Michael J. Golde's  Instablog

For purposes of this article, I am dividing the American economy into its domestic and international components. The domestic portion includes the sales and revenues generated by sales to businesses or consumers geographically located in the U.S. as opposed to that portion generated outside of the U.S.

By way of example, in 2009, Apple Inc. generated 46% of its revenues from international sales and 43% in FY 2008 and 41% in FY 2007. While this is a testament to Apple's success and ability to expand it markets, it also reveals that American multinational companies are becoming less dependent on the domestic sales to generate its revenues and profits. Also, as more business is generated internationally, a disproportionate number of the new jobs created by Apple's success are outside of this country.

There are a variety of factors benefitting Apple and other American companies doing business outside of the U.S., such as a weak dollar and cheaper manufacturing and overall labor costs, including health insurance costs. But, regardless of the reasons why, there are very few indicators that this globalization trend is going to benefit American workers to the same or even to a reasonably equivalent level as it does developing economies such as the BRIC nations.

As a result, it is perfectly explicable why the U.S. GDP figures are on the rise as and there is not a corresponding benefit to job growth here. But instead of enacting more business-friendly policies in the U.S. such as reducing the corporate tax rate and controlling the mounting budget deficits by restraining explosive government spending, to strengthen the value of the U.S. dollar, just the opposite is occurring.

Such anti-business policies do not stimulate job growth and nor does a stimulus package that is focused more on buttressing bloated government spending at the State and municipal levels as opposed to investments in overdue infrastructure improvements where jobs can't be outsourced. But the Obama Administration is a master at managing economic events to distort short-term economic outcomes having nothing to due with the real overall health of the economy. That should could as no surprise since Wall Street and public companies have been managing earning expectations for years. Who cares about the long-term future so long as a company beats revenue and earnings expectations if future business prospects are injured simultaneously (save the next quarter's guidance).

This is the kind of mentality that led us to Cash for Clunkers. Provide an artificial short-term stimulus of tax credits to "juice" auto sales even though the vast majority of those sales are merely being moved ahead instead of creating additional macro demand. In the process, as stated, politicians trade short-term benefits for sustained growth over the long-term. This, in turn, stems from a political gamble that if we can just kick the can down the road a little bit longer every, including job creation will get better over time. Problem is there is absolutely no current economic evidence to lead to this conclusion.

A similar phenomenon is occurring in the real estate market, both residential and commercial. After some accounting legerdemain and FASB complicity (to be sure, under Congressional pressure), banks that were on the verge of insolvency due to the declining values of Collateral Debt Obligations (CDOs) backed by real estate all of a sudden don't have to a reflect it at its true salable value. As a consequence, financial institutions (CDO obligors) are better off keeping undervalued collateral on its books at "make-believe" values as opposed to clearing the real estate at real values through the normal free-market capitalism liquidation process such as foreclosure to arrive at real price discovery.

To create bogus demand in the real estate market, various homebuyer credits have been enacted to create the impression of a back-to-life real estate market when a substantial portion of the transactions are "short-sales" or some other form of deed transfer where loss recognition is prolonged as long as possible.

Hence, a rising GDP base on increasing foreign sales, a weak dollar and government interventionist policies don't lead to economy recovery or to private-sector job creation. Yes, I know that "unemployment" is a lagging indicator -- as if that meaningless qualifier by jobs creation apologists is a sufficient explanation of for the lack of new jobs.

Position: AAPL, long; DIA and SPY, no position