By Dave Lindorff
One of the great mantras of the modern economics profession is that markets know best, and that the collective "wisdom" of investors is generally correct.
I've never really believed that, having spent years writing about business and finance. In fact, my interviews with market strategists, Wall Street economists and portfolio managers have convinced me that it's the rare investor or analyst who has done much serious reading of history, political science or even economics and finance for that matter. Sure, some people can be very good at analyzing the worth and the potential of a specific company, but when it comes to macroeconomic trends, most of the explanations you get are very narrowly focussed and ignorant, showing little concern for or understanding of the great drivers of history, economics or politics.
That said, I'm still left scratching my head at today's roughly 3% jump in the US equities market, which the investment analyst community is attributing to a report by the relatively obscure Institute for Supply Management, which announced that its index of manufacturing activity in the US had risen a bit to 56.3, instead of dipping slightly, as had been predicted by analysts.
Word that manufacturing was improving led to a stampede into equities by investors, especially into the stocks of manufacturing companies like Caterpillar, United Technologies and Boeing, which all jumped by 1-3% for the day.
But here's the thing. It might nice to see manufacturing orders picking up, but manufacturing in the US only represents a puny 12% of the US economy, a share that has been falling steadily for decades as US companies shift production month after month, year after year overseas. It would take one hell of a boom in manufacturing to kick start a US economy in which one in five workers is either out of work, working part-time while wanting full-time work, or has given up looking for work because there are no jobs...
For the rest of this article by DAVE LINDORFF in This CantBeHappening!, the new independent online newspaper, please go to: ThisCantBeHappening!
