In 2004, economists at the University of California, Los Angeles (UCLA), studied the policies of President Franklin Roosevelt's New Deal and determined it actually prolonged the Depression by seven years.
Harold L. Cole and Lee E. Ohanian blamed anti-free market measures for the slow recovery in an article published in the August 2004 issue of the Journal of Political Economy.
Cole and Ohanian asserted that Roosevelt thought excessive business competition led to low prices and wages, adding to the severity of the Depression.
"[Roosevelt] came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies," Cole said in a press release dated Aug. 10, 2004.
Are some in the media enjoying the down Dow? It certainly seemed that "Good Morning America" co-anchor Chris Cuomo was embracing a bit of schadenfreude during the Oct. 24 show - seemingly relieved he could find "some comfort" that other nations are undergoing economic problems just like the United States.
As the markets were beginning a very downbeat start, reporter Bianna Golodryga detailed the latest financial turmoil, including problems abroad.
"Another example came out this morning," she said. "We hear from the U.K., where they said that the GDP, the economic growth in that country, has slowed dramatically. And they are, in fact, probably entering a recession right now."
"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."
Story after story on the full-year results for the federal budget refers to the size of the full-year deficit for the fiscal year that just ended on September 30 ($455 billion), and how it compares to last year's deficit ($162 billion).
Almost none of them talk about why the deficit ballooned.
I wonder why?
Could it be because the Democrat-controlled Congress of Nancy Pelosi and Harry Reid allowed spending to spiral out of control?
On Saturday’s Good Morning America, ABC ran an unusual report that placed some of the blame for the Great Depression’s length on government intervention by Franklin Delano Roosevelt as well as Herbert Hoover, and concluded by questioning whether the current plans could do harm. After an unidentified economist contended that "the government from Hoover to Roosevelt made it worse by intervening too much and too arbitrarily," correspondent Bill Blakemore concluded: "And now, is the Bush government intervening too much arbitrarily with its $700 billion bailout? That’s a million dollar question, so to speak, for those trying to guess when this crisis will end."
Blakemore’s attention to this often ignored take on government intervention came at the end of a report that looked back at the Great Depression. After giving Roosevelt credit for injecting America with a "can do" spirit, Blakemore noted that the Great Depression ended its 10-year run as a result of World War II. He then asked the question of why the Stock Market Crash of 1929 resulted in the Great Depression:
BLAKEMORE: So what made the crash of ‘29 lengthen into a depression?
WOMAN: Because the government from Hoover to Roosevelt made it worse by intervening too much and too arbitrarily.
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.
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:
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.
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.
Comparisons to the current Wall Street financial situation to the Great Depression have not been unusual in the media, but Thursday's NBC Nightly News went a step further into inducing panic. Delivering a healthy dose of hyperbole, Steve Liesman of CNBC prompted a “wow” from anchor Brian Williams when he raised the spectre that the credit troubles could lead, “some” would say, to the “U.S. becoming a banana republic” while those in favor of federal action to take over bad debt “would say by losing our banking system, and maybe even Wall Street the way we're going, we would be that much closer to being a banana republic.” Leisman's warning:
I think there are some people who would say that this is, creates a danger, taking on all this bad debt of the U.S. becoming a banana republic. I think those, the proponents of this plan would say by losing our banking system, and maybe even Wall Street the way we're going, we would be that much closer to being a banana republic.
The department announced August 28 the economy grew at 3.3 percent in the second quarter of 2008, up from initial reports of 1.9 percent. The revised number exceeded expectations for growth, which economists had put at around 2.3 percent.
But to announce the good economic news - the growth was well above the 1.9-percent average quarterly growth over the last two years - would have undercut one of the main themes of Sen. Barack Obama's speech accepting the Democrats' presidential nominations: an economy in turmoil.
"We meet at one of those defining moments - a moment when our nation is at war, our economy in turmoil, and the American promise has been threatened once more," Obama told the crowd of more than 80,000 Democrats at Invesco Field in the Denver.
In case traditional news outlets "forget" to tell you, Uncle Sam announced this morning that second-quarter Gross Domestic Product (GDP) growth was revised sharply upward to 3.3% from the late July's advance estimate of 1.9%.
Dude, where's my recession?
Y'know, the recession that Barack Obama claimed we "almost certainly in" back in mid-July?
Believe it or not, there are supposedly legitimate economists out there who, despite today's news, still insist that we are in a recession -- right now! -- and have been for some time. And of course, reporters are finding them, and quoting them.
Earlier this week, when it was clear that a significant upward GDP revision was in the works, "journalists" at MarketWatch and CNNMoney.com, with the help of their "experts," did everything they could to downplay its impending significance. One even called it a "mirage."
Last month, it was the Associated Press's Jeannine Aversa's turn to mishandle the reporting on Uncle Sam's Monthly Treasury Statement on the government's receipts, spending, and deficit.
Aversa's usual specialty is hallucinating over "blizzards of pink slips" and "jobs vanishing into thin air" when she does her "report," aka her downbeat propaganda piece, on the government's monthly jobs release.
In covering June's Monthly Treasury Statement, Aversa selectively rounded the data she presented (covered at NewsBusters; at BizzyBlog) to make receipts look less impressive and to minimize the true extent of the government's current year spending spree.
"This blog is one of the places we'll tell these stories," BusinessWeek.com reporter Tim Catts wrote on the blog's first post on May 2. "Here, we'll jump into the conversation about where the economy is and where it's going. Yes, sometimes we'll look at the latest data. Sometimes we'll share observations from the road. The goal is to give readers real stories about how the downturn is affecting individuals, businesses, and communities."
However, activity on the blog has been scarce of late. Nearly three months later, there are just 22 posts. Meanwhile, the nation's Gross Domestic Product grew at a 1.9 percent pace for the second quarter of 2008, according to government estimates announced July 31.
The American Heritage Dictionary defines "several" as "being of a number more than two or three but not many." Nevertheless, the Times used the term instead of the more accurate "two," subtly exaggerating the image of restaurant closure.
Two chains - Bennigan's and Steak & Ale - owned by the Metromedia Restaurant Group were closed across the country July 29 after the company filed for bankruptcy. The Times blamed the economy for the shutdowns.
Brian Wesbury, whose writings I have quoted often, is at it again, puncturing the economic gloom with reality-based analysis. Since his job is to provide useful info for the investor-clients at First Trust, creating unrealized hype is not in his best interest.
A night after ABC anchor Charles Gibson hit full panic mode by leading with how “markets are gyrating, inflation is rising, banks are closing” and suggesting money is only safe “under the mattress,” on Wednesday night he actually began with how “Wall Street posts its best day in months. Financial stocks rise. The price of oil falls.” But he couldn't be completely upbeat as he proceeded to note that “consumer prices also rose sharply.”
Katie Couric, however, was one hundred percent negative. After teasing Wednesday's CBS Evening News by asserting “the economic vise tightens,” Couric intoned over a matching graphic (see above):
Good evening, everyone. We wish we didn't sound like a broken record, but once again tonight there is troubling economic news. Americans are getting it from all sides. From inflation. Today the government reported the second-biggest monthly increase since 1982. To the mortgage mess where a tight market has sent prices tumbling 29 percent in one year in southern California. And the banking crisis. The FBI is now investigating the failed bank IndyMac for fraud. We have a team of correspondents covering these economic developments tonight...
On Sunday's "Good Morning America," after 14 "Recession Rescue" segments or teases in less than a month, weekend co-host Kate Snow asked an economic psychologist if "part of [the negative financial outlook of Americans is] our fault, the media's fault, for constantly talking about how bad things are?" Snow and psychologist Kit Yarrow were discussing how much of the nation's current financial state is emotional, in light of comments last week by John McCain advisor Phil Gramm that when it comes to the economy, "we've sort of become a nation of whiners." [audio available here]
Yarrow responded to Snow's query by saying the media are to blame and that when journalists cover the subject, "Everything is described as a crisis." She added, "And it's described in anecdotal terms as well, which causes consumers, I think, to feel especially fearful." This is certainly true of "Good Morning America." The program has featured frightening graphics such as "No More Retirement? Economy Holds Couple Back," a June 24 story on whether the elderly will still be able to retire. On June 25, a graphic screamed, "Paying the Bills: How to Survive Economic Crisis."
Hitting full panic mode on Tuesday night, ABC anchor Charles Gibson teased World News: “Markets are gyrating, inflation is rising, banks are closing. Consumer pessimism is at an all-time high.” Actually, only one bank. Gibson explained “we are going to devote a large part of our broadcast tonight to the economy because the news each day seems unrelentingly bad.”
It certainly is on television news where Gibson brought aboard a group of three experts “to help us separate fact from fear,” but they and Gibson spread fear as he put himself in the place of a viewer and wondered: “My house is falling apart, the real estate mortgage companies may be in trouble, and now I hear about possible bank failures. And the stock market is tanking. So how do I be thoughtful about what I do with my money?” An exasperated Gibson soon pleaded:
Tell me where people go now to make sure their money is safe. With stocks down, you think the safest place to do is in the bank, and now we're told that there could be a lot of bank failures. So where do you put your money that you know it's safe? Under the mattress?
Specifically, Cheney's 2000 statement was that "we may well be on the front edge of a recession here," while Bush's 2001 claim was a milder "You know better than me that our economy is slowing down."
So what will be the reaction be to the Sunday assertion by Democratic presidential candidate Barack Obama that there's "little doubt" the country is in a recession, when no negative growth has occurred?
In the wake of former Sen. Phil Gramm's statements earlier this week about this being a nation full of whiners, the good folks at ABC's "Good Morning America" brought on a consumer psychologist Sunday to discuss whether or not the McCain advisor had a point.
Shockingly, not only did Kit Yarrow tell host Kate Snow that "the way consumers feel about things is very emotional," but also these "emotions are trumping reality" thereby creating a snowball which makes the economy worse.
Yarrow not only believes that things are "not as bad as consumers feel like it is," but also that the media are at fault because "everything is described as a crisis."
What follows is a partial transcript of this rather shocking and refreshing exchange (video available here, photo courtesy ABCNews.com):
Appearing as a guest during the 10 a.m. hour of the July 11 “MSNBC News Live,” Chicago Tribune managing editor James Warren compared McCain adviser Phil Gramm’s recent comments on the economy’s health to those of Henry Ford during the Great Depression:
But I think in the annals of a not particularly sensitive remarks this will rank up there with a bunch of things. Somebody, a historian reminded me yesterday, the auto manufacturing pioneer Henry Ford during the Depression said something to the effect that “these really are good times, it’s just that few know it.”
Warren then went on to suggest that Gramm needs to be reminded of the current economy’s impact on average Americans:
The United States is not in a recession. But the crew of the "Today" show does not care about the facts. On the July 11 edition, the NBC morning program focused on McCain adviser Phil Gramm’s "mental recession" and "nation of whiners" comment.
Instead of actually examining the facts behind Senator Gramm’s opinion, "Today" instead chose to focus on the "damage" to the McCain campaign. Lauer opened the show with the cliche phrase "with friends like these," and noting McCain is "distancing himself from his friend" and proceded to ask "has the damage been done?" Lauer then introduced the story claiming the remarks "could spell problems for Senator John McCain’s campaign."
Perhaps a fair story would examine whether Senator Gramm’s statements ring true or not. While the "nation of whiners" comment is Mr. Gramm’s opinion, his remark that we are not in a recession is a fact.
The economic definition of a recession is "a period of economic decline; specifically a decline in GDP for two or more consecutive quarters."
On Friday’s CBS "Early Show," co-host Harry Smith introduced a segment on comments by John McCain economic adviser Phil Gramm: "Let's talk about the economy now. Number one on voters' minds. Senator John McCain has been backed into a corner by a key economic adviser and forced to disavow some controversial statements." A report by correspondent Bill Plante followed in which he declared: "After spending the past week trying to convince voters that he does feel their pain, McCain was forced into full damage control after his economic adviser appeared to mock the troubles faced by many Americans."
Plante went on to quote Gramm’s "controversial" comments: "Gramm questioned the true extent of the country's economic downturn, saying, 'you've heard of mental depression. This is a mental recession. We have sort of become a nation of whiners, complaining about a loss of competitiveness, America in decline.'" In reality, Gramm’s assertion that America is not in a real recession is completely accurate, as a recession is defined as two consecutive quarters of negative economic growth and there has yet to be even one quarter of negative growth.
As far as Gramm’s "nation of whiners" comment, the "Early Show" would certainly know about that given its own recent whining about the economy. On June 30 Smith talked to economic analyst Mark Zandi and the two of them declared a recession. On June 24, co-host Julie Chen proclaimed a "perfect storm of economic woes" afflicting the nation.
Meanwhile on Friday’s show, Plante concluded his report by explaining: "Gramm said that he'd only been talking about the nation's leaders. But the comment played right into the Democrats charge that Republicans are a bunch of plutocrats who don't care about the average voter." Following Plante’s report, Smith talked to political analyst Jeff Greenfield, who made a similar observation about "plutocratic" Republicans:
Various media outlets have jumped on the comments of Phil Gramm, an advisor to John McCain's presidential campaign, that when it comes to the economy, "we've sort of become a nation of whiners." However, these same organizations, such as ABC News, have done their part to promote such things as fretting over no more Christmas presents. For instance, on the November 12, 2007 "Good Morning America," reporter Bianna Golodryga hyperbolically warned that "some people are foregoing routine visits to the doctor and are opting for cheaper foods, like pasta and peanut butter, as opposed to protein, fruits and vegetables, in order that they can save as much money as possible." She added that for certain individuals, "Even holiday gift shopping won't be the same."
Now, this is the same program that on Friday's show observed that "conservative icon" Phil Gramm's "words have been damaging at a time when McCain is trying to convince voters he feels their pain." Certainly, GMA has done everything possible to assure viewers that the economic situation, which isn't a recession, is destroying their lives. On April 22, 2008, Ms. Golodryga (see file photo above) showcased a man who had been forced to skip church because of gas prices.She then intoned, "Some people even say that they are changing their diets, cutting down on costly prescription drugs or walking instead of driving to the local grocery store."
With Starbucks’ announcement that it will closing 600 of its locations nationwide, the network morning shows on Wednesday heralded this news as another sign of a bad economy. ABC’s Bianna Golodryga on "Good Morning America" lamented that "Americans are struggling just to pay for a cup of Starbucks coffee." NBC’s Matt Lauer’s clever headline: "Trouble brewing -- Starbucks announces its closing 600 stores in the next year. Is the demand for $4 lattes dying in a tough economy?"
But CBS’s "The Early Show" took the puns and the "doom and gloom" to a new level. Host Maggie Rodriguez teased the headline news: "Starbucks shutting its doors on hundreds of stores. Tough economic times or just a grande letdown?" Correspondent Ben Tracy, in his report on the closings, quipped, "The economic slowdown has been a real grind for Starbucks' profits. After filling up their gas tanks, some coffee lovers don't have enough left to fill up their cups."
On Monday’s CBS "Early Show," co-host Harry Smith talked to economic analyst Mark Zandi about the state of the economy and asked: "Oil's up, gasoline's up, food prices up, stocks, way, way, way, way down. Home owner -- home values are down. Is there an end in sight to all of this bad news?" Zandi replied: "You just made me depressed. No. It's just bad news. It really is...It's just a really tough time for many Americans."
Later, Smith commented on how all the bad economic news seems to contribute to bad economic events: "It just seems like we're in this cumulative cycle that, you know, once one threshold of bad news gets reached, we reach to yet another one." That comment sparked this exchange with Zandi:
ZANDI: Yeah, it's a self re-enforcing negative cycle. You know, that's what happens during recessions, and that's what we're in the middle of right now.
SMITH: Whoa, is this a recession?
ZANDI: You know that -- that's a debate among economists and policy makers. But in the minds of the average American household I think there's no debate, this is a recession. I mean they're worth less today than they were a year ago, they're purchasing power is lower. I mean, for most people that's the definition of recession. So, economists can debate it but I think most people think this is a recession.
The U.S. is not in a recession, but viewers wouldn't know it from watching "Good Morning America." In the span of three days, the ABC program has eight times proposed cures in its "Recession Rescue" segment. On June 24 alone, GMA fretted about the "recession" five times. This is despite the fact that America hasn't had one quarter of negative growth, let alone the two necessary for there to be a recession.
On Tuesday, teasing a story on how bad credit can keep people from getting a job, co-host Robin Roberts previewed "important tips in our Recession Rescue." At the top of 7:30 half hour, she again told audiences to stay tuned for "important tips in this morning's Recession Rescue." Ten minutes later, news anchor Chris Cuomo promised "our Recession Rescue" would give credit advice designed to keep viewers from not missing out on a job. Later in the show, he touted another story on how to save for retirement and labeled it as, that's right, "a good Recession Rescue." Now, certainly, the economy has been struggling and many people are having difficulty, but do words not mean things to the reporters and producers at GMA? Or would they simply shrug their shoulders and say, "Close enough?"
Survey question: If the media had the results of three independent surveys of corporate executives about the economy and two of them were more negative than the third, which one wouldn't get much coverage?
In the last few days, three such surveys have been released. Two of them - the Business Roundtable's quarterly CEO Economic Outlook Index and the Duke University/CFO Magazine Global Business Outlook survey - got pretty good coverage in the media.
The third survey, conducted by the University of North Carolina's Kenan-Flagler Business School for the American Institute of Certified Public Accountants, less so.