AP Gets It Right in One Article, Wrong in Another, About Historical Extent of Market Drop

Photo of Tom Blumer.
By Tom Blumer (Bio | Archive)
October 12, 2008 - 23:25 ET

DownArrow.jpgGiven that the topic of this post is the Associated Press, I guess I should be pleased to report that one of its two reports tonight about the dive in the stock market last week is correct.

In one article ("Gov't eyes plan to take ownership stakes in banks"), AP's Harry Dunphy and Tom Raum correctly said that "the Dow Jones industrial average just completed its worst week ever, plummeting more than 18 percent." This is sadly true, at least if you "only" go back to 1921 (even I will give AP a pass for not wanting to dig through the muck of 1920, 1907, 1903 and 1901, which the New York Times was using as "hey, it's not that bad" benchmarks as Black Tuesday approached in 1929):

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NYToct25of1929onPrevCrashes

But in a different AP item ("Investors face more uncertainty as bailout widens"), reporters Stephenson Jacobs and Joe Bel Bruno incorrectly claimed that "Wall Street suffered through its worst five-day period in history," which is most assuredly wrong.

Here is the factual layout:

MarketDropsOct1929and2008

(Sources: Dow Jones for DJIA in 1929 [interactive model]; Yahoo! Finance for NASDAQ and the S&P 500 [except for Friday's close, which can currently be seen at nasdaq.com]).

You can see that while no single week's drop in October 1929 was as bad as last week's, there were two five-day periods -- the ones ending in Black Monday and Black Tuesday -- that were worse. Black Tuesday's was clearly much worse. It should also be noted that the Dow eventually fell to about 44.

No one interested in the country's long-term well-being is happy about what happened in the markets last week, but some historical perspective and accuracy is in order, along with hope that the worst of the current slump is over. Whether it is likely depends on how much of the economy the markets fear will be taken over by the government -- both before and after the presidential election.

Cross-posted at BizzyBlog.com.

—Tom Blumer is president of a training and development company in Mason, Ohio, and is a contributing editor to NewsBusters


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Don't worry. Nobel Prize

October 13, 2008 - 07:42 ET by Hero Squad

Don't worry. Nobel Prize winner Paul Krugman will save us all!

Paul Krugman Wins the Nobel Prize for Economics 

STOCKHOLM, Sweden —  American Paul Krugman won the Nobel economics prize on Monday for his analysis of trade patterns and location of economic activity.

Krugman, born in 1953, and a professor at Princeton University in New Jersey and a columnist for The New York Times, formulated a new theory to answer questions about free trade, the Royal Swedish Academy of Sciences said.

"What are the effects of free trade and globalization? What are the driving forces behind worldwide urbanization? Paul Krugman has formulated a new theory to answer these questions," the academy said in its citation.

"He has thereby integrated the previously disparate research fields of international trade and economic geography," it said.

Krugman was the lone winner of the $1.4 million award, the latest in a string of American researchers to be honored.

The award, known as the Nobel Memorial Prize in Economic Sciences, is the last of the six Nobel prizes announced this year and is not one of the original Nobels. It was created in 1968 by the Swedish central bank in Nobel's memory.
 

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