I wrote last week (A Perfect Storm) that despite all of the positive economic mainstream media articles in recent weeks – underlying economic fundamentals continue to deteriorate. As I read the Wall Street Journal this morning (August 31, 2009) – I noticed a couple of articles that speak to a few problems that could lead to some serious economic problems in the near future – problems that I (and others that are studying economic data themselves) have mentioned many times over the past few months.
This is unusual for mainstream media – we normally see articles speak to negatives – only after a negative economic event has occurred. We see very little economic analysis within mainstream media that addresses our true economic condition and then reports the potential for negative impacts to our economy, earnings, markets, etc. In recent months, we’ve been fed a steady diet of positive news (based on bad economic data and horrible analysis) with very little attention given to the severe problems lurking within real economic data.
It has all been positive spin.
So – when I see a few mainstream media articles that speak to a few of the economic issues I have been following closely – I take notice.
Here are a few articles from today from the Wall St. Journal:
Raft of Deals for Failed Banks Puts U.S. on Hook for Billions
• To encourage banks to pick through the wreckage of their collapsed competitors, the Federal Deposit Insurance Corp. has agreed to assume most of the risk on $80 billion in loans and other assets. The agency expects it will eventually have to cover $14 billion in future losses on deals cut so far. The initiative amounts to a subsidy for dozens of hand-picked banks.
Commercial Real Estate Lurks as Next Potential Mortgage Crisis
• Federal Reserve and Treasury officials are scrambling to prevent the commercial-real-estate sector from delivering a roundhouse punch to the U.S. economy just as it struggles to get up off the mat.
Can Rally Run Without Revenue?
• As stock investors turn their focus to earnings prospects for the second half and 2010, they are zeroing in on one of the market's biggest challenges: lackluster corporate revenue. The market barreled ahead this summer and is hovering near its high for the year, fueled in large part by stronger than-expected second-quarter earnings. But a significant driver of the good news was cost cutting. Many companies posted disappointing sales.
If you’ve read my previous posts – then you know that all three of these issues are going to have a severe negative impact on economic activity (and markets) in the near future. If we continue to see more articles like these – get ready.
Knowing how the global elite operate – it’s quite possible these types of articles are pre-empting some significant negative economic ‘events’. Since September and October have historically seen significant market volatility – I believe we’re in for a very rough ride.