An editorial by Andy Kessler in today’s Wall Street Journal asks the obvious of its readership:  “Was it a Sucker’s Rally?”   While the question may seem rhetorical to our readership and the other free-thinkers of the blogosphere, we take some pleasure in seeing the slumbering mass-media wake up to the obvious.  Yes.  It was a sucker’s rally.

You can have a jobless recovery, but you can’t have a profitless recovery. Consider: Earnings are subpar, Treasury’s last auction was a bust because of weak demand, the dollar is suspect, the stimulus is pork, the latest budget projects a $1.84 trillion deficit, the administration is berating investment firms and hedge funds saying “I don’t stand with them,” California is dead broke, health care may be nationalized, cap and trade will bump electric bills by 30% . . . Shall I go on?

Until these issues are resolved, I don’t see the stock market going much higher. I’m not disagreeing with the Fed’s policies — but I won’t buy into a rising stock market based on them. I’m bullish when I see productivity driving wealth.

For now, the market appears dependent on a hand cranking out dollars to help fund banks. I’d rather see rising expectations for corporate profits.

(Full article on WSJ:  http://online.wsj.com/article/SB124208415028908497.html )

A “jobless recovery” too, is unlikely in the American case. One must note that the very same pages of the Wall Street Journal consistently lauded the mighty, magical American consumer as the driving force of economic expansion during the boom years.  We think it should be clear to everyone by now that the American consumer is pushing up dasies.  Retail sales are anemic.  Credit card defaults are skyrocketing.   Unemployment is spiking and under-employment is still a near-invisible statistic.

While Kessler seems to think that unemployment isn’t the problem, but corporate profits are — we see this question of chicken and egg to be somewhat missing the point.  Credit destruction and demand destruction are a viscious cycle which feed each other and exist very much in tandem.

We applaud the WSJ for calling a spade a spade (This is, indeed a “sucker’s rally”) but can’t help noticing that Kessler’s rationale is staunchly supply-side:  A one-sided economic outlook which is in no small part responsible for the mess we’re in.