Brown Shoots -- Updated

There's more evidence today from Bloomberg News that the "economic recovery" is a hoax.

After slowly struggling upward for the last couple of months, the prices of both crude oil and gasoline collapsed today and started back down on news that gas consumption is, month-over-month, continuing at a rate six percent lower than a year ago. As a people, we're simply driving significantly less.

“The demand numbers are just too weak to ignore,” said Rick Mueller, a director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “The big gasoline build suggests that refiners are chasing a diminishing target.”

Crude oil for July delivery fell $1.82, or 2.6 percent, to $69.55 a barrel at 2:50 p.m. on the New York Mercantile Exchange, the lowest settlement since June 8. It was the biggest decline since June 3. Futures, which are up 56 percent this year, dropped 3.5 percent this week.

Gasoline for July delivery fell 10.51 cents, or 5.2 percent, to end the session at $1.9244 a gallon in New York, the lowest settlement since June 3 and the biggest decline since April 20. Futures fell 5.8 percent this week, the largest drop since February.

The fact is, there is no recovery, and there won't be one until there are more people getting jobs than losing them, and more people buying houses to live in than getting foreclosed out of them. This is true no matter what the stock market is doing: as long as unemployment continues to rise and the numbers of properties getting paid off in a regular fashion continues to decline, our troubles will continue also.

It's brown shoots, not green shoots.

Of course, as I've said before, lower levels of economic activity and "negative growth" are not entirely a bad thing. I wonder how many people are working in the underground economy now.

UPDATE: Another quote from the Bloomberg article linked above: “The slowing of the economic contraction is not a sign that energy demand is about to grow,” said Michael Fitzpatrick, a vice president for energy at MF Global Ltd. in New York. “The prices right now don’t reflect the fundamentals of the market.”

Fitzpatrick contradicts what people like Bernanke and Larry Kudlow have been trying to tell us -- that because things are getting worse more slowly, that means things are getting better.

But things can't be getting better when they're still getting worse. It's like that scene in "Through the Looking Glass" where the Red Queen says, "You call that a hill? I've seen hills compared with which that would be called a valley." Then Alice politely points out to her that a hill cannot be a valley, another way of saying the queen is just playing games with words, not describing reality.

The "fundamentals of the market" Mr. Fitzgerald refers to is the fact that things are still getting worse.

Crude oil is set to drop another 10 bucks in July and August -- the height of the "happy motoring" season.