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Thursday, July 8, 2010

You would think these people would know better

I took some time off from watching football and dealing with life to watch CNBC for a bit yesterday afternoon. You would think hosts on a financial cable news show would understand basic economic theory. You're wrong.

They were giddy about the 274 point rise in the Dow because in their world the performance of the Dow is reflects how well the economy is doing.

They were also lamenting the fact that industry is still not investing in expanding their business enough despite sitting on piles of cash. They believe it's because industries are worried about future government regulatory policies from the 'socialist' Obama. In short this is utter bullshit. They aren't investing because most companies are still not running at anything near capacity so why invest more when current capacity is not being utilized. Only one thing will change that; increasing demand.

Why can't these so called experts understand that. I am reminded of the famous Upton Sinclair quote, “If is difficult to get a man to understand something when his salary depends upon his not understanding it”

Remember the people at CNBC are anti-regulatory, tax cutting, deficit hawks whose paychecks depend on toeing the big corporate GOP line. Remember how gung ho they were during the rising housing bubble. Remember Jim Cramer touting Bear Stearns as a 'can't miss' stock pick just before it's collapse. Any housing bubble skeptic was derided and virtually run off the show.

As usual, Paul Krugman nails it. nails it.

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