Readers here know that I have urged us, for a long time, to be quite careful about the talk of "recovery". I do not put much faith in a rising Dow since that is, in my opinion, mainly a game of a bunch of traders trying to jump in and out of short-term profit-taking. I say this because there can be no meaning to a recovery when almost one in five people do not have full-time, real work–the almost 10 percent the media dutifully report as "unemployed" plus the additional ten percent of the workforce that has given up looking for work, works only part-time because full-time work cannot be found and the vast number of people who work for the poverty-level minimum wage.

   Even The Wall Street Journal, in an article about corporate profits, puts its finger on the problem:

In an ominous sign for the economy, much of the profit is being eked out through cost cuts. Executives say they are hesitant to reinvest such profits into their businesses. With large portions of their factories, fleets and warehouses sitting idle, some say they probably won’t see reason to do so for a year or more.

That means job growth and any significant rise in business spending could be a long time coming. That creates a chicken-and-egg problem at a time when the unemployment rate is already nearly 10%: Without more jobs, U.S. consumers will have a hard time increasing their spending; but without that spending, businesses might see little reason to start hiring.

Already, the economy is being starved of investment it needs to nurture growth. Net private investment, which includes spending on everything from machine tools to new houses, minus depreciation, fell to 0.1% of gross domestic product in the second quarter of 2009, according to the latest government data. That’s the lowest level since at least 1947. [emphasis added]

   What does this mean? Any "profits" that we will read about being reported are simply about chopping "costs", not because the average person has a decent paycheck again and can start spending–and "costs" usually means people…either in the form of layoffs or wage and benefit cuts.

   And that last point about investment is pretty worrisome–if you do not invest, you crumble.

   The "recovery" is being built on quicksand.

   We need a massive second stimulus to fill the hole of the lack of investment by the private sector. If we do not do that immediately, we will be sinking deeper into an economic crisis.