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The Financial Media Was Wrong on Greece… and They're Wrong on the Next Crisis Too
Let’s talk about the Greek issue.
More than enough ink has been spilled on this from the mainstream financial media. However, I do think we there are a few key takeaways we should note from this whole debacle.
1) Elements of the financial media is either unbelievably lazy or completely complicit in helping to maintain the illusion of success for the Centralized powers (large governments and Central Banks).
2) The political class and Central Banks are unable to resolve debt issues in any meaningful way.
3) The real “bottom” or level of “price discovery” is far lower than anyone expects due to the fact that the run up to 2008 was so rife with accounting gimmicks and fraud.
Regarding #1, it is worth noting that the Greek Crisis actually first started in 2009 when the country’s credit ratings were cut by all three credit rating agencies: Moody’s, Standard and Poor’s, and Fitch.
The first actual request for a Greek bailout came in April 2010, over five years ago. Since that time, Greece has received two formal bailouts, its credit ratings have been dropped to “junk,” and its GDP has collapsed over 20%: an amount roughly equal to the economic collapse experienced by Argentina during its 2000-2001 crisis.
Throughout this entire process, the financial media media has run thousands of articles proclaiming the Greece crisis was “over” or “fixed.”
Below is a spate of headlines from this period.
ECB chief Mario Draghi says worst of euro crisis over (March 2012)
European leaders say worst of debt crisis is over (December 2012)
European leaders hail breakthrough in debt crisis (January 2013)
Eurozone exceeds hopes in recovery (February 2014)
Euro-zone crisis over; at least the financial crisis is (April 2014)
Greece Exits Recession After Crisis That Put Euro at Risk (November 2014)
Worst of Euro Crisis Ended in Poll With 57% Optimistic (January 2014)
These are the more blatant headlines… however the entire five years period was filled with claims that the debt issues were contained if not easily fixable.
Usually the article featured an anonymous “official,” but as the below article shows, even Finance Ministers were willing to go “on the record” proclaiming that the EU had weathered the worst of the debt crisis storm:
The worst is over in the euro crisis, German Finance Minister Wolfgang Schäuble said on Friday, praising Greece and expressing confidence that France would master its problems.
Asked if the euro crisis would continue to worsen in 2013, Schäuble told German daily Bild: "I think we have the worst behind us. Countries like Greece have recognized that they can only overcome the crisis with hard reforms. I hope the progress will continue. We are moving ahead step by step."
The above article is from December 2012.
Reviewing the above headlines (or thousands of others like them)… one is reminded of what current EU President Jean-Claude Juncker once stated, “what it becomes serious, you have to lie.”
Unfortunately for investors who use the news as a source of information to guide their investment decisions, the financial media was an all-too willing accomplice for the Central Banks and statist types. Which returns us to point #1 in our list above:
1) Elements of the financial media are either unbelievably lazy or completely complicit in helping to maintain the illusion of success for the Centralized powers (large governments and Central Banks).
This has caused no shortage of harm to investors betting on Greece’s recovery. Greece’s stock market lost 85% during the first round of its financial crisis. The recovery rally peaked in 2014 right before it became clear that the first bailout hadn’t solved much of anything. Since that time, the Athens stock exchange has fallen another 52% with no indication of a bottom.
What does this tell us?
That the debt issues which lead to the 2008 Crisis as well as the 2012 EU Crisis have not been resolved. All the Central Banks have done is pave the way for even bigger crisis… a crisis that will involve entire countries, not just banks, going bankrupt.
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Schäuble is falling back to his old schizophrenic talk.
The SYSTEM makes enormous sums of money ... when people (and entire countries) are in debt. The Western banking sytem does not exist to do anyone a favor. It exists to get people hooked on debt, which it normally does by offering low-interest credit as a "starter loan". Later, when people cannot pay, the interest rate suddenly gets jacked up to enormous levels. NOT ONLY do they do this to individual consumers, they do it to ENTIRE NATIONS. And Greece is only one example.
DO YOU THINK that this system will ever admit that it is wrong? They have no "skin in the game" when it comes to the real economy. If people go bankrupt, then the banks write it off as "bad credit risk". They try to pass off the losses with complex financial maneuvers. But in the end, someone bites the bullet for the loss, and the bnks continue to make money from the other people who can pay. THAT'S IT!!
The System doesn't care about the real economy. They DO NOT CARE that 40% of Americans are no longer employed in the system at all. Just give more credit cards to the people who are still working!! They want their interest payments. End of story.
The last time I checked, "media" was a plural noun.
what's the singular for media, midi?
Yesterday there were only 15 copies of the free report left. So 10 recipients must have returned them.
the media is complicit in covering for Phoenix, the number was seasonally adjusted.
so you believe their data?
enuff already...
why not just say copy available upon request?
You would have to pay me to read their crap.
Everything is shiny forever because the alternative sucks too much.....