There are three fundamental mainstream sources for news.
The first is mainstream media such as
Wall Street Journal,
New York Times,
Business Week, and
The Economist. The second are blogs, such as
Market Folly or
Zero Hedge. Note that the former source would be more likely to report the optimistic viewpoint of the market. The latter tends to report on the negative side of the market.
The third source for news comes from the ordinary citizens who take the time to write comments on the previously mentioned sources for news.
It is a potential source for getting unique insight.
Below is a response on
The Economist by a user,
tp1024, in response to an article about unemployment. The article is entitled
The Trap | The Curse of Long Term Unemployment will bedevil the economy.
My emphasis is in bold.
There are several fallacies in the public presentation and perception of the current economic crisis.
One is that people spent beyond their means. This is - at best - a half truth. The other half is that corporations necessarily also earned beyond their means. When demand overshoots (people spend beyond their means), prices will necessarily rise. Thus, at least part of the spending will directly go to the corporations, increasing their profits through the credits and mortgages of Jane and Joe Consumer.
The naive economic models, that unfortunately underly [sic] the very models that real-world economists use all the time when advising policy makers, would have you think that what now happens is that labor becomes scarce. A scarcity of labor implies a rise in real wages. Statistics show that those models aren't worth the paper they are written on - real wages were stuck for a decade or so. Only part of the "extra spending" had plasma TV's to show for it, a lot turned out to be corporate profits, fees and interest rates for credits.
All of the latter would be turned into investments, if the economic models were true. In fact, however, they went into bubbles. While the internet-bubble was mostly benign (the over-investment in glass fiber ruined the market for communication satellites, but the positive results by far exceeded the negative ones) as they actually did something positive for the population as a whole, they created a new industry for that matter.
The pure price bubbles that followed (housing, oil, steel, grain and what have you) were more like a malign cancer. The difference between those and the internet bubble, was that there was (almost) no internet to begin with before the bubble. Housing, oil, steel or grain were at or near their maximum physical capacity to begin with. If you go into such a market and pour a 100 billion dollars into it, well guess what happens. If the market sells 100 million widgets in the same time, prices will have risen by 1000 dollar per widget at the end of the period, which what "investors" call their "profits". But those "profits" have nothing real to back them up. Except for the eventual consumers who can't help but buy grain or oil and have to pay the higher prices. And this is exactly where those "investors" got their "profits" from.
The *real* problem, however, in all this is something else. It's money. Because the money is in the hands of investors who (as I hope I've shown here) didn't invest. The money was in the hands of people who didn't know what to do with it in terms of producing stuff, delivering services or engaging in any other profitable business, other than toying around with numbers and making bigger numbers out of them.
--
As for unemployment, it reflects the lack of past investment. That is because the making of bigger numbers is perfectly tangential to what we call economic activity. As soon an the bigger numbers stop coming, there is nothing to stop this house of cards from collapsing.
Bad as the situation is, there is a silver lining. A lack of investment in the past means that there is *potentially* a lot of investment to be done in the future - lots of work for long term unemployed. This, however, has be organized. And it won't be the corporations who will do the investment, because they will use any profits they can get to pay back *their* excessive debt.
Contrary to what others here suggest, the government can do a lot. China has shown you what to do. Instead of throwing good bail-out money after the bad debt of the corporations, the USA should put it into places where it will pay off.
Will it pay off to put money into the levees of New Orleans? Will it pay off to put money into crumbling pipes that keep breaking, creating car-swallowing craters? Will it pay off to repair pot-holed roads that force drivers to slow down and sustain damages to their cars? Will it pay off to build high-speed railroads that can move passengers from state to state without waiting in line at the airport, waiting on the tarmac for the plane to take off, waiting in the air for the airport to give landing clearance, taking off shoes, suffering undignified body-scans and tap-downs, wasting incredible amounts of fuel? Will it pay off to put money into a public schooling system that has to failed the nation to the point that most Americans are unable to *pronounce* the names of the researchers on the average "American" scientific paper (if they can read them in the first place, that is)?
I'm not talking about building bridges to nowhere. I'm talking about building a nation that is worth being called that name.
