Sunday, June 3, 2012

Anecdotal Headlines Redux

One of the advantages of writing a blog is to be able to understand what I was thinking (or not thinking) at a certain point in time.  It can be satisfying, or amusing, or downright embarrassing looking back. We are all adrift in an ocean of information, the seas fomenting more than ever, that affecting our perception of the horizon, when we can see it at all.  Sometimes, the headlines of the Wall Street Journal seem to cry out a general national Zeitgeist and this weekend's edition was such a moment.  I've noted this phenomenon before, first on Wednesday, December 10, 2008, Anecdotal Headline Annotations, which I prefaced with a sentence that could exactly apply to the most recent edition, three and a half years later: If I was handed a copy of today’s Wall Street Journal only a couple of years ago, I would have thought the headlines were a forecast of an ethical and economic Armageddon. How otherwise does one interpret the following captions, from just one day’s newspaper?  
Then, a little more than two years ago, Friday, April 9, 2010, I posted another such moment, Anecdotal Headlines, writing at the time: ...while the Dow basks in the glow of massive liquidity injections in a low interest rate environment, approaching 11,000 as I write this, and investment bankers are rewarding themselves with record bonuses, the economy swims on against the tide of high unemployment (much higher than reported), kicking the state/municipal finance crisis down the road, and rising foreclosures

Usually, extreme headlines happen at inflection points.  Certainly the Dec. 2008 posting was one as far as the stock market is concerned (the Dow bottoming three months later), but the April 2010 posting was during the market's ascent. However, the so called "market" seems to be disconnected from the economy and jobs and whatever recovery there has been of Main Street mostly has been induced by the Federal Reserve and other government stimuli.  Some like to finger point, believing that recent deficit spending is the cause of our economic malaise.  I don't like deficit spending any more than they, but it is overly simplistic to think that if we ran our government like a responsible family, sitting around the ole' kitchen table, budgeting our expenses, tightening our belts, all will be OK.  Running a country is not like running a household, and without the stimulus, who knows where we would be today. 

We are going to hear a lot about the economy, everything being Obama's fault (note now that gas prices have fallen in the last few weeks we no longer hear about his being responsible for those) but another benefit (there are not many) of writing this blog is some of the documentation it provides. The Monday, September 22, 2008 entry, This Fundamental is Whining  is worth revisiting in this regard. Senator Phil Gramm, who had then become a lead economic adviser for McCain’s presidential run, called us (the American public) "a bunch of whiners," saying the only economic problem we have is a "mental recession."  Well we now know that this little "mental recession" was real, could have been a depression (who knows, it still might become one), and it was set in motion long before Obama took office.  Nonetheless, at the time McCain was already blaming Obama for the economy, saying “We've heard a lot of words from Senator Obama over the course of this campaign…But maybe just this once he could spare us the lectures, and admit to his own poor judgment in contributing to these problems. The crisis on Wall Street started in the Washington culture of lobbying and influence peddling, and he was right square in the middle of it."  Obama was to blame even before he became president!  And today, we not only have the residual effects of our own economic problems baked into the cake, there is also the exogenous factor of Europe's slow-motion economic collapse -- something we have no direct ability to control, even if we could agree on anything.  Then, there is the sun-setting of the Bush tax cuts, a fiscal cliff that desperately needs our malfunctioning government to agree on something. What are the chances?

Unfortunately, presidential elections do focus on how people feel at the time, and while we were feeling lousy in 2008 and "hope" was a mantra we eagerly seized, now we will be asked to "hope" some more, or rely on the magic wand of a private equity bailout specialist, Mitt Romney.  It is a nice fantasy (the magic wand), and as the Federal Reserve may be running out of its own magic bullets, the economy and the leading economic indicators will dictate the election, no matter how much tinder the Super Pacs throw on the campaign fires. 

The headlines of today are not much different in tone than those that preceded them, two years ago, and almost four years ago. Two of my favorites from 2010 are: Greek Bond Crisis Spreads and  Fed Chiefs Hint at Low Rates Possibly Into 2011.  Where is Yogi Berra when you need him? "It's deja vu all over again."  But he might have got it wrong with,  "The future ain't what it used to be."

So, how are we to divine our economic and moral future from today's headlines (presented in the order as they appear, just from the first section of the Wall Street Journal June 2/3 2012)?.....

Grim Job Report Sinks Markets
Feeble hiring by U.S. employers in May roiled markets and dimmed the already-cloudy outlook for an economy that appears to be following Europe and Asia into a slowdown

As Costs Soar, Taxpayers Target Pensions of Cops and Firefighters

Edwards Jury Saw Guilt, but Lack of Proof

State Takes Fresh Crack at Mortgages
Fannie Mae and Freddie Mac will participate in a Nevada program to cut loan balances for certain homeowners who are current on their mortgages but owe more than their houses are worth in what could be a model for other hard-hit states.

Big Scandal for Small Town
Sunland Park, N.M. sees Mayor-elect indicted amid host of lurid allegations.

Sen. Kirk Of Illinois Pushed Coin Bills
Sen. Mark Kirk of Illinois pushed for legislation authorizing a collectible coin that generated $2.5 million for an organization that had hired a firm that employed his former girlfriend to lobby for the bill, according to people involved in the matter.

Campaign's Focus Turns to Grim Data
Friday's weaker-than-expected jobs report quickly became the central focus of the presidential campaign, with President Barack Obama seeking to mitigate the political fallout and presumptive Republican nominee Mitt Romney trying to seize on the disappointing numbers.

Fed is Sure to Step Up Debate on More Stimulus
Friday's dismal jobs report is sure to sharpen a debate at the Federal Reserve about whether to take new actions to spur economic growth, but it likely doesn't settle it.

Euro-Zone Reports Deepen Gloom
Block sets record in number of Jobless as manufacturing activity falls; figures highlight widening North-South divide.

Asia Weakness Heightens Fears of Contagion
Manufacturing activity in China and across a wide swath of Asia slowed in May, heightening fears that the turmoil in Western economies is dragging down one of the few remaining engines of global growth.

Brazil Loses Steam As World Slows
Brazil grew at its slowest pace in more than two years during the first quarter as weak industrial production and a weakening global picture undermined Latin America's largest economy.

Cyprus Is Close to a Request for Bailout
Cyprus looks increasingly set to become the fourth euro-zone country to seek financial aid under Europe's temporary bailout fund, as early as this month, as it scrambles to protect its banking system from Greece's widening financial crisis that is threatening to engulf its tiny island neighbor.

Japan Gives Warning on Yen
The Japanese government went on high alert against the newly rising yen Friday, trying to scare off global investors with multiple threats of intervention in currency markets, but stopping short of direct action to drive the yen down.