As a blanket statement, i'd tend to disagree as 1) there are
some very nice sounding Squires out there and 2) "Encore" guitars are usually even cheaper than the cheapest Squire.
However, the guitar may be the issue, in the same way that it may be the amp. As mentioned earlier, if it doesn't sound good in the room to start with then it makes the rest of the recording process difficult. if you're happy with the sound in the room then it's easier to play around with different mic positions/amp positions (i.e getting it off the floor, angling it back, physically moving the amp into a different part of the room etc). Also, getting the amp off the floor a bit would mean you could position the mic much easier as it looks like the boom arm is currently extended to it's fullest.
I think the trap some people fall in to is, as Armistice said, that a guitar sound that works in a mix isn't always the same as the amp sound in the room. I've been working with a guy who's always played acoustic guitar as a singer/
songwriter and is now playing electric in a band as the third guitarist. Every time he sets his amp up he turns the bass way up and the treble down a bit so that, to his hears, it sounds good
on it's own in the room. However, when the rest of the band join in, everyone really struggles to hear what he's playing. After some polite words from myself and one of
the other guitarist in the band, he's turned the bass down and the middle and treble up a bit, and suddenly his parts are plenty audible in the practice room (and he's stopped fighting the need just to turn his amp up)