There is a good bit worth pondering in an article today in the Wall Street Journal, an article seemingly filled with enthusiasm over a recovering economy and troubled only about a government which might interfere with that recovery by regulating it to death.
First is the thrilling data about Caterpillar, all about its improvement in profits in the first quarter of this year and the effect of that news on the stock market. Not mentioned is that Caterpillar’s revenue decreased 11% in that same quarter; they made more profit while selling fewer engines and less equipment. Their profit improvement was due to cost cutting, which is rather an old story. How, precisely, does that signal a recovering economy?
The article then goes on to describe increased manufacturing in Texas, Whirlpool seeing increased revenue in consumer appliances, and Alcoa improving as metals futures prices rose, all of which actually are signals of an improving economy. First it indulges in hyperbole about profits from diminished sales, and then it just sort of brushes by actual improvements with a casual mention.
The caution it sounds is that Wall Street is concerned about the regulation of derivatives. Apparently the economy of making things, producing actual goods and people buying real tangible products could be unraveled by government regulation of the trading of pieces of paper which provide high profits for the traders on Wall Street.
I’m certainly glad that we’ve been warned of that impending doom.
You reference the Wall Street Journal as if it somehow represented the opinions and state of mind of the denizens of Wall Street. Many years ago this might have been true, as the Journal was a reasonably objective, fact-based source of the information needed by those whose lived and died by Wall Street. Today, however, this is no longer the case. The Wall Street Journal has become just another for the opinions of one Rupert Murdoch of Fox News fame.
ReplyDeleteSadly, we've reached the point that if you read it in the Wall Street Journal, not only is it unlikely that it represents "news" that would be of value to those who make their living on Wall Street, but it is also unlikely that it represents "facts" that could be verified by those who make their living anywhere else on the planet.
Now I finally understand why I think that the WSJ is a fine paper, but haven't been able to stomach its actual contents for years. I didn't know that Murdoch had bought the paper and corrupted it.
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