By DoctoRx of the Daily Capitalist, on September 5th, 2011
Stock markets fell very hard in Europe today, but if even Bloomberg.com doesn’t mention it, does that mean it did not happen or does not matter?
The Stoxx 50 index was down over 5%, as was the German DAX. Yet the “Top News” headlines on Bloomberg as I write this are, in order:
Obama Addresses Union Labor Day Rally;
Darwin Effect Cuts Photo-Voltaic Panel Prices;
Articles on Harvard v Cambridge and how the strong NZ dollar is straining the finances of attendees at a world rugby tournament there;
An op-ed specifically addressed to Rick Perry expressing the POV that Social Security is not a Ponzi scheme;
European stocks drop on Merkel Election Loss
(Later, there is a headline announcing the Italian bank stocks plunged. No mention that the Italian stock market indices also fell about 5%.)
This neglect of a gigantic fall in the price of corporate Europe’s assets and earnings power is a bit scary. If there is any wonder as to why the alternative blogosphere is gaining readers by leaps and bounds, today’s Bloomberg shows why. The mass media in the U. S. decidedly accentuates the positive.
We at The Daily Capitalist prefer to instead accentuate the facts, and then add interpretation to them.
As we see it, the question of whether the U. S. has entered a new recession is the wrong question. We believe that the one that officially began in 2007 never ended. Inventory shifts, one-off government programs, random fluctuations of economic activity, mismeasurement of the inflation adjustment to measured GDP, etc., all came into play.
I would add that increasingly this year has the smell of 1974, 1978-9, 1998, and even perhaps 2008. Of course a great deal of what is now happening relates back to the governmental and Fed decisions of 2008, setting a bipartisan course followed by the Obama administration in 2009. To now see the government, via the FHFA, suing the same banks it and the Fed supported so vigorously in 2008 and thereafter looks discordant. Couldn’t there have been less support to reach the same result more rapidly and more smoothly?
In any case, the JPMorgan Chase analyst’s recent call for gold to hit $2500/ounce by year end - is, very unfortunately and quite amazingly, looking more plausible. As is a 1.5% ten year bond yield.