Nattering Nitwits
Harold Meyerson has a nice column in today's WP underscoring the deeply bizarro nature of an economy that, you've noticed, collapsed under the benign gaze of George "It's your money not the government's money" Bush.
By 2007, when Wall Street's profits amounted to an astonishing 40 percent of all American profits, the business of American finance was no longer American business -- providing loans for domestic production, technological innovation, that sort of thing -- but swapping bets and hedges on bets and hedges, all for hefty commissions.Save for devising more ways for Americans to go into debt, Wall Street had basically decoupled itself from the economy in which Americans live and work.
And what were America's "financial news" channels doing all that while? I ran into a CNN Money manager at a journalists' do last night, and asked him whether he'd reconsidered any of the networks' reporting, in particular their choice of sources, in the light of recent bubble bursts. The short answer: No. Everything's jus' fine.
Back to Meyerson:
While the nattering nitwits of CNBC hailed the stock market increases of the first seven years of George W. Bush's presidency as evidence that the U.S. economy had never done better, every other economic index made clear that the economy was in dismal shape. As Neil Irwin and Dan Eggen documented in Monday's Post, the rate of job creation and GDP growth during Bush's tenure is the lowest of any president of the post-World War II period. Somehow, our financial geniuses managed to miss this and built a vast financial edifice on the backs of consumers who eventually could consume no more.
I hate to beat up on journalism at such a bleak time in its history, but it's salutary to remember the recent past before rushing out to repeat it.
Excellent post! Wall Street seems to have learned nothing over the past 70+ years regarding bubbles. Their mentality is "bubbles never collapse until they do."
They never have the integrity or the guts to get out of bubble cycles until after the collapse when the public gets screwed.
This is why we need regulations and regulators to ride-herd over these speculators.
January 14, 2009 11:19 AM | Reply | Permalink
Disregarding its traditional function of "keeping them honest", American journalism became the handmaiden of the negligent Bush era. Journalists became megaphones for the ruling elite (yes, there is one), stenographically repeating to the public every lie and torturous scrap of illogic from the Beltway. While American political and physical infrastructure burned, American journalism tuned Bush's fiddle.
January 14, 2009 11:46 AM | Reply | Permalink
The stenography habit long predates Bush. Reagan's Teflon was spun by journalism. The Halberstam-Woodstein moment of 1965-75 was the exception, not the rule.
January 14, 2009 12:05 PM | Reply | Permalink
I totally agree. But I'm also concerned about a dangerous journalistic backlash. It's now fashionable to sell pessimism as financial journalism. It might well be irresponsible, though. For one thing, the attitude of the press follows, rather than leads the market. When everyone is dour, the stock market has often hit a bottom. Another problem is that we've dismantled all the real safety nets, especially for retirement. Scaring people out of the market, turning a generation away from stocks, could cause problems later on.
The stock market will recover and sadly, most people will stay on the sidelines, miss the big part of the recovery, buy while prices are rising and get screwed again. The financial press has to be careful about how it reports on planning and investing matters and it shouldn't be subsumed with the grief of the day.
January 14, 2009 11:49 AM | Reply | Permalink
CNN Money manager, nattering nitwits on CNBC...their bread-and-butter is the Street. Nobody, well almost nobody, is going to invest in a sick market - not rocketry to figure out why it was advertised as extremely healthy.
It's painfully amusing to watch the blame game going on. From Dems forcing banks to make bad loans, to consumers not consuming enough, the natural peaks and depressions of any (properly) functioning capitalist system are never mentioned - perhaps because the truth might make us question the viability of the system?
January 14, 2009 12:17 PM | Reply | Permalink
I don't think there's any question that laissez-faire capitalism has demonstrated conclusively that its rightful place is the dustbin of history so it can continue to argue with communism.
January 14, 2009 4:26 PM | Reply | Permalink
"...from dems forcing..." was right out of the Republican political camp. Can't cite any particular tenter - nor did it come from Goldberg. (Does anybody quote Goldberg?)
January 14, 2009 5:32 PM | Reply | Permalink
Of course ... I should have read for tone more carefully, but also wanted to make sure that assertion doesn't appear without a BS alert in close proximity.
Lots of people quote Jonah, and often.
Anytime you see someone deliberately(with intent to amuse) make a circular or nonsensical argument, and cap it with "and that is central to my point", that's a Jonanism.
January 15, 2009 9:05 AM | Reply | Permalink
Aren't the failings of financial journalism essentially the same as those of all journalism, namely laziness, getting too close to sources and conflicts of interest?
This is one of the reasons why it might make more sense for more journalism to be funded in future by non-profit foundations, rather than media companies. The modern, fragmented media industry, with its declining editorial budgets and upended business models, seems like it is having a hard time sustaining a role as a skeptical watchdog. Skepticism doesn't sell. Perhaps it would be better for them to focus on breaking news and leave watchdog journalism to others.
January 14, 2009 1:47 PM | Reply | Permalink
In the matter of transparency and fairness, the corrupt american politicians must be put on the world stage for review and punishment.
Please read my google blogger and see the realities of the shape our nation is really in!
http://www.Zzzoney.blogspot.com
The titles are all different, but the story remains the same. CHAOS
Respectfully the punisher,
Zzzoney
Zzzoney@gmail.com
January 14, 2009 1:48 PM | Reply | Permalink
In my view, "financial journalist" is practically an oxy-moron.
I watch a fair amount of CNBC (aka "Bubblevision"). Nowhere is the corporatist bias of the MSM more obvious than on this network. To me, the entire show has to be viewed as one big contrary indicator. Listen to what they're saying, then consider what they're not saying. (At least the numbers they report are correct, most of the time.)
-- ARG
January 14, 2009 2:48 PM | Reply | Permalink
I paused briefly on CNBC recently and heard them say all that is needed to get us out of the recession is happy talk. People are just too depressed by the negative news to spend so everyone needs to talk about how great the economy really is and our troubles would be over. The most galling part about this is that those bozos get paid for spouting nonsense.
January 14, 2009 3:30 PM | Reply | Permalink
Considering the availability for comment of Kevin Phillips and Nouriel Roubini, I'm not sure why you'd want to ask anything from anyone else.
How can you beat the timing of "Bad Money"?
Roubini is probably booking his Stockholm hotel suite right now for next year...
It's not just that their "go-to guys" were wrong, here were these other guys standing on the corner with a big sandwich board:
The End Of The World Is Near!
And then, the world ended. How cool is that?
January 14, 2009 3:39 PM | Reply | Permalink
Hey, Jolly. (Might want to enlarge that Avatar -- I can barely recognize you!)
Roubini was on Bubblevision this morning, in fact, and said 2009 doesn't look any better than 2008. He sees a 25% downside risk in the equity markets. (That'd be Dow 6000, for those keeping score at home.)
So I should give CNBC credit for having guys like Roubini on occasionally. That's why I watch, in fact. But a large portion of their guests are full of crap.
-- ARG
January 15, 2009 10:53 AM | Reply | Permalink
I have one, er, two....um, 3 comments on financial reporters:
James Glassman, 1999; "The DOW will hit 36,000"
June 2002: Larry Kudlow CNBC host. "The shock therapy of a decisive war will elevate the stock market by a couple thousand points."
Alan Greenspan, 2008: "Um, I made a mistake."
January 14, 2009 4:30 PM | Reply | Permalink
Hey, John.
Well, Krudlow (as much as I dislike him -- what a blowhard!) was right about the immediate effect of the war on the markets. In 2003 the Dow did rise more than 2000 points. Note he did not say it would stay up (well, I'm sure he probably did say that, too, since he's a permabull, but still he was right in the short term).
I believe the effect of the initial war spending was stimulative, and it helped soften the dot-com crash and bought time for Greenspan to inflate the housing bubble.
The economic strategy throughout the Bush years was to push the inevitable day of reckoning out as far as possible. I believe they actually knew this crash would come, but they thought they could delay it long enough to blame it on the next president.
Oops.
Note, Rush Limpbaugh has been calling this the "Obama recession" ever since November. But the timing makes it obvious who was asleep at the switch. For now.
My worry is that after another year, the Democrats will own this recession (depression) anyway, in terms of media and public opinion. (Everybody still seems to think we'll be out of this hole in six months to a year. I think that's nuts.)
-- ARG
January 15, 2009 12:25 PM | Reply | Permalink
ARG,
"Note he did not say it would stay up (well, I'm sure he probably did say that, too, since he's a permabull, but still he was right in the short term)."
Yes, that was my point, it didn't stay up. I should have been more clear.
January 15, 2009 3:47 PM | Reply | Permalink
At least we can all take comfort knowing that Rupert Murdoch owns the WSJ and he will never allow his financial journalists to stray from the Fox, I mean the facts.
January 14, 2009 8:05 PM | Reply | Permalink
Yeah, and last year David Brooks, was extolling the benefits of the American financial system over that of Europe, allegedly because our unemployment rate is lower (which is a lie) and saying that the fundamentals of our economy were sound. The buffoons at the Wall Street Journal and CNBC don't care about Americans going broke and dying because they can't afford medical care. They think they are the chosen few. They were ordained to have everything, and know the answers to everything.
January 14, 2009 8:09 PM | Reply | Permalink
Thanks for pointing this piece out, T.G.
To co-opt/paraphrase Berkeley's Brad DeLong: "Raze the [Debt Economy] to the ground. Plough it under. Scatter salt in the furrows so it can never grow back."
January 14, 2009 8:40 PM | Reply | Permalink
I wonder if anyone has looked into the role computer trading of stock has played in this. Back in the "good old days" one had to sit in a brokers office and jump up and actually buy/sell to participate in the market hoping for a quick killing. Now, anyone with a computer can be a "day trader" and work the game of "buy low, sell high" at the speed of light.
As a nation we became enamored of people who make vast sums just by playing games, whether the game is NBA basketball, real estate "investment", or trading stocks. I could add selling insurance to that, but that's another story.
Some how we need to change our admirations toward admiring people who work for a living and get paid for that.
January 14, 2009 9:04 PM | Reply | Permalink