Why economic euphoria ain’t what it used to be

Please don’t tell anyone. I’m not a spoilsport. I don’t want to ruin anyone’s weekend.

I know we are all celebrating. The European Union has a deal! This could be the biggest month in almost 80 years at the New York Stock Exchange. The U.S. economy grew at a sizzling 2.5 percent last quarter. Pop a cork! Time to order your Maserati from the same place the broke Italian government seems to be buying theirs.

Happy Days are….

Ok, enough snark. Our little secret is that there is actually not much to celebrate in all this. Yes, the European Union struck a deal to deal with some of its immediate problems. Of course, when you look at the deal, you see that there are plenty of loose ends. And that the deal doesn’t address the fundamental structural problems the EU face. And that the deal doesn’t address the impact austerity programs and tightening capital flows will have on countries like Spain and Italy … or what they may mean for their debt problems and how it may make future problems more likely. Nor does the deal reduce many of the fault lines in the foundations of European banking … under-reported risk, faux-stress tests, debts soon to go bad. Nor does it address the problems in global derivative markets that have existed since well before the crisis of 2008-2009 and about which serious measures have yet to be taken.

While the deal does have the advantage of finally getting the banks to recognize they have to pay a price for their lending recklessness … for being the pushers that helped get these crack-addict countries hooked on easy debt and look-the-other-way terms, it simply is the latest last-ditch halfway measure to be cooked up by the financial wizards of Europe. Remember when some among their numbers they were called the Gnomes of Zurich? Garden gnomes would do a better job.

As for the good month on the stock market, we all know better than reading too much into that, don’t we? Don’t we? There are schools of fish that are more rational than the stock market. Further, while they look all beady-eyed and serious, Wall Street players are as deeply biased toward childish optimism as they are toward over-reaching greed. We all need regular reminding of this. That’s why I keep on my desk, as I have said before, a little cartoon given to me by a very smart Wall Street guy that shows Peter Pan flying out the window with Wendy and her brothers and Peter says "We’re going someplace where everything is wonderful and nothing has anything to do with reality" and the littlest boy whispers to his brother, "You mean we’re going to Wall Street?"

Finally as for that caffeine jolt of 2.5 percent growth last quarter let’s remember the following: First, we have a recent track record of over-estimating our quarterly growth and then adjusting the numbers downward when no one is looking. Second, I was just kidding about that being a caffeine jolt. It will have precisely the same stimulative effect on job-creation as the average episode of "Two and a Half Men" will have on your cerebral cortex. It’s a big dubious nothing burger … or to be fair, a not-so-much burger … like one of those black bean things you get a health food restaurant, you know, the kind that looks and tastes as if its last owner was a dyspeptic cat.

Which is not to say that you shouldn’t enjoy the little economic sugar rush if you want. Go for it. There’s no reason to dwell on the fact that on other fronts, the economy is sclerotic, leaders in Europe, the United States, and Japan don’t know how to play well together, the banking system is still the same old casino full of hucksters, egomaniacs and some folks who just plain belong in the slammer. Why ruin your weekend thinking about how we still aren’t dealing meaningfully with the big problems on the either side of the Atlantic? Or in Japan. Or in the emerging world.

Go on folks, let a smile be your umbrella. You know just how dry that will keep you, right?