It's springtime. The temperature is 85 degrees here in Washington. New York is approaching record-breaking temperatures. Global warming is back in business.

The flowers are out. Cherry blossoms are thick on the ground. The grass is yearning for the mower.

Heck, everything is back in business. To hear the media tell it, you'd think jobs were picking up...consumer spending too...manufacturing - everything.

Everyone thinks the recovery is as pullulating as April. Obama says we've 'turned the corner.' Larry Summers thinks we're headed to the moon.

Is our old 'Crash Alert' flag still flying over the building with the gold balls? We hope so. Because, when everyone is thinking the same thing, no one is really thinking at all.

And when you start thinking about it, you begin to wonder...

..what happened to de-leveraging? What happened to all those bubble era mistakes?

..what happened to all that debt consumers were carrying?

..what happened to the Great Correction; isn't there anything left to correct?

You'll recall that the Great Correction seemed to be aiming to put a number of things right. Foremost were the economies of the USA andChina. The US needed to correct its over-reliance on consumer spending/debt. China needed to correct its over-reliance on exporting things to America.

Of course, there were a number of other things in need of correction too:

..like the huge credit expansion of 1946-2007...in which debt went from 150% of GDP to more like 370%.

..and the phony baloney post-1971 money system in which the reserves of one central bank are the IOUs of other central banks. In the case of Europe, nobody is exactly sure who's supposed to pay the IOUs. In the case of the US, everybody knows who's supposed to pay...and everybody knows he can't pay. He doesn't have that much money. Even if you liquidated all his assets and all his citizens' assets, Uncle Sam would still be about $50 trillion short.

..and there's the stock market too. We're still in bounce mode,

following the big drop from 2007 to March of 2009.

In the short run, our chief researcher - Charles Delvalle, who keeps an eye on our investments at our family office - is bullish:

"The intermediate trend in the Dow Jones is still up. This trend was confirmed after the Dow Jones surpassed its Jan 19 peak. We could see a test in the trend, with a drop back down to the Jan 19 highs. As long as the Dow manages to stay above this, we could see a charge to 11,000 as soon as [this] week."

But if this Great Correction is as great as we think it ought to be, it will wipe out this bounce...and sink another 50% before finally hitting bottom.

..and don't forget the bull market in bonds. No one knows for sure, but the 10-year T-note hit its all-time low below 3% in November 2008, after a 27-year bull run. This week it went back over 4% - its highest point for this cycle. "The fun's over," says old-timer, Richard Russell. Are 10-year yields headed back to 15%?

..finally, there's the very big picture...the Anglo-saxon empire...begun by the British in the 16th century...and carried on by Britain's former colony, America. Is it time to take the English-speakers down a notch? Maybe...

Well, what do you think? Has the Great Correction fizzled out? Is it time to party like it was 2006 again? Is China going to make even more money by selling even more stuff to the US? Are Americans going to go further into debt to buy it? Are their houses going to recover 25% to 30% losses and keep on going? Is the Dow going back up to 14,000 - and beyond? Are bonds going up - even though the supply of them is soaring? And what about the empire? Has it got greater glories still in store?

We don't know. We just watch...wait...and wonder...

..along with everyone else.

And more thoughts...

Our old friend, Graham Summers points out that the latest employment numbers are close to fraud:

Let's have a look at these 162,000 jobs.

Right off the bat, we know that 48,000 of them came from hiring census workers. I won't completely put this down because these ARE new jobs. But they're hardly sustainable (the census is a temporary employer) or productive: paying someone to count other people adds literally NOTHING to the US's manufacturing or productivity base. If it did, we could simply start hiring people to count clouds or trees and have an incredible economy in no time.

So without census workers, we added 114,000 jobs in March.

Then there are the +81,000 via birth/death adjustments. This metric is so complicated that it's not even worth trying to explain. In simple terms, the BLS tries to adjust the jobs numbers to account for the

birth/death cycle of businesses. But the reality is that it is an 'X' factor used to downplay job losses and boost job gains.

Without these adjustments, we added 33,000 jobs in March.

Then, of course, there are the weather adjustments. The winter of 2009-2010, was by all counts, a rough one. So the BLS made various adjustments to atone for the fact that for several chunks of 1Q10, people couldn't even get to work, let alone hire. Now that the winter is over, the BLS is adjusting numbers upwards to make up for former downward revisions. The total number of jobs "created" by adjusting for the nasty winter? 100,000.

Without these adjustments, we LOST 67,000 jobs in March.

"Bill, you should come down here...this Saturday, they're auctioning off Tulip Hill. It's probably the nicest house in the county. And it's gorgeous... I don't know if I've ever seen such a pretty place..."

Our cousin was calling to tell us about a house owned by another remote cousin. It's a beautiful place. Built in the early 18th century by a rich planter...it is an authentic Georgian brick colonial, with a park that reaches down to the river. They didn't build many houses of that quality in America. Of those, few have survived. This is one of them.

One friend bought the place for $1.2 million (if we recall correctly) back in the mid-'90s. Then, another friend bought it for over $4 million in the bubble years. When he went to sell it, however, he found that he couldn't get anywhere near his money back. So, it's up for auction, with a $1.6 million minimum.

"Don't even think about it," said Elizabeth. "We've got more than enough problems already."

So, we called our cousin back...

"I'm not even going to look at it. Because if I look at it, I might start thinking about ways to get it. The next thing you know, I'd have another roof to fix and another pile of bills to pay. A man has to know his limitations..."

And finally, this from Bloomberg:

Los Angeles will run out of cash on May 5, city Controller Wendy Greuel said today in a release in which she requested a $90 million transfer of reserve funds to pay bills.

The controller said she received a letter from the Los Angeles Department of Water and Power today indicating the utility wouldn't send an anticipated $73 million payment to the city's general fund.

That money is part of an annual contribution of 8 percent of power revenue that the utility makes in lieu of paying taxes to the city, according to Ben Golombek, a spokesman for the controller.

"The question I have been asked most often during the budget crisis is, 'When will the city run out of money?' Greuel said in the e-mailed release. "Unfortunately, we finally have the answer."

Regards,

Bill Bonner

for The Daily Reckoning

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