The would-be president continues to complain bitterly about media favoritism. His advisors, according to an article in yesterday's FT, criticize media "fawning" as interfering with official duties. The article sites media advantage coupled with opaque campaign financing as a threat to an otherwise "reliable" voting system. Because the president has the media in his pocket, control of government purse strings and threat of retribution against those that vote against him, a key adviser calls the upcoming election "David against Goliath."
The article I'm referring to was written about the upcoming election in Venezuela and about the heavy-handed tactics, including a fawning media at the disposal of Hugo Chavez.
Of course it would be easy to see why those comments in the first paragraph could be attributed to Mitt Romney's campaign, which hasn't mentioned just how bias media coverage has been, but it's as obvious as that controversial touchdown call on Monday night. The thing is, with so much rah-rah from mainstream media outlets that find the silver lining in all the news, it seems to have caught on in polling (also mostly biased) and yesterday's consumer confidence survey. But that faux sense that all's well wasn't enough to keep the market elevated.
View of Christmas Future
Everyday this European crisis is like A Christmas Carol in that we get the benefit of seeing how our future could be if we remain on this current path. This current path is mostly about fiscal irresponsibly, fading demands for rigor in education, manners, and the embrace of a mindset that we are less able to care for ourselves so government should step up to the plate. Riots broke out in Spain as that nation gets closer to instituting austerity that means less welfare and more responsibility. This nation is in the midst of healing decades of socialistic policies that have diminished past glory and erased future glory unless a lot of pain can be tolerated.
I'm not sure if it can, and this is why Americans must pay attention. Do we have the guts to suck it up? At some point, that test will be upon the nation. All prior generations faced down challenges that could have destroyed the country. Our current generation is enthralled with television shows spawned from young men punching women in the face and children being exploited. I still think it's in America's DNA to do the right thing at the moment of truth. My worry is that that moment could come soon, making the challenge less difficult. I didn't say easy, but consider what's happening in Europe. It feels like we're jumping off a five-story building if we really tackle our problems or waiting for it to become a ten-story fall.
Americans have been able to put their heads in the sand for so long, but those people in Spain stumbling around the streets were doing that a couple years ago with a bottle of wine and joy rather than with Molotov cocktails and blind rage. Yesterday, I think the reality of it all hit the stock market, which reverted back to its historic role of harbinger of the future rather than another tool to celebrate mediocrity. But, I don't know that it was Spain that spooked the market as much as its neighbor-Portugal
Portugal has a center-right government that came up with a plan that asked workers to contribute more to their own social security while allowing businesses to contribute less to the general welfare fund. The plan is designed to spark job creation in the nation with 15.6% official unemployment rate (US is the same).
After succumbing to the riots and in order to hit debt targets of its 78.0 billion bailout, Portugal's leaders will now raise taxes on income, investments (cap gains), assets and even gas emissions. The masses might be appeased but the nation moves a giant step closer to economic doom. Those postponed riots will reemerge in greater force when government can no longer pay for the welfare state and businesses have been sucked dry. From a competitive point of view this means the best and brightest will leave for Brazil and other countries but don't underestimate many working poor looking for opportunities and not handouts, they will leave as well.
The gift for Americans not too busy watching Big Ang is we see how hard it is to do the right thing even when it's clear any other choice is a short term pain reliever at best. This is a center-right government; what happens when they vote back in the socialists? What happens when Spain votes back in the socialists?
What happens when America votes back in the socialists?
I think this is what the stock market saw yesterday. How ironic is it that on a day when a couple of key (second tier) economic reports came in well above consensus the market suffers one of its worst sessions of the year. This is how the stock market works. The rest of the world is slowing although growing at pace we dream about and the domestic economy isn't ready to carry the world. Heck, the domestic economy can't even create 200,000 jobs a month and the stock market is worried. Of course the happy news yesterday on all the media outlets from radio to newspapers is the possibility of 700,000 temp hires for the holidays. Last year it was 670,000.
Media favoritism works wonders in politics and even the stock market to a certain point. I closed out a couple of losers yesterday and have been aggressively taking profits on trading ideas in part to raise funds. We are not panicking but paying attention to a wakeup call barely audible because of all the other noise.