No prizes for guessing what the lead story is today—the launch of the good ship QE3. Front pages for all: “Fed Links New Aid to Jobs Recovery in Forceful Move” in the New York Times (NYT), “Fed Acts to Fix Jobs Market” in the Wall Street Journal (WSJ), and “Bernanke takes plunge with QE3” in the Financial Times (FT).

This is a big story. Although more QE (i.e., quantitative easing) is not necessarily a big deal, the way it’s being done shows that the Fed is all in: the open-ended nature of the program, the specific commitments, and the fact that it will go in conjunction with the existing Operation Twist. This is well in excess of what the Fed had to do, and well in excess of what many—mostly Republicans—thought it should do. The FT described the move as “stunningly bold” in a sidebar on the front page. This is a political bet, made necessary by the Fed’s conviction that—in the face of fiscal and political uncertainty in the U.S.—the economy would continue to be very weak and unemployment unacceptably high, if nothing more were done.

Unfortunately, the headline story today on front pages everywhere was the murder of the U.S. ambassador and three of his team in Libya. The Financial Times (FT) led with “Marines sent to Libya after envoy is killed in mob attack on US consulate,” the New York Times (NYT) had “Attack on US Site In Libya Kills Envoy; A Flash Point for Obama and Romney,” and the Wall Street Journal (WSJ) had “Libya Attack Sparks Crisis.” My thoughts and prayers to the families of the victims—there is not a lot else to say.

Economics got pushed to the back pages. The decision by the German court to approve Germany’s participation in the European rescue fund was on page 3 of the FT, with “Constitutional court refuse to block creation of rescue fund.” Meanwhile “In Victory for Merkel, German Court Ruling Favors European Bailout Fund” appeared on page 6 of the NYT, and “German Court Clears Rescue Fund” appeared on page 10 of the WSJ. This is a major victory for the euro, as not only was the rescue fund approved, but the language used made it more difficult for future challenges to be filed, and the conditions imposed were less than had been feared.

The common front-page story yesterday was, of course, the anniversary of 9/11. The Financial Times (FT) led with “9/11 remembered – Thousands gather at NY memorial,” the Wall Street Journal (WSJ) with “Where Towers Stood, Memories Cast a Long Shadow,” and the New York Times (NYT) with “Indelible Date, Unforgettable Lives.” It is fitting that this terrible event continues to get this level of coverage. Never forget.

No other real common front-pagers, but a couple of stories snagged two of three. The big one was the $104 million payout for the whistle-blower who led the IRS to systematic evidence that UBS had enabled thousands of Americans to evade taxes. He needs the money, as he just got out of jail on similar charges, but this will certainly aid his re-entry into society. “‘Tarantula’ snares record $104m reward for whistleblowing in UBS tax case” hit the front page of the FT, and “Get Out of Jail Free? No, It’s Better” landed on the front page of the NYT, but “Whistleblower Gets $104 million” was relegated to page C1 of the WSJ. Think this will encourage others to run to the IRS with evidence of tax evasion? Incentives work, although the jail sentence will probably mitigate any effect.

One story consistently made the front pages this morning: where is China’s presumptive new leader? “Mystery as China’s leader-in-waiting vanishes” in the Financial Times (FT), “Communist Leader’s Absence Sets Off Rumor Mills in China” in the New York Times (NYT), and “China Mystery: Where is Xi Jinping” in the Wall Street Journal (WSJ) all report the same speculation, but no one has any facts. Imagine, not all that long before inauguration, the vanishing of a U.S. president-elect. Problems? Quite possibly.

As well as China has done economically, it is clear that the political system does not operate at the same level of sophistication. Most predictions of continued Chinese economic success hinge on the ability of the government to manage the economy; to my mind, this type of story calls that ability into serious question. The FT has a good overview article, “The Ascent of the Bureaucrat” (p. 7), which discusses some of the issues associated with the current system. Given those issues, the downfall of Bo Xilai and his wife, and the current absence of Xi Jinping, you have to wonder what is happening at the top levels of Chinese politics and what that will mean for the economy, not to mention for the people.

The U.S. jobs figures and their effect on the presidential race were a flash in the pan. Although they made it to the front pages over the weekend, with “Poor jobs data hit Obama campaign” in the Financial Times (FT) and “Jobs Data Weigh on Obama, Fed” in the Wall Street Journal (WSJ), they got bumped into nonexistence on Monday.

The big stories on Monday are the pending threats to the eurozone, the German Constitutional Court decision and Dutch elections on September 12, and the slowdown in China.

Two big stories today. The Democratic National Convention (DNC) made the front page of the New York Times (NYT) and the Wall Street Journal (WSJ), but not the Financial Times (FT), and the European Central Bank’s (ECB’s) bond-buying plan made all three.

The DNC coverage is fairly vanilla, with “Obama Presses Plan for US Resurgence” in the WSJ and “Obama Makes Case for Second Term” in the NYT. More interesting is the accompanying analysis. “Campaign Confident It Has Roads to Re-election,” on the front page of the WSJ, discusses the race from an Electoral College perspective, pointing out that there is a structural advantage for the Democrats and breaking down the swing states—pretty good article. The WSJ has another note-worthy analysis piece, “Jobs Gauge Carries Election Clout” (p. A2), that talks about the importance of today’s employment figures to the election; we will discuss jobs a bit later in this post. The FT did touch on the U.S. election indirectly with a front-page article, “Draghi helps out Obama campaign,” pointing out that a European financial collapse would definitely have a negative drag on his chances for reelection.

The big story in the U.S. papers was the Democratic National Convention, and this time, Bill Clinton took his turn in the spotlight. The Wall Street Journal (WSJ) led with “Clinton Makes the Case for Obama,” and the New York Times (NYT) went with “Clinton Delivers Stirring Plea for Obama Second Term.” Not sure this counts as news—that the Big Dog is for the Democrat—but whatever.

The real news of the day, in the sense of something that might make a difference, is the announcement of the European Central Bank’s (ECB’s) plan to support the market for European government bonds. The Financial Times (FT) covered this story in “ECB resists capping bond yields in debt plan,” the NYT in “Fear of More Austerity Fuels Greek Unrest Ahead of Crucial Talks” (p. B1, the front business page), and the WSJ in “Europe Outlook Dims as Bank Meets” (p. A9) and “Moment of Truth for Draghi’s Plan” (p. C12). To get ahead of the news cycle a bit, the actual plan announced by the ECB, which will be in the papers tomorrow, is the most aggressive to date. The bank proposed the open-ended purchase of government bonds at short maturities (up to three years) for countries that are in one of the eurozone economic support facilities. In other words, if countries in trouble are willing to commit to an approved plan to balance their finances, the bank will make sure their interest rates don’t spike.

http://www.youtube.com/watch?v=WC5gHNME04E 

No news is good news

The front-page news today is the Democratic National Convention. The Financial Times (FT) leads with “Economy blow in key week for Obama,” which discusses the weak manufacturing report just released in the context of the election. The Wall Street Journal (WSJ) leads with “Democrats Rush to Rebut GOP,” and the New York Times (NYT) leads with “First Lady Tops Opening Night for Democrats.” Less meat in those articles, but that is what happened.

Not much else happening today, but there are some good stories looking ahead and some good coverage of things we have discussed in the past. The big pending issue is the European Central Bank (ECB) meeting tomorrow, and all three papers hit that. The FT has “All eyes on Draghi over bond proposal” (p. 2), stating correctly that the world will be parsing whatever he says or—possibly more importantly—doesn’t say about the ECB bond buying program. He is widely expected to announce such a program, but the details will matter—a lot. The WSJ did not deal directly with the pending meeting but did hit on a problem the ECB has that we discussed yesterday in “Lending Gaps Challenge Central Bank.” Borrowing costs are getting higher in the peripheral economies, as the euro convergence reverses, making it harder for the ECB to help them and complicating whatever is announced. Finally, we have “European leaders step up talks before policy meeting” in the FT. They have a lot to talk about. Make no mistake: this is a very important meeting for the future of the euro in the near term. Stay tuned.