The stock market has all but forgotten the crisis and has passed over the levels before it all began. According to the majority on Wall Street, the worst is over and the sky is the limit. Profits are on the rise. China and the other emerging nations will save us all as they move from export economies to import ones.

The US GDP (Gross Domestic Product) for 2010 was estimated to be about 14.6 trillion dollars; China’s 2010 GDP was estimated to be just over 6 trillion dollars. The dream of China saving the world seems as doomed as an 180lb man trying to save a drowning elephant.

The stock market has managed to recover past the pre crisis levels without much help from Main Street. Outflows on Mutual Funds have far exceeded inflows over the past few years. The stock market went from being populated with long-term investors to short term traders.

Current earnings carry less impact than future ones. When the financial press refers to a company’s price to earnings ratio, commonly they are referring to their future potential earnings. The current P/E’s (Price to earnings ratios) seem a little less spectacular and largely overlooked. If a meteorologist can’t predict the weather with much accuracy over 10 days, how can a company predict their earnings 365 days into the future? It’s like saying since it is sunny today it will be sunny next year on the same day.

Commodities prices have sky rocketed as a result of the government’s sure-fire cure of making the USA an export giant by devaluing the US Dollar. Gas is over $3.00 a gallon for most Americans and the cost at the grocery store is on the rise. Wall Street sees this rise in prices as validation of the ensuing recovery, while the rest of America finds less money in their pockets for the same amount of goods. 70% of the United State’s economy is based on Consumer spending, paying more for the same does not constitute growth in my book. Wait until manufacturers have to restock the shelves using record high basic materials. If the US Consumer can’t afford to go to the doctor and pay a co pay (as seen in a recent health insurance companies earnings helped by less people going to the doctor), I highly doubt these manufacturers will be able to pass on the higher costs. If the goods prices are firm and what the consumer is willing to pay is equally firm, than the only weak point is the manufacturer’s employee’s job.

One thing is for sure; nothing truly has changed for those who pushed the cart to the edge. The economic optimism is not based on fundamental changes to the system but rather the hope that the ship will right its self. Unfortunately most of us who live in the real world know that there is no such thing as a happy ending, if you pour water on a person who is drowning, it probably won’t help.

Sometimes it pays to look at the glass as half empty to ensure you conserve what is left.

My belief is that economics needs to be broken down into the smallest piece to the individual US citizen. What works for an individual should work for the economy as a whole.

To date the US government has taken the position that the government needs to fill in the demand holes with stimulus by borrowing money. If the US government borrows 1.5 trillion dollars and then spends it into the economy through stimulus, this “growth” in the economy (gdp) should bridge the gap according to the current powers.

What if an individual did the same thing as the US government? Okay so Suzy gets a pay cut and the she decides to adopt the same philosophy as her government. Suzy takes her credit cards and decides to go on a spending spree matching her lost income. Suzy does not just use her credit cards to pay current bills, but she also uses it to redo her kitchen. Suzy lost $30,000 in pay, but she spent $30,000 on her kitchen and other none essential items to make up for the lost income. Did Suzy make up her lost $30,000 in income? Is her situation better after spending the $30,000? Did she reduce or increase her risk?

The answer to the above questions seems relatively obvious to me. If you lose income a budget is the solution not a spending spree. If 70% of the US economy comes down to the US consumer, shouldn’t our rules be their rules?

I am reminded of a common movie scene where the characters are climbing up a mountain to get to safety only to find a seemingly endless set of mountain ranges. The risk with declaring an end may be the straw that breaks the camel’s back. Can we take the double dip? What happens to the US consumer if there is another bout of mass layoffs.

There is no short of predictions for the future equally positive and negative. The current momentum seems to rest much of the world recovery on emerging markets and a weak dollar. Stimulus in the US has failed to create a meaningful impact on unemployment and the credit market has shrunk even with the massive bailouts last year. The US housing market has been kept on life support with government supported interest rates and tax rebates. My real concern is that nothing that has been done really is sustainable. Over the past year the US government has thrown money at everyone but its tax payers. Maybe the real solution is to let us spend our own money and when I say “us” I mean everyone regardless of income.

Interesting that Washington DC over the past years seems to have become just as disconnected to Main Street as Wall Street. Has Wall Street moved into Washington? Over the past year I have had discussions with many people who have lost their jobs or had a pay cuts, not one of them ever mentioned healthcare as a major problem right now.

Happy Thanksgiving! The Emerging Market of Dubai’s possible credit problems may give a new meaning to Black Friday or just another straw on the camel’s back.