Wells Fargo fools stock market; last week it had profits, this week it needs $50 billion; only more jobs can deliver a lasting economic recovery

Here's the problem with all the giddy talk about an economic recovery: it's based on financial information coming from the same people who gave us the mortgage loan mess built on fraud and deceit.

Last week, the stock market's rally was fueled by first quarter profits for Wells Fargo. Yet this week, Wells Fargo says it will need to borrow $50 billion to pay back the federal government because the underlying trend in the economy still is bad.

And why is it bad? BECAUSE PEOPLE STILL ARE LOSING THEIR JOBS!

The Wall Street Journal reports that the health care industry is now cutting employees, a trend that will really hurt Nashville:

But the pace of job growth in health services has slowed sharply this year. The sector added an average of 17,000 jobs per month in the first three months of the year, less than half last year's pace. Health care usually weathers downturns better than many other industries because consumers tend to cut spending on cars or clothes before they forgo trips to the emergency room or pharmacy. But this recession is the deepest in a generation.

"To the extent that health care might have been recession-proof, it is no longer," said Paul Levy, chief executive of Beth Israel Deaconess Medical Center in Boston, a teaching hospital for Harvard University. The hospital last month announced 140 job cuts, salary freezes, and reductions in vacation allowances and retirement-fund contributions to make up a $20 million budget shortfall.

Ultimately, there can be no economic recovery in America without a big part of the 6 million-plus jobs lost being regained. Why? Consumer spending accounts for two-thirds of this nation's GDP; financials account for 14 percent.

And Obama's stimulus plan only delivers a quarter of its impact in the first year.

Don't be fooled. There is a long way to go before we can really talk about recovery. Keeping paying off your bills and cutting household expenses. And save money for a most uncertain economic future.

Bloomberg News reports on Well Fargo's continuing problems:

April 13 (Bloomberg) -- Wells Fargo & Co., the second- biggest U.S. home lender, may need $50 billion to pay back the federal government and cover loan losses as the economic slump deepens, according to KBW Inc.’s Frederick Cannon.

KBW expects $120 billion of “stress” losses at Wells Fargo, assuming the recession continues through the first quarter of 2010 and unemployment reaches 12 percent, Cannon wrote today in a report. The San Francisco-based bank may need to raise $25 billion on top of the $25 billion it owes the U.S. Treasury for the industry bailout plan, he wrote.

First-quarter net income rose 50 percent to about $3 billion, Wells Fargo said last week in announcing preliminary results that topped the most optimistic Wall Street estimates and sparked a 32 percent jump in the stock. The bank attributed the profit to a surge in mortgage originations and revenue from Wachovia Corp., acquired in December. Full results are scheduled for April 22.

“Details were scarce and we believe that much of the positive news in the preliminary results had to do with merger accounting, revised accounting standards and mortgage default moratoriums, rather than underlying trends,” wrote Cannon, who downgraded the shares to “underperform” from “market perform.” “We expect earnings and capital to be under pressure due to continued economic weakness.”