It is not often that the world wakes up to the same headlines right around the globe. But that is what happened last week when the news media told the story of the international economic system going into a tailspin.
The collapse of investment banks and a huge global insurance company had media outlets using terms like “Wall Street meltdown”, “an economic 9/11″, even the “end of capitalism”…
To hear much of the global media tell it the economic crash blindsided the world, including banks, regulators and even those who had been reporting the financial world to the public.
“I don’t think anyone saw this coming, least of all the financial press,” Ryan Chittum from the Columbia Journalism Review, says. “Should financial journalists be fortune tellers? No. But should they have done a better job of reporting that the structure of Wall Street was such that something like could have happened and clearly the answer is yes…”
What the media seem to have been doing wrong according to Andrew Palmer, the Economist’s banking correspondent, is not being sceptical enough during the period of sustained economic growth…The media’s obsession with business also plays a part. Reporting on the triumphs of the so-called the titans of Wall Street sells more papers and attracts more viewers than stories of ordinary people having their homes repossessed.
“With business magazines such as Fortunes, Forbes, there is a kind of cult of the CEO I think,” Chittum says. “It sells magazines when you have the triumphant titan of business on the cover with his latest plan to conquer industry.
Lousy journalism doesn’t make for a Free Press or an informed populace.
Ashby Bladen saw it coming a long time ago
I touched on this a few weeks ago before the shit hit the fan: CNBC, Bloomberg, FBN, et al can’t report on this from a stand point of “what’s really causing it”. If they tried, they’d have to admit the amount of bullshit and tea leaf reading that goes on, and that their own core audience (and friends) will do anything for a dollar…
…including the taxpayer’s dollar.
The Money Honey, Crazy Cramer and their lot are a big part of the problem. But, if some old man wants to think he’s a big trader sitting in his home office watching CNBC all day… while his 401k turns to mush… that’s his fault. Right?
No surprise. It’s a trend in journalism. Many journalist see themselves as information rock stars. These entertainment journalists have marginalized the old investigative journalists. And the end result has become an ignorant population.
There were plenty of economists that saw this coming; Mike Shedlock, the crew over there at The Automatic Earth, and a whole gaggle of Japanese economists that are somewhat more sensitive to the implications of a housing crash.
However, our media has this notion in mind that if you “talk up” the economy everything will be fine forever, and we will all have pizza and ponies! It’s sort of the “media lost the Vietnam war” theory applied to all of reality. Ignore the negative, and it ceases to exist! While perception has some effect upon the reality we live in, perception is not the Lathe of Heaven, and we can’t just re-write the books by believing they are in order.
A ship of fools is dashed upon the rocks.
“should they have done a better job of reporting that the structure of Wall Street was such that something like (this) could have happened”
Although I have no respect for the way the main stream media handles its responsibilities, including this situation, we shouldn’t spend too much time on their analytical failings in this situation. It only distracts us from looking at the REAL villains – and there are plenty.
Where were the regulators who were responsible for enforcing EXISTING laws requiring due diligence in vetting borrowers?
Why did Congress and Pres. Clinton accede to the repeal of the Glass Stiegal Act 9 years ago? This is/was the law that prevented banks from dabbling in the stock market – one of the major causes of the last major crash and depression. Were they thinking at all?
Why did the government allow the repeal of usury laws?
Why did they change the bankruptcy laws so that only corporations would benefit. Now Corporations can use these laws when they need to declare – even for bogus reasons – like plant closings, and labor disputes. Meanwhile, ordinary citizens are severely limited in the protections available for legitimate filings.
All these factors benefit businesses and harm citizens by either:
(a) removing reasonable regulations that came to be, due to the lessons of history
(b) failing to enforce existing laws for ideological reasons, and/or gross incompetence, and/or being in pocket of corporate interests.
As of this writing, a bailout plan was agreed upon. It is a bad plan that taxpayers will pay for endlessly, and will only help the wrongdoers (businesses and government) escape the consequences of their actions.
Congress has been scared into yet another bad action based on overblown fear. (Iraq/WMD, Patriot Act, etc.)
[Excellent comment. – ed.]
That was by no means an exhaustive list of realist economists, by the way; any one else care to add other examples?
A bit off topic but the current bail out plan is a bit strange. Why hasn’t the American people looked at the $700 billion figure and told themselves that each American could become one million dollars richer? The population of the USA is 305 million. Not all of the people are adults (over the age of 18). So for under 305 million dollars each citizen could get one million dollars then the rest of the $700 billion could go to bail out the banks.
How is that for a tax break?
I dunno, this guy saw it coming…
http://globaleconomicanalysis.blogspot.com/
#8 Bad math; 700 billion works out to a bit over $2000 per citizen.
Of course, that figure is bogus, most of the better economists are saying that it will cost at least 5 trillion dollars. Simply paying off everyone’s mortgages would be far cheaper than that. . . .
# Li — You do realize that 1000 million = 1 billion
#9 – $700 billion works out to a bit over $2000 per citizen.
The problem is, not all citizens pay taxes – i.e. children, unemployed, rich-tax-cheats, etc
And, of course, some citizens are “more equal” than others – so they get paid by Uncle Same instead of paying taxes.
So it’ll be the honest middle-class taxpayer (who still manages to pay their mortgage and credit card bills) who bends over and takes another hit.
#10 bac
Yes, although it is a number that is impossible to imagine, we know 1 billion is 1,000 million.
Drop the millions and think about it:
700,000 / 350 = 2000
Anyways, bottom line; there is a lot of fraud involved here. The entire value of all of the sub prime mortgages (pay them off, done) is less than 200 billion, and yet these fools, these supposed masters of the universe in their mountains of steel and concrete, managed to blow that value up to untold trillions of dollars, perhaps hundreds of trillions of dollars of worthless paper. And they did this through ‘clever’ ‘investment vehicles’ (neither a sound investment nor a vehicle), ‘securities’ (not very secure), and derivatives (honest; their entire value is derived). If they sink our economy and ruin our retirements with this fraud, they should swing.
Alex Jones has been reporting on it for a decade. So have many other patriot talk shows. a large plank of Ron Paul’s platform involved the financial disaster that we are facing.
You know what’s real weird?
Look at the Dell Logo.
The E looks like Enron and the two ls look like the twin towers. I am guessing the D is for Dubya.
It all screwed up when the rating Co’s rated the CDO junk as triple A.If they had done their job the banks would have not been able to buy the toxic paper. There would have been no market and we would not be in this mess.
This bailout is a bandaid on a person who has lost an arm.
My bad, sometimes I just can’t do math. The actual figure, if you were to give the $700 billion to 350 million people works out to about $20 dollars per person.
If you report that the markets are going to crash, you probably get placed into the same camp as the guy reporting the world is coming to an end. No one takes these people seriously until the event happens. Sure, there were people out there that saw the financial crunch. The big question is who was listening.
only surprising thing about the american economy bubble bursting (which was pretty obvious for abour 3 years now) is, that i comes sooner than expected. one might have guessed they would wait for a black cat walking in from the left in the political field and just blame it all on B.O. you know how media fools people’s deception, they would have just bought into it.
but wooosh there it goes. and you wonder why mccain hesitated to give his support to the bailout whilest obi gives in right away?
theres something big in the republican bush.
off topic – palins icebear button is kinda cute isn’t it?
but uhmn.. wait.. oh… wasn’t it her party too, laughing at good old al’ for warning about climate changes and its effects.
wait what. palaska? brings some fresh air to the ‘melting pot’ doesn’t it.
theres a couple trillion melting clean to vitalize economy, and there aint even polarpuppies in the way anymore. high-five.
thing is, it doesn’t really matter who is going to win.
first they intentionally let mcainy screw up all the time so he might have an easier time loosing. the bubble is all set for black friday, but some scared ceos give a go for the tailspin. change of plan and now they bring in the B side. alaska in the white house man. soon gonna be proud to be alasak-american citizen who can help their country out of the crisis.
it really doesnt matter to the big players, all strings attached, just let them little ones decide for them, for their country. giving pride back to the people. (and in 400 years no one ever took it away but themselves)
wow. i guess the somewhat brainy americans realize now how one nation can wake up a sad day in 1940, and by the time 5 years pass they still dont no nothing about whats really going down.
dont bite the hand that feeds you right so ok there’s war, but they just kept feeding them. damn no – couldn’t have been the people. must have been the same terrorists responsible for the reichstag-fire. (sidenote im not talking politics here, its socially involved economics)
so get your shady glasses and a flashlight out and start looking for these strings. they lead up to the players.
or .. a well snacktime.
“Financial journalists didn’t see the economic crunch coming”
Most “journalists” today are incompetent. Tune in the news and you see stories about some kid who fell down a well in another part of the country. This is important to the average citizen how? It certainly should take precedence over what screwing bill was just passed wasting taxpayer $. LOL
Most of what is printed by “journalists” is only useful as TP…
On Chris Matthews Sunday show this morning, David Brooks of the NY Times, said that the calls, mail and email to Congress has been “100 to 1 or 200 to 1 against a bailout.”
Notice how everyone in Congress and the MSM say things like “I don’t like it but doing nothing is not an option.”
Read “Manufacturing Consent” by Noam Chomsky. When the elite want it they use the media to marginalize dissent. Normally, people buy into it. Not this time, this is a whopper.
“No one could have predicted that someone would hijack commercial jets and crash them into buildings.” The DoD had been conducting training exercises for that exact scenario since 1994. Ever hear about that in the MSM?
#16 – try using a calculator:
$700 billion is:
700,000,000,000
350 million is:
350,000,000
so $700 billion divided by 350 miilion is:
$2,000 per person.
The problem is, as I said before, there aren’t 350 million tax-payers.
Here’s another fun number to wrap your head around:
$2,500,000,000,000
$2.5 trillion — that’s the estimated total U.S. consumer debt (not mortgages, just all the usual credit card debt, car loans and all the other crap we buy).
divided by 350,000,000
That’s $7,142.86 per person.
#19 “The DoD had been conducting training exercises for that exact scenario since 1994. Ever hear about that in the MSM?”
They also had been conducting exercises for a hundred other things that never happened. Did you ever hear about those on MSM?
# 3 Jägermeister
You are right.
But in a Democracy, it’s the people responsibility to lead, not abdicate and trust this responsibility to others with vested interest other then the public’s, just sign on this dotted line.
I think the founding fathers may have gave too much credence and reliance on the Press to keep Americans current with mostly untarnished truth necessary for our democracy to work. I also think the founding fathers didn’t institute sufficient safe guards to prevent the government deliberately misinforming it’s citizenry.
The average American doesn’t have time, inclination nor the energy after work to keep tabs and stay involved or focused on where the country is going. We are encourage to leave it to the experts and not question it.
IMHO, the country down fall began when on average two incomes where required to afford a house and we pursued a life style approaching Hollywood clamorous. As a relief from work it became all the more important to pursue mind/life numbing entertainment over mind/life expanding substance.
Yes, Wall Street greed and politician raw power grabs caused the current multitude of bad choices we have now, but; honestly, it’s the public’s own damn fault for not checking it.
America will continue to swing from one crisis to the next as long the public continues to not stay involved and focused on media sound bites as thought and political action guides and just leaving the nitty gritty to the experts and NOT questioning their facts.
Basically, this happened only because the average American chooses and cherishes being entertained at all times (modern entertainment requires suspension of disbelieve) and thereby generally ignorant and dumb.
I’ll admit I’m not a college graduate. And my simple high school economics (yes, I went to high school when economics was a required course)could never explain the current economy. I was assured by those much smarter than me, that economic basics did not apply. That we were in a new economy. Guess the smart folks were wrong.
Now I’m looking for someone who can answer my new simple, basic question; where is this 700 Billion dollars going to come from? We (America) already have a 9 Trillion dollar national debt!! Where will the money be found? In my pocket? In yours?
What a load of BS. They damned well knew that it was coming. They were just complicit in keeping the scam going as long as possible by brushing it under the rug every chance they got.
Not everyone missd this. For a variety of reasons, I went short with my portfolio as of 9/2007, and was strongly influenced by this guy, Satyajit Das, who laid it out very clearly a year ago:
http://tinyurl.com/2gylh5
Nobody ever sees it comin’ but cranks & crepe-hangers.
This is just like GLOBAL WARMING. Its not enough to warn it is coming. Unless you can prove every up and down in the charts, you are charged with just guessing and being negative.
Lou posted this excellent video showing that a few years ago our leaders took credit for setting up this system that mathematically HAD TO FAIL. Listen to when Congressman Waters takes credit for “the innovation of 100% housing loans.” 100%!! That kind of financing can only work in a steadily rising housing market. Has the world ever seen a steadily rising anything?==No.
So, the simple fact is that without anyone predicting the year, month, week and day of the market failure==everyone wants to “not worry and be happy.” You’ll see this throughout otherwise rational thought: “Our Economy is Basically Strong.” or for Obama: “I won’t change my social plans except maybe some of it will be delayed.” Both our future leaders still high on the hallucigenic of “happy thinking.”
Here is a 5 minute article on how this collapse could not be modelled and therefore our experts were asleep at the switch–to be followed by Lou’s excellent video that every American should see:
http://www.newscientist.com/article/mg19926754.200-the-blunders-that-led-to-financial-catastrophe.html
http://www.youtube.com/watch?v=_MGT_cSi7Rs
And if #23 is still reading WHAT WILL UNAVOIDABLY HAPPEN is massive inflation taking down the value of the dollar making savings worthless and if the stock market doesn’t inflate along with it, stocks become valueless as well. Times call for a move to “hard” assets and comodities.
Now, I can’t predict the year, month, week, and day======so, be happy.
If they had lived in my town and seen house after house up for sale and most businesses either closed or suffering they might have known.
#27–Bob West==thats another long term trend that cannot be exactly computer modelled, yet everyone gives happy talk about it.
THE LOSS OF EXPORT BASED JOBS IN AMERICA will kill our economy. When Briggs and Straton closes its small engine plant in Millwaukie and 50,000 manufacturing jobs go overseas, we have an impact on par with 911==yet 99% of those in charge claim this is good for America.
The World’s economy is becoming interconnected and if you aren’t selling more to the world than you are buying, you are slowly suffocating. Giving tax advantages to companies that provide the plastic bags is just icing on the suicide cake.
More Big Business Lies sold to us by both political parties because they are paid to do so.
Its all pretty clear. Just can’t give you the year, month, week, and day of the collapse. Be Happy.
Where will we get the 700 billion? Printing presses! Time to build more—& keep ’em hummin’ 24/7