"The deregulation of U.S. financial markets did not reflect only the narrow ideology of a particular party or administration," the editorial said. "And the problem with the U.S. economy, more than lack of regulation, has been government's failure to control systemic risks that government itself helped to create. We are not witnessing a crisis of the free market but a crisis of distorted markets."
Someone should explain to ABC: it ain't "dirty" if it's true. GMA got the collective vapors this morning over the robo-calls the RNC and McCain campaign are making, informing voters of Barack Obama's close association with unrepentant terrorist Bill Ayers.
In GMA's book, there's no real difference between these calls—which Cokie Roberts alluded to as "dirtier" tactics—and the calls made against McCain during the 2000 South Carolina Republican primary.
Except there is a difference. A big, fundamental one: what's said in the current calls is true. Obama did work closely with Ayers. What was said in the 2000 calls against McCain in South Carolina was false: he didn't father a black child out of wedlock. He and wife Cindy adopted a Bangladeshi child.
When the Dow hit below 8,000, the media went nuts, crying the economy was on the brink of collapse. But a lot of that same economy is still doing quite well, despite the mainstream media. Businessman Dan Kennedy, a new columnist with the Business & Media Institute, shows how skewed the standard view really is.
Between 91 and 94 percent of all home mortgages in the United States are current, not teetering at foreclosure. The overwhelming number of banks, particularly community banks, have been managed responsibly and are not on the brink of collapse. The vast majority of public corporations with stock values depressed by 20 or 30 percent are in no way connected to the mortgage meltdown, Wall Street's house of cards or the collapsing auto industry. They are well-managed companies and their fundamentals are sound. And there are still productive, successful, optimistic people.
Kennedy ought to know. He is a successful entrepreneur, consultant, speaker and the author of 13 books. Kennedy is especially known for his seven "No BS" books and that is the title of his new BMI column. Kennedy reaches well over 1-million independent business owners annually with newsletters, speaking engagements and meetings around the country.
It may not have been "huge" when CNBC's Joe Kernen said it but the dude has been on practically every news station by now.
Kernen told chief Washington correspondent John Harwood that the "Joe the plumber" story "would be huge" and even a "bombshell," in any other election year. Kernen said voters "don't care" because they are buying into Sen. Obama's assertion that the Bush tax policies have led to the financial crisis.
"Obviously not everyone out there knows how to connect the dots between the [financial crisis] and tax policy. For some reason the Bush tax policies are being cited by Obama as the reason that we're in this position right now, again and again and again," said "Squawk Box" co-host Kernen Oct. 16.
Gee, and I thought I might be pushing the envelope on September 28 when I expressed concern that the "bailout" with the made-up $700 billion price tag that turned into the pork-loaded "bailout" with the made-up $850 billion price tag "blackmail" (though "extortion" may be the more appropriate word).
It is clear that this is indeed the case, at least twice over. First, there were the threats made by the Treasury Secretary, the President, and the Fed Chairman warning of a banking Armageddon if Congress didn't pass the bill.
Now there's clear evidence, reported with stunning casualness by CNBC, that Paulson & Co. threatened the big banks in some way to force them to "accept" Uncle Sam's preferred equity investments:
The Nobel committee can stop looking for next year winner of the Nobel prize in economics and hand the thing right now to Harold Myerson. The WaPo columnist's effort of today, Gods That Failed, is Krugmanesque, reading like an extended gloat at the expense of believers in free markets. Ha-ha, mocks Myerson, your god of unregulated capitalism is dead. Just like Communism failed, so has your system. You half expect Myerson to end with a self-satisfied "nah nah nah nah nah!"
From Myerson's opening paras [emphasis added]:
In 1949, a number of famous writers, among them Arthur Koestler, André Gide, Richard Wright, Stephen Spender and Ignazio Silone, wrote essays explaining why they were no longer communists. The essays were collected in a volume entitled "The God That Failed."
Today, conservative intellectuals might want to consider writing a tome on the failure of their own beloved deity, unregulated capitalism.
There's just one small problem with Harold's hypothesis: it's based on an entirely false premise, one that I'm sure NB readers will quickly spot. The current mess was caused not by too little government regulation, but too much.
There has been an unreality in the reports on the falling stock markets for at least the past 10 days. Each day's plunge seems to have been exclusively due to the "global economic crisis" and/or the supposed "freeze on credit."
Oddly enough, the admittedly small bank where I have my business accounts is having absolutely no problem funding mortgage, home-equity, and other loan applications from qualified borrowers -- a fact I confirmed just before posting this entry. With all due respect to the global business press, if there's truly a "freeze," how can that be?
I've put forth an alternative explanation to the media meme a couple of times this week myself, but an editorial at IBDeditorials.com yesterday brought out a major element of what I have been saying much more forcefully and articulately. Remarkably, though the possibility seems pretty obvious to me, and I suspect many others, I have seen no one in the business press covering daily market events even mention the obvious and quite likely alternative that follows.
The editorial, "Investors' Real Fear: A Socialist Tsunami," teases with the plaintive question, "What is it about the specter of our first socialist president and the end of capitalism as we know it that they don't understand?"
Was the current economic situation caused by too little government intervention in the financial markets—or too much? I'd say the latter. Washington used Fannie/Freddie as a political piggy bank, causing it dole out loans to people who had no business receiving them. And because Freddie and Fannie's obligations enjoyed the implicit guarantee of the federal government, they were able to obtain funds at lower rates and become by far the biggest dog on Mortgage Street. That in turn caused private-sector banks to lower their lending standards in order to be able to compete. Throw in the Community Reinvestment Act—another major bit of government meddling that forced lenders to compromise underwriting standards—and you had a recipe for the current unpleasantness.
But the Washington Post, in the person of Anthony Faiola, sees too much capitalism, not too little, as the problem. According to his official WaPo bio, he "writes about the forces of globalization" for the paper. Faiola's article in today's WaPo is entitled The End Of American Capitalism?—and it seems clear he'd love someday soon to be able to remove the question mark.
The Dow dropped 5,585 points since its high a year ago, banks have been afraid to lend and the government bought billions in toxic mortgage-backed securities. So CBS's "The Early Show" went to some top finance experts to explain what was happening to viewers, right? Nope, they went to kids, Oct. 10.
Weatherman Dave Price talked to fifth graders in Arlington, Va., about the credit crisis, exclaiming, "You wouldn't believe how much they know, sometimes we ought to listen to them and their solutions."
"What one thing does your mom waste money on?" Price asked one student.
"Mmm, smokes, I guess," a fifth grade girl from Glebe Elementary School replied.
It's sad when just about the only place to get the truth about what happened to precipitate the current mortgage-lending mess is the Colbert Report.
Jim Cramer of CNBC's "Mad Money" appeared on the Comedy Central show on Monday.
The takeaway soundbites:
Cramer said "I'd love to, but I can't" pin the blame for the debacles at Fannie Mae and Freddie Mac on President Bush.
He noted that "the Democrats got a lot of campaign contributions from Fannie and Freddie and vice-versa. It was a big circle," and that this is what enabled the two government-sponsored enterprises to continue "to lend to anybody."
Though Colbert was in attempting-comedy mode, Cramer eventually got to the point where he clearly wasn't kidding (video is at the National Review Media Blog link).
Here's the relevant verbiage, which begins at the 2:20 mark (bolds are mine):
Labor costs the Detroit Three substantially more per vehicle than it does the Japanese. Health care is the biggest chunk. GM, for instance spends $1,635 per vehicle on health care for active and retired workers in the U.S. Toyota pays nothing for retired workers - it has very few - and only $215 for active ones . . . Contract issues like work rules, line relief and holiday pay amount to $630 per vehicle - costs that the Japanese don't have. And paying UAW members for not working when plants are shut costs another $350 per vehicle. -- Fortune magazine, January 26, 2007
Obama and Biden will strengthen the ability of workers to organize unions. He will fight for passage of the Employee Free Choice Act. Obama and Biden will ensure that his labor appointees support workers' rights and will work to ban the permanent replacement of striking workers. -- Official Obama website statement on labor [emphasis added].
The Securities and Exchange Commission ended the 16-day ban on short selling Oct. 9, which has left many journalists asking if the ban actually worked to keep more banks from failing.
The staff at the Business & Media Institute's video blog, "The Biz Flog," could have told you the ban wasn't a good idea when they put together "Who's Afraid of a Big Bad Short Seller?"But, it's nice to see some members of the media questioning if the ban worked:
"While the ban was in place, other market forces pushed key indices into a rapid decline. We are going to see if that ban actually slowed the freefall or perhaps made it worse," Fox Business Network host Alexis Glick said on "Money for Breakfast," Oct. 9.
Glick went on to point out that the ban also affected companies that weren't banks:
The Dow may be tanking and we could be heading into a global recession in the near future, but there's a green lining to it all, according to Reuters. Mother Earth might get a breather from those dastardly carbon emissions, what with shuttered factories and all.
Here's how the financial news wire teased a story on the afternoon of October 7, a day after the Dow closed below 10,000 for the first time since October 2004:
Economic silver lining? The slowdown in the world economy may give the planet a breather from high carbon dioxide emissions, a leading scientist says.
The October 7 story by Reuters staffer Michele Kambas focused on the recent remarks by Nobel winner Paul Crutzen:
There's a theory floating around the right side of the blogosphere that NBC removed a "Saturday Night Live" skit from the Internet because the network had second thoughts about making fun of liberals or caught too much heat for doing so.
But a new theory has surfaced in the mainstream media. Advertising Age is reporting that the skit may have been pulled for apolitical reasons. "A good guess: The clip, a fake C-SPAN news report, identifies [former bank owners Herb and Marion Sandler] ... as 'people who should be shot' in a graphic."
A story on the San Franciso Chronicle Web site seems to buttress that view. It is headlined "Herb Sandler Takes On SNL After Snark Attack" and quotes Sandler as saying, "We are being unfairly tarred" for problems in the mortage industry.
When Lehman Brothers CEO Richard Fuld testified before the House Oversight Committee Oct. 6, the media criticized his wealth and spending amidst financial turmoil in his company and on Wall Street. But conspicuously missing was the story of Fuld's political contributions.
It's the kind of socialist attitude that would make Venezuelan dictator Hugo Chávez proud. Unfortunately, it's coming from a New York Times columnist making recommendations for the U.S. financial system.
"[W]hat we really need is we need, well capital that the banks - we need to put money into the system," Krugman said. "And in effect, what always happens in financial crises is a partial nationalization - partial and temporary nationalization of the financial system. And, that is - you know and, I predict with almost 100-percent confidence that's how it will end, but the [Henry] Paulson Treasury wasn't willing to talk about that."
The Media Research Center's Director of Communications and NewsBusters.org Contributing Editor Seton Motley appeared on Friday afternoon on the Fox News Channel's American Election HQ to discuss how Bill O'Reilly handled his interview of Rep. Barney Frank, as well as how ABC's The View routinely abuses Gov. Sarah Palin.
Motley expressed thanks and gratitude that FINALLY someone in the media was asking Rep. Frank about his extensive history of blockading, stonewalling and grandstanding against attempts to reform Freddie Mac and Fannie Mae, O'Reilly's righteously indignant questioning notwithstanding.
Motley also cautioned that "there is no diving in The View's thought pool," and pointed out that their panel make-up is biased in typical media fashion: three liberals and one conservative.
Old Media's coverage of the recently-lifted executive and congressional bans on offshore exploration and drilling for oil and natural gas largely overlooked an important element that should have been very relevant to the discussion.
Supporters of lifting the bans surely share much of the blame for only rarely citing it. Though they have frequently noted the hundreds of billions of dollars a years annually sent overseas to pay for oil that could have been extracted here, they have mostly missed a golden opportunity to tell the American people what over a quarter-century of drilling bans has cost the government and taxpayers. They also generally failed to tell us about the windfall that awaits if the end of the offshore and other bans finally leads to appropriately aggressive use of this country's God-given resources.
But if we had inquisitive financial reporters in the business press who were interested in information relevant to the "Drill Baby Drill" debate instead of merely repackaging the press releases they received from those on both sides (the sole exception I found was this Wall Street Journal editorial), many more Americans would have long ago learned about what follows.
"They're safe if they're used properly, but so often they're not and so I consider them to be dangerous," said Dr. Alanna Levine, a pediatrician based in Englewood Hospital in New York.
The CBS segment focused on new regulations of over-the-counter cough and cold medicines for children by the Food and Drug Administration (FDA), but left out any representation by pharmaceutical companies or trade organizations.
Levine stressed problems with use of the product telling viewers that emergency rooms see up to 7,000 children a year, but she focused on the medicines, not on the caregivers improperly administering them to children.
Conservative opposition to a federal bailout of financial institutions is over campaign donations, not a desire to uphold sound market principles, according to CNBC.
CNBC's chief Washington correspondent John Harwood said Sept. 25 on "Squawk Box" that he had a conversation with "a top Republican member of congress last night" who told him the resistance among conservatives to the $700 billion bailout plan is in part due to Wall Street donations to Democrats.
"‘A lot of our guys have decided that we hate Wall Street ... because they're giving a lot of money to Democrats right now,'" Harwood said he was told by an unnamed source.
"We've talked about how nice the bi-partisan coming together of the far left and the far right to oppose this plan. It was heartwarming, right? That finally brought the fringe elements of both sides together on this," co-host Joe Kernen joked.
In a September 19 "Good Morning America" preview of a report scheduled to appear on the same day's edition of ABC's "20/20," chief investigative reporter Brian Ross took a few jabs at the rich who had fallen.
Ross called it "the end of a shameful chapter of American history," and although top executives on Wall Street had been hit hard in a way "they never thought was possible ... it's hardly the soup kitchen."
There was also much indignation in the report over the assets of Richard S. Fuld Jr., chairman and chief executive officer of now fallen Lehman Brothers Inc., and Alan Schwartz, the CEO of now "busted" Bear Stearns.
Barack Obama became a candidate for president on the wings of his 2004 Dem convention keynote speech in which he famously said "there is not a Black America and a White America a Latino America and Asian America -- there’s the United States of America." But as Rush Limbaugh has described in the Wall Street Journal today, Obama is now relying on deceptive ads for the express purpose of stoking racial antagonism. Obama's appeal to our worst instincts finds its echo in the MSM. Time's Swampland blog has an item up today by Karen Tumulty entitled "McCain Plays the Race Card." How has McCain allegedly done this? By running an ad that, according to Tumulty [emphasis added]:
[I]s hardly subtle: Sinister images of two black men, followed by one of a vulnerable-looking elderly white woman . . . [T]he image of the victim doesn't seem accidental either, given the fact that older white women are a key swing constituency in this election.
The supposedly "sinister" looking black men? Barack Obama and Franklin Raines, the former CEO of Fannie Mae. And the "vulnerable-looking elderly white woman"? It's the lady shown in the image here [larger image after the jump]. Now as much as we might find it distasteful to engage in some kind of latter-day racial phrenology, if Time is going to rely on this image to accuse McCain of trying to scare elderly white women, I'm afraid we're going to have to go there. An informal instant-message survey of friends and family to whom I sent the image yielded these responses to my open-ended question as to the woman's race:
On CNBC's "Squawk Box," reporter Charlie Gasparino told co-host Joe Kernen, "I will say this about the Bear Stearns thing when you compare that [Lehman] with this. I think our reporting was incredibly responsible. It was so responsible ... and you know we went out of our way with Bear Stearns ... We just report on how feckless management is and I can't help that Bear Stearns was feckless. [Lehman] was feckless too and that is the scary part."
"They're going to parse every ‘is' that a journalist said," said Kernen. "We don't hammer the stock. We watch the stock get hammered and then we talk about it."
The application's algorithms work off six key tenets of spin and bias, which the company derived from both the guidelines of the Society of Professional Journalists' Code Of Ethics and input from an advisory board composed of journalism luminaries.
It's an oldie, but a goodie for the broadcast media - attacking bottled water, a legitimate product that produces billions of dollars in sales annually.
The September 10 "CBS Evening News" went after the bottled water industry, suggesting that a lack of regulations for purification and testing meant bottled water is unsafe.
"The marketing campaigns say it all - bottled water is a pure healthy choice for consumers and millions of Americans are swallowing that message," CBS correspondent Thalia Assuras said. "Despite research showing that almost 40 percent actually comes out of taps, including Pepsi's Aquafina, Coke's Dasani and Nestle's Pure-Life, consumers spent $11 billion last year buying it off the shelves, convinced it's healthier. Food safety experts say there is no evidence of that."
On MSNBC's "Morning Joe" September 8, Jim Cramer took a shot at owner of The Wall Street Journal, Rupert Murdoch, in the midst of talking about the Fannie Mae and Freddie Mac takeover:
I read The Wall Street Journal, sorry, The Fox Street Journal. When is Murdoch going to put his positive right wing implant on left wing journalists? ... When is Murdoch going to broom the Spartacus workers union?
As for Fannie and Freddie, Cramer told the hosts of the September 8 broadcast that "We had a laissez-faire attitude. Now we are going to have the greatest bureaucracy in history created by Republicans. I'm an agent of change," Cramer said sarcastically.
Later in the segment, Cramer joked that the Democratic Party were "Bolsheviks" quipping, "There. How's that for biased media?"
CNBC's "Squawk Box" co-host Joe Kernen took a moment during a panel discussion September 2 to take a shot at the onslaught of coverage over presumptive vice presidential nominee Sarah Palin's daughter's pregnancy.
You know as a member of the media I'm just kind of embarrassed with the media. The media says, "Yeah it shouldn't matter, it's not going to matter, we're not going to cover it" and then they put it on the cover of every paper.
Earlier in the broadcast Kernen told chief Washington correspondent John Harwood he did not think the family incidence was as big a deal as the media was making it out to be:
Felt a little bit like the guy in Casablanca, shocked, you know: teen sex in Alaska, John. Probably not that much of a shocker I guess, right? Not a whole lot. I guess bowling, yeah, It's a little lonely probably up there, right, John? ... I don't understand everybody at the same time saying that this is not going to be a big deal ... the press is going to be responsible about this, Barack Obama please don't make anything of this, but then it's the cover of every paper like it, you know, like matters.
Mercantilism [emphasis added]: An economic doctrine that flourished in Europe from the sixteenth to the eighteenth centuries. Mercantilists held that a nation's wealth consisted primarily in the amount of gold and silver in its treasury. Accordingly, mercantilist governments imposed extensive restrictions on their economies to ensure a surplus of exports over imports. In the eighteenth century, mercantilism was challenged by the doctrine of laissez-faire.
When Barack Obama talks—and talks—about the future, does he really mean "back to the future"? You have to wonder after reading the column by one of his economic advisors in today's LA Times. In Renewing America's 'contract with the middle class, Leo Hindery Jr. explicitly calls for a return to mercantilism, the discredited theory of economics popular during the 17th and 18th centuries. Hindery [emphasis added]:
It is imperative -- way past time, in fact -- for America to be as mercantilist as are our trading partners.
Sometimes the qualities that make a strong candidate in one pool make them a weak candidate in another pool.
Former Massachusetts Gov. Mitt Romney would hurt Republican presidential nominee Sen. John McCain as a running mate because of "vulnerability" stemming from his successful businesses and support for free trade, according to a reporter for The Washington Post.
"On the whole subject of trade deals and free trade agreements is that a vulnerability, a potential vulnerability on the side of Mitt Romney?" Andrea Mitchell asked Post reporter Chris Cillizza on the August 28 broadcast of "MSNBC Live".
"It absolutely is," said Cillizza, who writes "The Fix" blog at WashingtonPost.com. "And that's a calculation I think the McCain campaign has to make. Yes, Mitt Romney has great business bona fides. Built a business, he used that line many times in the primary: ‘I know why jobs come and I know why they go.'"
"The other side of that, however, is he worked for a company called Bingham Capital that occasionally engaged in leverage buyouts, that means shipping jobs overseas. That's not the kind of thing that's going to go over well in these rust belt states where McCain needs to perform well, most notably Michigan, Ohio and Pennsylvania," Cillizza said.