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Which Is It, Mr. Murdoch: Recession, or Recovery?

By Rick Ackerman Posted on December 31, 2010, 12:01 am EST Last Updated December 31, 2010, 8:03 am EST

Two stories that were played next to each other recently on the front page of The Wall Street Journal serve to illustrate the news media’s schizophrenic reportage on the economy.  On the one hand, there was this chirpy report on employment: “Job Offers Rising as Economy Warms Up”.  Never mind that some estimates put current joblessness at nearly 20%  – more than twice as high as the official figure – or that the statistics behind the headline were squishier than a mermaid’s bath sponge. But there was also this story, providing a very different picture of a U.S. economy that is likely to be burdened for years by the overly generous pension benefits promised to city employees across the nation: “Pensions Push Taxes Higher”. The bland headline dosen’t begin to convey the seriousness of the problem.  Some acute examples from Pennsylvania, New York and Illinois were cited in the article.  In Upper Moreland, PA, for instance, annual pension contributions have risen from around $100,000 in 2005 to an estimated $1.1 million in 2011. Spread over a population of just 26,000, that’s quite a hit on taxpayers.  Like countless other municipalities, Upper Moreland had assumed that the juicy investment returns of just five years ago would continue indefinitely, lulling the town into underfunding pensions at a time when they should have been stepping up contributions.

Who says the housing market has to recover?

If the Journal and other national newspapers seem not to be making an honest effort to put good news and bad news in proper perspective, it is mainly for two reasons. The first is that the need to sell advertising ultimately trumps the need to report the news honestly. We have reams of evidence to support this assertion, having come from a background in journalism ourselves.  In the 1990-91 recession, a reporter friend who had won a Pulitzer for his pit-bull aggressiveness in digging up dirt was removed from his city hall beat and relocated to exurbia after some big advertisers and the mayor leaned on his publisher. The paper has since continued to soften its coverage in other ways, devoting less ink to scandal and more to style-section puffery.  Unfortunately, the same could be said of nearly every other big-city newspaper in America. If you’ve got a juicy scandal to report, better take it to Drudge, since even mega-billionaire media barons like Rupert Murdoch, owner of the Wall Street Journal, are not about to bite the hand that feeds them.

Another Creepy Rally

The other reason newspapers unthinkingly run Great Recession  and green-shoots-of-recovery stories side-by-side is that they are too timid and lazy to get the story right.  The housing depression, for instance. The conventional narrative holds that weak real estate markets eventually recover.  While that’s true as far as it goes, real estate prices have been so weak for so long that it demands an unconventional explanation.  Fine. Here it is: The Great Recession is not a mere recession, but rather a prelude to full-blown depression. That point of view may be dog-bites-man fare in the newsletter world, but just try selling it to your news editor, much less to his boss’s boss’s boss, Mr. Murdoch.  In the meantime, forecasters like our colleague Bob Bronson, of Bronson Capital Management, have been getting their housing-market forecasts precisely right since well before the crash.  As such, Bob could not have been surprised earlier in the week when the mainstream news media reported that the housing market had relapsed.  For Bronson and quite a few of us in the not-yet-ready-for-prime-time world who foresaw the initial collapse in real estate, there is good reason to think that things will get much worse before they get better.  CNBC, the New York Times and their ilk are quite clearly committed to telling readers otherwise, even if the evidence rarely amounts to more than an uptick in consumer confidence or yet another gratuitous, creepy rally on Wall Street.

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  • John Jay January 2, 2011, 11:12 pm

    The Republicans are going to start “Investigations” into the Obama administration.
    All our problems are over!
    Time to raise the debt ceiling again.
    Time to get tough with the old folks drawing Social Security
    Better keep the bases open all over the world, and keep fighting in AfPakIraq, and maybe Yemen and N Korea.
    It’s not like our own borders are wide open or anything.
    SNAFUand FUBAR will continue until further notice.

  • Steve January 1, 2011, 8:40 am

    Its almost 2011 here near the Pacific. To all a good New Year. And Rick; thanks for the conversation.

    Always remember that the Framers did not create Rights. The Right of Defense is as old as Man. The offense of governments and crooks is a New Deal. The obligation to defend is something to live for.

    It is said that the Goddard Family hid cannon and powder and by conquest took Concord Bridge in 1775.

    That is a Right.

    Think about what has been give up since that thoughtful day in A.D. 1775 on the East Coast.

    Look at where we are today, and think about where we will be at the end of 2011. The slide into the belief that Rights come from some Framer, or legislator, or piece of paper is nearly complete.

    Defend your Nation.

    Bull Shit – immigrate.

    I am smiling right now because I know that every day of 2011 will bring us closer to the time of rebuilding. In good fortune the fires will refine the ore in 2011. Every day that it gets tougher is a day closer.

    Good Cheer to all, and to All a Good Night – forgive my opp paw – the word stuff or urea just did not fit.

  • Rich December 31, 2010, 8:05 pm

    Money chasing stories for False Flag profits:
    BBerg reported first equity fund buying last week since April 2010 and headlined Commodities outperforming everything else in 2010, quoting PIMCo managing $24 B to drive Commodities pop and drop.
    Meanwhile, contrary deflationary deleveraging fool on the hill eyeing a silver short bounce from 9.80 to 24 with Trailing Buy and Sell Stops:
    http://stockcharts.com/freecharts/gallery.html?ZSL
    Saving and Solvency for 2011.
    Gung hay fat choy and Hau’oli Makahiki Hou All…

  • Redou December 31, 2010, 6:28 pm

    The article and comments make me think of
    our media and it’s role.

    An unholy alliance between Money
    and Marxism has been forged in America.

    What is the Politically Correct Line that Editors
    have to toe to keep their jobs – if not Marxist.
    Beyond advertising revenue – there are whole
    segments of political thought in America that
    Cannot Be Discussed.

    Where is the Anti-War coverage in Main Stream Media?

    In the 60’s and early 70’s Viet Nam coverage
    was on TV every night, body bags, flag draped
    coffins, firefights in rice paddies. The Media THEN was anti -war. NOW the media is Pro-War, running Audie Murphy movies all the time. Got to keep the RUBES saluting the flag.

    Samuel Johnson famously said: “Patriotism is the last refuge of a scoundrel.”

    There are well over a MILLION dead Iraqi People who WERE NOT DEAD before BABY
    BUSH invaded Iraq. Millions more in REFUGEE camps. These include Old People, Women and Children. When there is no clean water, no medicine, no electricity, no food on the shelves, no sanitation – Women, children and OLD people die. BABY BUSH bought himself a nice retirement ESTATE in , I think, Paraguay – just in case the US becomes uncomfortable to live in.

    Joseph Stalin said –
    one death is a tragedy , a MILLION dead
    is a statistic.

    Iraq NEVER DID anything to the US.

    News from the Middle East is sanitized like a State Park Outhouse, but you can still smell the stink.

    The wars cannot be openly debated, even though Obama lied and said he would bring the
    troops home. Even though the public does not
    support the wars. Why does the media not
    discuss it? Just like Russia. Must toe the Party
    line.

    Where is the discussion of TARP? TARP is only
    the tip of the iceberg when it comes to bailing
    out big financial players at taxpayer expense.
    Trillions have been wasted, not billions – Trillions.

    Why cannot these guys fail? Banks went bust
    in the last depression – life went on. The RICH GUYS who caused the whole depression don’t have to take any losses but the POOR GUY has the bill tacked onto his tax bill for the rest of his life.

    But where is the discussion of this in the “Populist” MSMedia? Not discussed.

    The main stream media parrots the “official”
    gov’t statistics, when everyone knows these
    numbers are a lie. Just like the old Soviet Union, media supports the lies of the government. Media is a tool of the government and the moneyed classes. Face it, we no longer have a free press in this nation.

    But the REAL issue, what is even scarier than
    the corrupted media – is that the powerful people in America now think like Marxists.

    The founders of this nation believed in the common man and the common woman. They
    entrusted the future of the nation to the public.
    Washington, Jefferson, Franklin and all the rest
    knew the European legacy of Feudalism and
    Serfdom and the dangers of an entrenched, politically connected Elite.

    This was the first time in history ANYBODY gave a nation to the Common People and said
    that the common person has rights.

    The founders gave the people GUNS and
    FREE SPEECH and the VOTE. But now the
    Marxist Elite in America are trying (and succeeding) in taking these rights back.
    And the MEDIA goes along – all the while
    pretending to be “POPULIST”.

    The way you can tell a man is trying to control you is he wants to “HELP” you.

    In Europe, the common man had a baby and
    needed milk. He went up the hill to the BACK DOOR of the mansion. With his HAT in his HAND, he asked the master if he could have
    a cow for milk for his baby. The MASTER owned the house the poor man lived in, the land, and all the cows.

    Now, the Common Man and the Common Woman in America live in a rented apartment
    or in a house they do not own. They go up
    to the BANK with their HAT in their HAND and
    ask for an extension on their LOAN. The Banker, an agent of the Federal Reserve, lends them money created out of thin air by a computer, but they have to spend 30 years of
    their lives busting their ass to pay back
    the INTEREST on money that the bankers get
    for FREE.

    Or they go to the welfare office, food stamp office, Medicare office, AFDC office, whatever…. WITH their HAT in their HAND
    to ask their MASTERS for a handout.

    The MASTERS use the HANDOUTS to weaken
    and control the population. To take the products of the people’s labor and give a pittance back – and the people say
    THANK YOU.

    You will never hear these things discussed
    on the TV or in the papers. TV and the papers
    are owned by the Marxist Masters.

    Prove me wrong.

    • redwilldanaher December 31, 2010, 6:52 pm

      Hey Redou, I agree except that you left out much of the worst of the worst. As a new year is about to dawn, I’ll keep things light to keep spirits up and save the worst for later, just like our government does at the insistence of its masters. Extend and pretend all the way to collectivist Hell! Why not? The bowl games have been great thus far so, Why me worry? Obviously I couldn’t agree with you more but I do as there’s much more that I’ll add at some other time! Anyway, thanks for supporting my main gripe: The Media. That’s what makes it all possible in the end. If they didn’t control that they’d have to coerce us at gun point. My favorite example is the 1980’s “Big 3” newscasts that would almost always close with a downbeat piece about the plight of the homeless so they could leave as somber a mood as possible. The recovery was chugging along for 5 years and they were still hitting on the homeless nearly every night! How can we possibly combat what is aligned against us? They dominate media, good luck getting the word out and having it believed (see Paul Craig Roberts throwing in the towel after decades). Electoral process? LOL, must I type more than that? “Throw the bums out” is replayed every 2 years and the trends only worsen. Force? No shot at all. They have more people afraid to own a firearm and defend themselves than actually do by a wide margin and they could cut off the supply of legally purchased ammo and long guns in hours. This is only the beginning too. The “Lockdown” is much more impressive than this but with those 3 options removed, what are we left with? We’re left with my closing theme for 2010 and my main theme for 2011: Secession brothers. We need to leave, peacefully. I wish you all another year of bliss within the Matrix.

    • redwilldanaher December 31, 2010, 7:40 pm

      A CFA from Duluth manages to put it together, at least partially, in his spare time but NONE of our MSM financial media can do anything other than cheer lead stock market indices higher? I no longer have the energy to argue with people that believe that the “profit motive” ensures us a free media. I’ve had it with the TV psychopaths, I can barely watch them. I’ve neither heard nor seen any one of the “Fast Money” fools explain to us how it is possible to issue new debt and then to buy it back days later, all with imaginary money. It’s the most ridiculous ponzi scheme in history and the clown posse has no problem with it, any of the corruption, the lies, the insider collusion, etc. They’re indebting us and using the “money” they gain as a result to buy stocks to convince us that all is well only to sell into the CON once the public begins panic buying again. It’s sickening, literally sickening. NO, we’re the fools, we’re the clowns that continue to be a party to this. Secession is the only answer to it all.

      http://www.financialsense.com/contributors/daniel-amerman/hiding-a-depression-how-the-us-government-does-it

    • mario cavolo January 2, 2011, 9:56 pm

      Redou….so painfully on the mark…

      Cheers, Mario

    • Cam Fitzgerald January 3, 2011, 12:03 am

      Those were some pretty interesting posts you left Red. I have to ask a dumb question now though.

      When you say secession are you talking North from South, East from West or state by state. This is an area that is not familiar to me at all and I say that speaking as a Canadian where we have one province (Quebec) that has suggested it secede many times over the years.

      That threat to break up Canada revolves around the themes of control over immigration, language rights, revenue sharing, taxation and independence as a unique society in the areas of culture and law though.

      Maybe a difference. Can you fill me just a little?

  • 3 Lions December 30, 2010, 7:43 pm

    As you mention, the mainstream press and TV business news channels ‘are paid to be happy’ by advertisers and politicians. In some respects they are no different to the official ratings agencies like Fitch etc. who are basically paid to rate ‘happy’. Having been proved to be worthless over the last 2 years or so the ratings agencies are just beginning to get a bit more realistic – a glimmer of realism, no more. They now know that if they are seriously caught with their pants down again their whole raison d’etre will be called into question. The appointment of Ron Paul as the official ‘hammer of the FED’ is another glimmer of hope. At the moment it is just a small snowball rolling down Corona Bowl @ Eldora but it is gathering more snow as it rolls. The ratings agencies must have noticed that complacency and deceit is gradually becoming unacceptable.

    As for the mainstream press, which by and large is bankrupt, individual publication’s survival is less likely than a ratings agency’s survival. Pick-up any regional/local newspaper, scan all the positive editorial over the first three pages and then turn to the reader’s letters page and you find the reality of people losing jobs, homes, etc.. Editors cannot continue to report ‘happy’ in their newspapers whilst their readers are factually demonstrating the complete opposite. Hence we have the schizophrenic transitional stage in the mainstream press from ‘happy’ to ‘dire’.

    From an economic point-of-view this double-standard, transitional stage in the press is still only in its very early stages in spite of the economic slump starting almost 4 years ago. This sluggishness towards realisation of the truth portends a very long depression that will last way beyond the forecasts of even the most ardent bears bearing in mind that 4 years into this econmic slump there has been no increase in interest rates, no stock market crash/slump, no significant city or state defaults and no street violence in the USA of the kind already appearing in Europe. All of these things will afflict the USA so it will be a serious challenge to editors to try reporting ‘happy’ with all that going on.

    It also reflects the progression of the internet in the sense that perhaps as recently as 5 years ago a commentator reporting economic truth in a blog [or whatever they were called in the old days!] was regarded as a crank and the mainstream press was regarded as the only place to find get the truth. Hardly anybody nowadays would dispute that if you want the economic truth you can only find it in blogs etc. online [like Rick’s Picks] and the mainstream press is not to be trusted.

    The younger generation that is growing up with this online truth [do you know any young people that read newspapers?] and currently seeing the heartache caused to their parents and grandparents by the mis-management of the economy over the last few decades will be the ones to pull us out of this quagmire but it ain’t gonna happen any time soon! After all, since the political generation responsible for causing the problems is currently charged with resolving those problems it does not bode well for the short or medium term.

    But nevertheless a prosperous New Year to all you traders out there!

  • warren December 30, 2010, 7:26 pm

    I can only assume that all here have had a pretty good Christmas. That we have the time to do this should be proof enough. Whether you are a believer or not doesn’t matter because the bounty just spills over. I hope and pray for our continued prosperity in the New Year. I include myself because I take nothing for granted.
    Anyway, what caught my eye in this article was the photo. That could have been our neighborhood a little better than 3 yrs ago. Prices were at their peak and we made out like the proverbial bandits. Now, the for sale signs are up in multitudes again in hopes of salvaging something before the real bust. Don’t try to tell me that the banks are in danger; only the people that trusted them will suffer. Also I can’t help thinking that Ben B. and his minions at the Fed must have a lot of relatives in the real estate industry (if it can be called an industry). The boom and bust cycles provided by these clowns is like maneh to agents who win no matter which way the market goes.
    I get a kick out of radio and tv shows that recall the past year’s happenings with or without fond remembrance. It just all seems so short sighted. Look back over the last 300 yrs at least and see what central banks and fiat money have done for humanity.
    Read “When Money Dies” by Adam Fergusson, or “The Creature from Jekyll Island” by G. Edward Griffin. Then, act, any way you can.
    I also commend the author of this column. Thank you, Rick for providing a place for me to vent my opinion.

    Okay, back to the morning routine. Bye

  • Other Paul December 30, 2010, 6:29 pm

    Long-term statistics on financial fraud show that:

    10% of people will not commit fraud under any circumstance
    10% of people will always commit fraud if given the opportunity
    80% will commit fraud if the circumstances are “right.”

    I think that it is fair to say that “circumstances” can be doing what the editor wants to keep your job, running that red light when the cop is not present, cheating “a little” on income tax returns (expense reports, etc.), accepting those Las Vegas trips from the potential contractor, etc.

    Moral relativism is as old as civilization. In a materialistic driven world, individuals’ decisions often come down to to what’s good for “me” versus what is “right” for society because “right” becomes all about “my” well-being.

  • fallingman December 30, 2010, 5:23 pm

    Another article that’s dead on. Thanks.

    As the year ends, I’d just like to express my appreciation for these daily missives. I write a newsletter myself, but we put it out only twice a month. I can only imagine what kind of effort it takes to put out a daily with this kind of consistent quality.

    Again, much appreciated.

  • dan December 30, 2010, 5:03 pm

    plain and simple…LIARS…..LIE

    and ignorant people believe them……

    the truth hurts and then you have to respond so its easier to BELIEVE,no worry there…

    an informed person in todays environment will be very frustrated and troubled for they and their ilk cannot fix the many problems that beset us….every man for themselves and may GOD bless those that choose to listen to the TRUTH…

  • Dan December 30, 2010, 2:59 pm

    Maybe they have been reading Bob Prechter’s socionomics. Google it if you want to know more. The idea is that the mood of the country controls everything. I know everyone bashes Prechter for his market crash calls, but I do think he has some interesting thoughts regarding how our thinking impacts markets. I don’t believe there is anyway the Government and media can keep the country afloat using misleading headlines – but it sure seems like they are trying!

    &&&&&

    Bob Prechter’s pioneering work on socionomics never got the attention it deserved. Used copies of the two-volume set can be had at Amazon for under $25. Here’s a link:

    http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Dstripbooks&field-keywords=socionomics

  • Benjamin December 30, 2010, 9:55 am

    Speaking of anticipations of big, fat juicy returns on malinvestment (in housing)… The bigger idea that government can provide high paying jobs for an infinite number of people is also proven to be a dismal failure.

    But aside from unfunded pensions and the ever-looming and growing cloud of austerity, I would like to point out that there’s even more debt than meets the eye at first glance. A prime example is the recent death of a Chicago firefighter (which apparently has become national news).

    Talk about not biting the hand that feeds. Every story I’ve been hearing every morning ever since it happened was about how the owner of the old building which burned down, killing that firefighter in the process, had been cited before for code violations (as if…). They also like to point out that he’s been out of business for some time, and hasn’t done anything with that old building.

    Now, anyone who lives in or near Chicago knows how much they love to tax and spend. They also know how much a number of people love to worship firefighters (as opposed to, say, asbestos and liberty and productive use and habitation of a building).

    But was there any mention of the FULL cause and effect of the fire and the resulting death? No, and there never will be. It simply cannot be the case that a city government taxes residents up the wazoo to the point where they lose their business. It simply cannot be the case that a city government loves to fine so that someone can’t make necessary repairs and deal with potential hazards well enough on their own, well before they happen (the fines are MUCH more important, you see, for if he had paid it, according to one media idiot, there never would’ve been a fire!).

    …I’m going somewhere with this rant. It’s just that I’m so PO’ed over the stupidity and audacity of it all…

    Point-blank, Chicago has too many govt employees with expensive pensions (including firefighers) and WAY too many politicians all too willing to cater to the growth of their numbers. They love their taxes and fines. And the federal government loves bans (asbestos, to name one thing). That’s what killed that firefighter. Not that the media would’ve put it that way, that government kills people and that firefighters are stupid enough to support the system 100% for the promise of that big, fat pension in the sky, and thus put themselves at needless risk so that society can look upon them as great heroes. Aside from being utter cowards that will never tell it like is, 100%, they’re also enamored with government and the suicidal heroes they produce.

    So, it’ll continue. I don’t know how, but until people get the courage to see it and tell it like it is, no matter who threatens you in what way for saying it, this train-wreck will just keep chugging along as if it has every right and every means to do so. And of course, people will needlessly die in slavery because of it.

    • Gary December 30, 2010, 3:51 pm

      With reference to Jill’s opening statement where she refers to both bullish and bearish stories being published: I have found that many technical market anylists do the same thing in their newsletters so that they can always refer to and quote a correct calls in the hope that everybody forgets that an opposite call was made in almost the same breath!

  • Jill December 30, 2010, 8:07 am

    Perhaps the newspapers do the same as those huge publishing houses that publish dozens of financial newsletters dispensing contradictory advice– They publish bullish ones, bearish ones, ones that focus on various sectors– not because the advice in them is worth the money, but because they want to appeal to as many “markets” as possible.

    Thus, the WSJ can get both optimists and pessimists to buy their newspaper. There’s a story to be marketed to every kind of person with every point of view. And it’s easy. No reporters have to bother to investigate events or dig up actual information. Because reporting isn’t reporting any more. It’s marketing people’s own attitudes back to them– telling them that their opinion or attitude is absolutely correct.

    Apparently, as you noted, the market for mindless fluff must be the biggest one there is, because newspapers tend to focus mainly on that. Perhaps that’s the lowest common denominator. Almost everyone desires to be entertained and to have themselves distracted from what is actually going on in the economy.

    It’s interesting that, as you say, even “mega-billionaire media barons are not about to bite the hand that feeds them.” Accumulation of large amounts of money seems like drug addiction. Once people have more money than they or their families can spend in their lives, they usually idiotically stay on that treadmill, trying to make even more money– often sacrificing truth, friendships, family relationships, and anything else that is meaningful– rather than doing more fulfilling activities with their time and energy.

    • Hank December 30, 2010, 5:56 pm

      Nice commentary Jill. Interesting thought on financial news marketing. Keeping our eye on the big picture and the important things in life has not been our strong suit.


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