By Jon Markham

Das believes the central problem is that governments have already spentmore than $1 trillion in taxpayer-generated and borrowed funds but arenot getting as much bang for their buck as expected. If you strip outgovernment spending and low interest rates, he notes, there’s not awhole lot of activity going on. The government has tried to prime the
pump, but the pump is still just dribbling.

He suggests we not be fooled by recent earnings reports or governmentstats, pointing to U.S. bank earnings as especially inaccurate. JPMorgan has a balance sheet of $1 trillion and can borrow at essentiallyzero, he notes. So if they just go out and buy 10-year bonds at 3% theyshould be able to earn $30 billion a year. Yet the bank announced aprofit of $3.3 billion last quarter.

“What does that tell you? It says they are losing money on everythingelse,” Das says. “Strip out the gifts, and it’s big net loss.” And atbig industrial concerns like General Electric, he argues, revenue growthis anemic — so earnings growth is solely stemming from cost-cutting andlayoffs.

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