Wells Fargo posted a profit in the 1st quarter of 2009…….same with Goldman-Sachs, the AIG company…….it looks like the economy is beginning to turn around…..Stop!…think again!

A month-long upturn in the stock market has sparked a round of optimistic media commentaries and statements by Obama administration officials suggesting that the US economy is on the road to recovery. But any serious examination of the state of both the financial system and the broader economy suggests that such celebrations are unwarranted.

The surge in the stock market shows that the American ruling elite is confident that the Obama administration will do everything in its power to protect the interests of the banks and finance capital.

But for all the joy on Wall Street, the market remains extremely volatile. Despite the bailout plan, none of the underlying problems caused by billions of dollars of “toxic”, that is, worthless, financial assets, has been resolved either in the US or internationally. Consequently, the market remains highly vulnerable to adverse developments which could see a reversal as dramatic as the present rise.

The latest rise was likewise sparked by a positive Wall Street response to an Obama intervention on its behalf, as the vast dimensions of the next round of the Treasury bailout of the financial system became known. The market rise could well give way to a new market plunge, however, particularly in the event of new financial shocks, like the failure or federal takeover of another large banking institution, such as Citibank or Bank of America, or a major assault on the overvalued US dollar.

All the “profits” being posted by banks that were a month ago failing miserably is a bit suspect….at least in my opinion….it also helps that the accounting of “toxic” assets has changed in the company’s favor.  So it is with a stroke of a pen that there is profit, not the health of the company.  This is just using the new accounting techniques.  These games allow these companies to make something out of nothing.

Wall Street is celebrating the fact that it has, in the Obama administration, a completely reliable and docile instrument of its interests.  And the working class will continue to suffer.  With all the favors that has been done for the banks, there is still NO loosening of credit, as a matter of fact, banks are making it more difficult for consumers to get the credit they need to help the demand curve…..and without that recovery is further away.

Class dismissed.