Charles Payne
Recently 60 Minutes ran a story about those giant empty cities in China which shocked a lot of people, but was about two years old for those that follow China closely. The odd thing about those cities is they aren't used as propaganda. You never see them on posters or news clips as signs of increasing prosperity. I guess they were part of stimulus spending, but still not sure why it sits idle. One thing that is hard to dispute is wealth is bubbling up in China, and there are people that could live in those empty cities.

The story recalls the legend of Grigory Potemkin, the Governor-General of New Russia during the reign of Catherine the Great.

Catherine was born a princess in Germany and eventually married into the Romanov Dynasty wedding Duke Peter of Holstein, the grandson of Peter the Great. Once installed as ruler, Peter III made lots of enemies, including the military, when he put an end to the war with Prussia. With help from a powerful lover, and backed by military, Catherine engineered the removal of Peter and seized control.

(Shortly thereafter, Peter had an unfortunate run-in with the Grim Reaper who really was Alexi Orlov, the brother of Catherine's lover. It should be noted that in his short reign as Emperor of Russia, Peter was thought to be unpatriotic and pro-Prussian, wrote 220 new laws, established technical schools for middle class and lower class, established the first bank in Russia and engaged in protectionism, halting imports of sugar and other materials. In a different time and place, this guy would have inspired a Tea Party-type of revolt - his resume does look familiar.)

Although there were numerous challenges and several coup attempts during the reign of Catherine the Great, she stood out for several reasons including:

> Westernization
> Modernization
> Expanding borders
> Promoting education and Enlightenment (to elite)
> Increased control of landed gentry over serfs
> Sexual appetite (but that thing is said to be just a myth)

In 1783 Russia annexed Crimea and Grigory Potemkin, another former lover of Catherine the Great, was put in charge of development. He enjoyed modest success building the area along with southern Ukraine. He established a southern coast for Russia on the Black Sea with several towns, an arsenal and war fleet of no less than 40 ships. Stories of rapid progress saw massive immigration to the area with settlers bringing energy, skills and enterprise. Farmers worked the land to create impressive agriculture. Potemkin raced against a clock preparing for the visit of his former lover and demanding ruler.

The Visit

Potemkin was awarded 400-1,000 serfs the day Peter III was killed and must have expected an amazing windfall if Catherine the Great was impressed with his work. From her point of view, it must have been spectacular.

Peasants lined the road with smiling faces
200 sharpshooting Amazons put on amazing displays
20,000 rockets
55,000 burning pots spelled out the empress' initials
Herds of cows were in each village

The thing is, the same peasants and cows were shifted along the route and much of the wonderment masked a region that while improving, was still vastly improvised. While much of the story is in dispute among scholars, especially the more outlandish aspects (like paintings of rows of buildings and homes), Potemkin Villages live on to describe false facades. In America today, cynicism lives and virtually everything is seen by someone or some group as a Potemkin Village.

American Facade

These days everyone is a skeptic as only the bottom 20% of the economy is happier and mostly as a function of promises of increased incomes and benefits but not jobs. Go to our website and let me know the greatest example of an American Potemkin Village:

I get and share the skepticism, but history serves as my guide, and I think it's too early to fold your tent and head for the hills. It's a drastic mistake to think America is too far gone or couldn't endure another crisis. Yes, I'm the person that always says we can jump off a one-story building now or wait for this to become a ten story mountain of debt. At some point, we have to jump, but some people think we are on a 100-story pile of debt and the death of America is inevitable. Keep the flag flying high and don't bury us yet.

But, there are problems, and the best case scenario is we survive the next four years plodding along at a fraction of our potential. Yes, America's economy is the greatest threat to the stock market rally and would-be housing recovery. Of course, I'm bracing for the war on success to take a more psychical tone. I learned yesterday of the army of "translators" that will be hired at salaries of up to $48 an hour to help people that don't understand English (even native speakers) with their choices under the new health care law... and to register voters.

California will need 21,000 of these folks, mostly plucked from organizations like ACORN and Planned Parenthood. Coupled with the 55,000 new IRS agents to enforce the law, it's going to be very intimidating for anyone that thinks out of the box or thinks fiscal liberty is a birthright. Still, we are a nation of fighters, and even those intoxicated on the brew of free stuff and sticking it to the rich (and not-so-rich) can sober up before we are forced to take a deadly leap.

I will say this, I've never seen a bubble peak with this much anger and cynicism. People aren't buying housing in droves, daily volume in the stock market is anemic and money is still camped out in the safety of bonds.

There is no Main Street facade of enthusiasm.

No Illusions

The jobs report was a disaster. Maybe the New York Times will find solace in the unemployment rate dropping to 7.6% but even the most ardent Obama cheerleaders have to be scratching their heads and, hopefully, searching their souls.

Most important narrative from this report is how much more attractive it is to sit out this "recovery" as all the benefits add up to more money, less aggravation than working part time or being employed for incomes less than $40,000

* 496,000 out of labor force
* 63.3% participation rate, the lowest since May 1979 (also known as "the good old days")
* 350,000 stopped working part time, not for full time work but back to the sofa
* Payroll (tax hike added to pain) = retail jobs -24,100

There is a real argument over how compassionate policies are in that they entice people not to grind it out, to be tough, to hit the bricks in the face of tall obstacles. In the meantime, participation is at the lowest level since May 1979, otherwise known as "The Good Old Days."

For those that say the market is up only because of the Fed we should see the Dow rally 200 points as this would mean even more printing. The fact is monetary policy is the most dangerous near-term problem for the stock market and economy. It's failed from day-one and continues to fail today. In the meantime, efforts to blame the "sequester" is the worst ploy out there—its completely disingenuous. This is a "Dropout Nation" … fueled by lack of opportunities and redesign of America into one that rewards a lack of effort.

Charles Payne

Charles V. Payne is a regular contributor to the Fox Business and Fox News Networks. He is also the Chief Executive Officer and Principle Analyst of Wall Street Strategies, Inc. (WSSI), founded in 1991 which provides subscription analytical services to both individual and institutional investors.