A quick look at the numbers:

Yesterday, the Dow fell more than 200 points. Oil, up $1.69, hit a new
record. The dollar rose to $1.53 per euro. And gold lost ground...dropping
down to $871.

Up, down...up, down...whats going on? Is the economy recovering? Is the
stock market giving us the all clear? Is the smart money buying the
United States of America again?

No. No. And no. At least, not in our humble, timid,
looking-over-our-shoulder and keeping-our-fingers-crossed opinion.

Yes, dear reader, here at The Daily Reckoning headquarters we are
sometimes right...sometimes wrong...and always in doubt. What are we in
doubt about today? Practically everything. Still, that doesnt stop us
from having opinions.

But lets begin by looking at Consumeris Americanus, a species that has
been having its share of trouble lately. Its habitat is threatened by
falling house prices...its food supply has become more expensive. Whats
the outlook?

First, this report from Bloomberg:

U.S. consumer borrowing jumped more than double the amount economists
forecast in March, indicating a slowing economy is forcing Americans to
accumulate credit-card and other forms of debt.

Consumer credit increased by $15.3 billion for the month to $2.56
trillion, the biggest monthly rise since November, the Federal Reserve
said today in Washington. In February, credit rose by $6.5 billion,
previously reported as an increase of $5.2 billion. The Feds report
doesnt cover borrowing secured by real estate, such as home-equity loans.

Consumers are turning to credit cards after banks tightened standards for
home-equity loans and other borrowing. The March figures brought U.S.
consumer borrowing in the first quarter to $34 billion, the most since the
first three months of 2001, when the economy entered its last official
recession.

Consumers are strapped as incomes are not keeping up with inflation and
this is leading them to rely increasingly on credit to see them through
the worst housing downturn since the Great Depression, said Chris Rupkey,
chief financial economist at Bank of Tokyo-Mitsubishi in New York. The
days of extracting cash from ones home to spend on goods and services are
long gone.

But wait? The feds clearly want to protect this endangered species. These
dinosaurs vote! So, theyre sending out rebate checks...theyre cutting
rates...theyre spoon feeding the banks so theyll be able to help the
consumer out with more credit on easier terms.

Richard Benson comments:

For the average American, this rebate check represents only one car,
credit card, or partial mortgage payment. When you consider it cost well
over $60 now to fill up the gas tank for a mid-sized car, and a lot more
to go out to eat, it wont go very far.

On the household front, millions of homeowners havent even finished
paying their heating bills from last winter, and over six million
Americans asked for energy assistance funds so their power wouldnt be
shut off. (In California alone, 1.7 million households are behind on their
utility payments.)

Signs of the stretched consumer include the following stunning facts:

- Home equity loans have a seven percent delinquency;
- Subprime mortgages, past due over 60 days, are pushing 14 percent;
- Over one million homes are in foreclosure and three million more are
empty, and up for sale;
- Ten million homes have mortgage balances greater than their value. (No
wonder some homeowners are walking away from them);
- In the auto market, 25 percent of all car loans are higher than the car
is worth. (The average balance these cars are underwater for is $4,300!)

Jobs are also falling off a cliff. If it hadnt been for the Birth Death
computer model at the BLS creating service jobs out of thin air, the
payroll data would have shown over 280,000 people actually lost their jobs
in April. Currently, 2.7 million workers have exhausted their unemployment
benefits, and with no job prospects or income, hello collector!

Meanwhile, the rising price of food has forced a record 28 million
Americans onto food stamps. Trouble is, says the bleeding heart press, the
giveaways dont go as far as they used to. Many are still hungry,
according to a CNN report.

Its true that we havent lived in the United States for more than 10
years. But we used to live right in the heart of the Baltimore ghetto.
There, almost everyone got food stamps and other taxpayer-financed
freebies. What we recall is that people tended to be overfed...not hungry.

But, back to our doubts and opinions...

Consumeris Americanus isnt looking his best. But so what? The newspapers
tell us that the worst is behind us. The credit crunch is over, says
Buffett. The housing crisis is over, says the Wall Street Journal. And
just look at the stock market...

The stock market is said to look ahead. It is thought to see through the
headlines...through the noise and opinions...and through the theories...to
tell us what is really going on.

Look, say the bulls, the stock market is doing well; theres nothing to
worry about. The chartists say the next move is up. The Dow Theory folks
say were still in a bull market. The dreamers are hoping for Dow 15,000.

Of course, theyre right about one thing; theres nothing to worry about.
Were just talking about money. But anyone who thinks the stock market
really predicts future money trends hasnt been paying close attention. In
early January 1990, the key Japanese stock index was over 39,000. It had
risen like a rocket for the preceding five years. Surely, it saw more
growth and prosperity ahead, right?

But that very same month, Japan, Inc. ran into a serious problem. The
stock market crashed...and the economy went into a long slump from which
it still hasnt recovered.

In the United States 10 years later, again the stock market had registered
steady, impressive gains over the preceding five years. The NASDAQ was
going almost straight up. Surely, stock prices signaled more growth and
prosperity ahead, right?

Nope. The NASDAQ crashed...the Dow sank...and in real terms, after a
decade, even in the Dow stockholders are still down 20% to 30%.

No, dear readers, the stock market is often blind, deaf and dumb. It cant
see ahead. It cant hear the warning whispers. And it cant put 2 and 2
together.

*** What beautiful weather... we said to a colleague yesterday. It
looks like the beginning of summer in London, doesnt it.

The beginning? You better enjoy it. This might be the end of summer
too.

London is not known for its great weather. Sometimes, a few lovely weeks
in May or June may be all the summer Londoners get.

*** You may be able to print your way out of a recession, said another
colleague this morning, but you cant mint your way out.

What?

In the U.S., he explained, because of price increases in the metals
markets, it now costs more than 5 cents to make a new nickel. And here in
England, if you melt down two pennies, you get 3 pennies worth of
copper.

*** And heres more, from the Washington Post, on Japans self
extinction:

Japan celebrated a national holiday on Monday in honor of its children.
But Childrens Day might just as easily have been a national day of
mourning.

For this is the land of disappearing children and a slow-motion
demographic catastrophe that is without precedent in the developed world.

The number of children has declined for 27 consecutive years, a
government report said over the weekend. Japan now has fewer children who
are 14 or younger than at any time since 1908.

The proportion of children in the population fell to an all-time low of
13.5 percent. That number has been falling for 34 straight years and is
the lowest among 31 major countries, according to the report. In the
United States, children account for about 20 percent of the population.

Japan also has a surfeit of the elderly. About 22 percent of the
population is 65 or older, the highest proportion in the world. And that
number is on the rise. By 2020, the elderly will outnumber children by
nearly 3 to 1, the government report predicted. By 2040, they will
outnumber them by nearly 4 to 1.

The economic and social consequences of these trends are difficult to
overstate.

Japan, now the worlds second-largest economy, will lose 70 percent of
its workforce by 2050 and economic growth will slow to zero, according to
a report this year by the nonprofit Japan Center for Economic Research.

Population shrinkage began three years ago and is gathering pace. Within
50 years, the population, now 127 million, will fall by a third, the
government projects. Within a century, two-thirds of the population will
be gone.

In what is now being called a super-aging society, department and
grocery stores have recorded declining sales for a decade...

*** Food riots have broken out in several countries...including several
oil producers. The oil exporters find they need to spend more and more of
their loot feeding their own growing populations. Several have tried to
invest in more local food production, but have been stopped by a lack of
water.

*** Heres something interesting. Our Buenos Aires correspondent, Horacio
Pozzo, tells us that U.S. company, Amyris, has gotten together with a
Brazilian company, Crystalsev, to produce a sugar-caned based bio-diesel
fuel which is equal or better than diesel from petroleum. Several large
companies from Europe and America are moving to Brazil to take part in the
development of bio-diesel fuels. And Fiat Powertrain Technologies says it
will launch a motor designed to run on ethanol also in Brazil, in 2010.

*** Finally, more than a million Americans are being fed and housed,
courtesy of state, local and federal governments. Theyre the lucky
ones...paying no mortgages...losing no jobs; they dont even have to buy
bread. Still, life in U.S. prisons is probably no picnic.

Until tomorrow,

Bill Bonner
The Daily Reckoning