Iron Capital Insights

  • Iron Capital Insights
  • February 21, 2012
  • Chuck Osborne

The Biggest News Stories Not in The News

Do you ever wonder why some stories get a lot of press and others, which seem more important, do not? I read The Wall Street Journal, The New York Times and The Washington Post daily, and I get constant news updates on economic issues, specifically on all of our holdings. Over the last few years I have become increasingly shocked when stories are seemingly ignored, and perhaps more importantly how stories are spun, by the mainstream media. The news you don’t hear is often about the issues and events that have the most significant impact on your portfolio.

For example, as we celebrate the announcement of yet another bailout to Greece, we seem to forget that the entire European debt crisis began with Greece admitting to fraud. Greece falsified its financials to gain admission into the Eurozone. That lie may well throw the western world into renewed financial crisis. George Soros has said the wave caused by Europe’s current fiscal situation will make the 2008 financial crisis seem like a ripple in a pond. Four years after the financial crisis, angry protestors still want justice for greedy bankers; where is the outcry for justice to be served on greedy Greek politicians?

It would have been bad enough if the fibs had stopped there; however, Greece has promised austerity measures in order to secure past bailouts, but has yet to deliver on most of those promises. This past week one Greek politician was quoted as saying he will vote for more austerity to secure this new bailout from the EU, because Greece needs the money and he knows they won’t actually make the cuts. Again, barely mentions in the mainstream media.

Back at home our government has been operating without a budget for three years now. The Senate has not passed a budget in that time, despite the fact that they are legally required to do so. One could blame this on gridlock, perhaps, but the Senate, led by Harry Reid, is under Democratic control, and for two of these years the House was under Democratic control as well. I have seen but one short article which indicated that Reid has no intention of even attempting to put together a budget this year. This is historic; why isn’t the press all over it?

Earlier this month Secretary of Defense Leon Panetta, who may just know a thing or two the rest of us don’t, said publicly he believes Israel will attack Iran by spring. Press coverage relegated to briefs.

John Corzine, the former governor of New Jersey, and his team at MF Global have evidently stolen between $1.2 and $1.6 billion from their clients’ accounts. While he is no Bernie Madoff, this still puts Corzine in some lofty company relative to white-collar crime. Barely a mention.

I have no solution for the short-comings of our modern media, but there is something we can do as investors: pay attention to the big stories buried on the back pages, and their potential impact on our portfolios.

Greece growing closer to default despite all the EU bailouts; another war looming in the Middle East; our own financial picture even worse than realized; continued mistrust of Wall Street: All of these “non-stories” will have market impact. It is remarkable how obvious the signs always seem in hindsight. These signs seem pretty obvious now, but too bad the media isn’t paying attention.

Chuck Osborne, CFA
Managing Director