Should we believe our President’s recent State of the Union statement suggesting that we’ve made it through the worst of the economic crisis?

“Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again.”

-President Barack Obama, State of the Union, January 2011

Via The Daily Crux and David Rosenberg

The stock market is, indeed, roaring back from well below 7000 on the Dow Jones. And according to a recent Politifact review, corporate profits for 2010 will likely come in higher than those of 2007, before the onset of the crisis.

But is it economic growth that drove profits and stock markets? Or is it something else. Karl Denninger of Market Ticker suggests that our real Growth Domestic Product, the measure of economic growth, is nothing but fuzzy math:

The loss of purchasing power in real terms, the drive to “two income” households and finally the wild screams from the media, government, and lastly Bernanke’s recent assertion that “QE2” has been a “success” because the stock market has gone up all underlie the truth – we have not grown the economy at all during the last sixty years!  Instead we serially pulled out the credit card and said “Charge It!”, continually rolling over the debt and adding more to it.

If you look at the stock market, one has to ask – when did it start to “take off”?   In 1991 the S&P 500 printed 300 and the Dow stood at 2,500.  That was the start of the monstrous “bull run” in stocks.

Exactly none of the alleged “stock market appreciation” has come from actual economic growth since that time.  It has all come from ever-increasing amounts of leverage (debt) that, when subtracted back out of the change in GDP, show that on an actual output basis the economy of the United States has not printed a positive number the entire time.

Is Denninger suggesting that out of control debt spending and excessive leverage in the system could be the possible cause of the stock market and corporate profit growth we’ve seen in not just the last couple of years, but since the early 1990’s? It seems this is the case, and he is using a long lost science called mathematics to make his case.

The math doesn’t lie, folks.

While President Obama diverted the masses of millions watching his speech towards the idea that a rising stock market and corporate profits mean the end of the worst recession in our country’s history, the reality of what’s happening will remain a mystery for most until it’s too late.

The stock market and corporate profits are but a drop in an Olympic size swimming pool. The recessionary bust we experienced was caused by excessive leverage, money printing and speculation, and in our view, was just a canary in the coal mine for the main event.

What we are looking at is a sovereign debt crisis. And, regardless of what our stock markets do, nothing will change the fact that our government has over leveraged itself, borrowing some 40 cents for every dollar it spends. When those chickens come home to roost – and it won’t be long now – no one will be worried about their stock portfolios or how much money GM made last quarter. They’ll be more concerned with how to put food on the table.

President Obama has told us, on numerous occasions, that the recession is behind us and a greater depression was averted.

Can you believe him?

Would you have believed Herbert Hoover when he said in 1930 before a U.S. Chamber of Commerce Meeting:

“While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover.”

There are many instances of President Hoover attempting to assure the people that everything was going to be alright and that growth and prosperity would return. Most of the people then, like today, had no idea they were already in the midst of depression and the worst was yet to come.

Some choice quotes via The Daily Crux, that should, if nothing else, ring the alarm that perhaps something isn’t quite right:

Obama’s State of the Union:

“Thanks to the tax cuts we passed, Americans’ paychecks are a little bigger today. Every business can write off the full cost of the new investments they make this year. These steps, taken by Democrats and Republicans, will grow the economy and add to the more than one million private sector jobs created last year.”

Herbert Hoover, October 22, 1932, campaign speech in Detroit:

“It can be demonstrated that the tide has turned and that the gigantic forces of depression are today in retreat. Our measures and policies have demonstrated their effectiveness. They have preserved the American people from certain chaos. They have preserved a final fortress of stability in the world.”

Obama’s State of the Union:

“But now that the worst of the recession is over…”

Herbert Hoover, June 1930, to a delegation requesting a public works project:

“Gentlemen, you have come sixty days too late. The depression is over.”

Obama’s State of the Union:

“The steps we’ve taken over the last two years may have broken the back of this recession…”

Herbert Hoover, State of the Union, December 6, 1932:

“The unprecedented emergency measures enacted and policies adopted undoubtedly saved the country from economic disaster…”

Incidentally, 1932 was an election year that led to FDR’s Presidency. Hoover, who was trying to save his administration, chose to placate the masses with illusions rather than to tell them the truth.

It may not be repeating exactly as before, but it sure does seem to rhyme.