S&P/Case-Shiller Home Price Index:

The home- loan credit bubble began to blow in 1998, the same year fuel prices were @ their lowest. Is this a coincidence? It is hard to say but cheap fuels were a powerful incentive to build a lot of exurban ‘edge cities’ and populate them with SUVs and giant pickup trucks. Given $50 oil rather than sub- $20 oil during the mid- 1990s it is hard to see how any massive expansion of suburban development could have gained much finance traction.

Houses built would have been too expensive for all but a few more or less wealthy or unmarketably small. In both instances there would have been no ‘economies of scale’ in credit markets inflated housing prices even as supply expanded massively relative to increases in demand.

High fuel prices would have had the same effect on the cost of automobiles which would have been harder to market. Americans would have had to choose between smaller cars which many Americans dislike or to drive larger vehicles a lot less. In either case there would have been less buy- side pressure for more suburbia. After all, it’s useless if you cannot get there!

Take away the buy side in real estate and the so- called ‘home builders’ crater taking with them the millions of construction jobs. Housing is where the capital spending expansion took place in the US and OECD. Corporate employment @ companies like Cisco is minuscule compared to expansions in real estate- related finance: in municipal governments @ all levels to manage development and provide services to new suburbs, in real estate development itself, in related areas such as home improvement and the companies that provide building materials/services. While banking and mortgage jobs are technical and command high salaries, pallet stackers @ Home Depot or Lowes do not. The undocumented Hispanic workers who actually were building the shit- box houses, strip centers and banal office buildings did not command high wages, either.

These building- related jobs have been lost forever. Cisco hiring ten or twenty new janitors @ $10 per hour to sweep around the robots will not bring the waste- based economy back from the dead.

What to watch are interest rates. The trend world- wide is for higher borrowing costs. All economies are distressed and the risks are increasing. Markets are beginning to price in the rationing effects of permanently high energy costs on credit. At the same time the faux demand for more so- called risk- free funds for insiders has long since passed the point of diminished returns. Events in the Middle East and elsewhere are putting paid to the Neo- liberal ‘serf fantasy’. The serfs are mad as hell and won’t take it anymore.

Or sez Reformed Broker Joshua Brown:

The torches and pitchforks may have been put into cold storage as the economy rebounded, but trust me, the villagers know where they left them.

This means more risk and more cash hoarding.