-- Posted Monday, 2 November 2009 | Digg This Article
| | Source: GoldSeek.com
Rick’s Picks
Monday, November 2, 2009
“Phenomenally accurate forecasts”
Now that’s more like it. After a night’s sleep, Wall Street traders and speculators evidently decided the 3.5 percent GDP growth figure released by The Guvvamint on Thursday wasn’t such great news after all. On Friday the Dow gave back all 200 points of the previous day’s gains, plus 50 more. We’d have to concede that the news media played a positive role in making this a “teaching moment” for the poor saps who actually believe the economy is recovering. Instead of the usual cheerleading, network news anchors emphasized that virtually all of the dubious growth had come from Cash for Clunkers and a massive infusion of fiscal spending. This most surely played a role in Friday’s selloff.
Actually, the networks have been doing a better job lately at describing economic reality than the Wall Street Journal, whose coverage has grown increasingly schizophrenic. While generally downplaying negative news, the Journal has headlined any ostensibly upbeat story that contained even the faintest glimmer of light at the end of the tunnel. Thus, when Caterpillar reported a 53% fall in profits for the third quarter, the prominently displayed story emphasized not only that that number beat estimates, which obviously had been low-balled, but that the company “believes” sales have bottomed.
Such stories have received undue emphasis in the Journal, especially on the front page, even as far more important economic news has gotten tucked away on inside pages. You’d have to get your information from the newsletter world, from blogs, and from local newspapers, to understand, for one, how dire the situation is for state and local governments. Their budgets are imploding, creating a severe drag on the economy that will be felt for years. Is consumer spending supposed to overcome this?
Consumption Above All
The very question raises another issue about mainstream coverage of the recession-cum-Depression: How can a revival of consumer spending be the key to any recovery? The very word “consume” – as opposed to “invest” – should raise a yellow flag. The belief that consumption is the key to a strong economy is so deeply ingrained that few Americans even question that it has become the basis for all economic decisions made by the federal government. But popular delusion is at a tidal crest when it views pumping up home prices and retail sales as government’s most important domestic role. We might have expected economists to know better, and to help lead us out of the woods, but for the fact that credit-based consumption has become their credo as well. This belief was handed down from on high by Alan Greenspan, the man who single-handedly brought the dismal science to the point of utter disgrace.
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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not b construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. >From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Monday, 2 November 2009 | Digg This Article | Source: GoldSeek.com
