Regulation

Remember the years of media flak President George W. Bush received for his alleged use for political gain of first the terrorist attacks of September 11, 2001 and then the related Afghanistan and Iraq Wars?

Will the press be as vociferous now? Incoming Obama Administration Chief of Staff Rahm Emanuel, speaking on Wednesday on and to the Wall Street Journal Digital Network, stated outright his desire to make political hay with the ongoing travails of the U.S. and global economy:

"You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things you think you could not do before."

Wonder why President-elect Obama resigned from the Senate so early (while Vice President-elect Joe Biden remains an active member) and is hanging back, not wading into the debate over bailouts etc, and naming candidates for nearly every Cabinet post save Treasury (the man or woman who will have $350 billion to dispense when he/she walks through the door)?

Pulitzer-Prize winning author and professor of history at Stanford University David M. Kennedy told Bloomberg radio Nov. 18 that the current financial crisis bears no comparison to the Great Depression.

"Well, we're not yet in anything remotely resembling the crisis, the scale of crisis of the Great Depression." When Franklin Roosevelt took office in 1933, 13 million Americans were unemployed. "That was 25 percent of the work force," Kennedy told Bloomberg host Tom Keene.

The professor laid out exactly what has changed since the troubled 1930s:

Earlier today, Christopher Booker at the UK Telegraph noted a "surreal scientific blunder," followed by an attempted cover-up, that should cause everyone to question the source's past and future credibility.

The source of the shoddy work is NASA's Goddard Institute for Space Studies (GISS), the outfit run by world champion globalarmist James Hansen. Hansen has in the past stated that "heads of major fossil-fuel companies who spread disinformation about global warming should be 'tried for high crimes against humanity and nature.'"

What Booker reports causes one to wonder what the appropriate punishment should be for committing drop-dead obvious errors and integrity-lacking follow-up.

Part of the punishment is surely the Telegraph's delicious headline, followed by Booker's criticism (bolds are mine):

The world has never seen such freezing heat

In the name of gender equality, the Today show plumped this morning for government regulation forcing health care insurers to charge men and women the same for individual policies even though women cost insurers more because of greater use of services.  Hasn't the financial crisis taught the MSM anything about the danger of government meddling in markets? No.

Insurers wind up paying out more in claims under women's policies than men's.  Under the circumstances, charging women the same as men would make as much sense as FedEx charging a flat shipping fee no matter how big the box.  But that didn't stop NBC medical editor Nancy Snyderman and Today weekend co-host Amy Robach from decrying the unfairness of it all this morning.  Their solution? More government, of course.  They want legislation to force insurers to charge the sexes the same.

View video here.

So what exactly is the government doing with your money? Fox Business Network's Alexis Glick would like to know.

Treasury Secretary Henry Paulson announced Nov. 12 he would be redirecting the $700 billion bailout to focus on propping up financial institutions instead of buying troubled mortgage assets, which was the original intent of the rescue plan.

Glick, the host of FBN's "Money for Breakfast," told the CBS's "The Early Show" Nov 13 that the Treasury Department's move away from the original plan to buy up troubled mortgages "does not make sense" and was "actually pretty outrageous":

[T]he markets responded to that yesterday ... Look, the original intent of this Troubled Asset Relief Program was to purchase troubled assets. And I think the marketplace started to adjust several weeks ago when we started to see the size and magnitude of the capital injections.

It's not like Barack Obama is a socialist or anything. It's just that Thomas Friedman wants him to put a "government master" in charge of the country's biggest manufacturing sector. Friedman made his modest proposal in his New York Times column of today, and expanded on it during a Morning Joe appearance. [H/t reader Tom.]

Video also available here.

I've got three easy reasons why Friedman's idea won't work.

British premier Gordon Brown, a former chancellor of the Exchequer -- analogous to the U.S. Secretary of the Treasury -- delivered a thinly-veiled entreaty to President-elect Barack Obama to eschew trade protectionism in a November 10 speech, reports Kevin Sullivan of the Washington Post Foreign Service. Post editors buried Sullivan's 18-paragraph article on page A15:

LONDON, Nov. 10 -- Prime Minister Gordon Brown on Monday warned that trade protectionism would worsen the global financial crisis, a remark widely perceived as aimed at U.S. President-elect Barack Obama.

In a speech lauding the "global power of nations working together," Brown called for "rejection of beggar-thy-neighbor protectionism that has been a feature in transforming past crises into deep recessions."

Obama's campaign rhetoric struck some allies as protectionist, particularly his calls for tax incentives to discourage companies from relocating jobs away from the United States.

A Financial Times reporter who endorsed Obama but worried about his economic policies has taken a fresh look at the President-elect's post-election economic policy ideas, and doesn't like some of the big ticket items he sees. [See related blog entry by Jeff Poor here]

In his November 10 op-ed "The choices that confront America," British journalist Clive Crook reserved some of his harshest criticism for Obama's openness to bailing out Detroit's floundering automakers (emphasis mine):

The greatest danger of all is that the valid case for a strong stimulus takes under its wing spending proposals that create an ongoing obligation, have no true investment rationale, and represent a waste of public money now and in the future.

The bail-out currently being sought by the big US carmakers falls squarely into this category. Managers and unions have conspired for years to drive US-owned, US-based car manufacturing into the ground. Now they seek public subsidy to pay for investments they should have undertaken in any case, and to sustain wages and benefits that comparably qualified workers in other industries cannot hope to enjoy.

Why a worker in a US-owned car factory deserves more generous treatment than any other kind of US worker escapes me. Asking those other workers to pay for these privileges seems to add insult to injury. Perhaps President Obama will be able to explain.

"The government is doing what it can. They've learned the lessons of the 30s. And the lesson of the 30s was to put ideology aside and do whatever you can to bail it out," New York Times Chief Financial Correspondent Floyd Norris said in an Oct. 8 video on the publication's Web site entitled "Echoes from a Dismal Past."

"I agree with you," economics reporter Louis Uchitelle said, also pointing out that it took two years before the government really "stepped in and acted" during the Depression - referring to Franklin Roosevelt's action.

Norris said one of the first lessons of the 1930s was that bailing banks out would "limit the damage of the financial crisis."

"If you go back just two or three years ago, you had this powerful argument that government was the problem. So there is emerging from this an understanding that markets and government are married whether they like it or not," Uchitelle said.

Who's going to be the leader of the financial world in the role of Treasury Secretary under President Obama? It may be Democratic New Jersey Gov. Jon Corzine, who has pushed for an additional economic stimulus package to the tune of $300 billion to support infrastructure projects.

CNBC's Carl Quintanilla asked Corzine outright on "Squawk Box" if he would accept a job in the Obama administration as Treasury Secretary. "If it's offered, governor, will you say no?" Quintanilla asked.

"You know, I'm not going to say never to anything," Corzine said Nov. 5.

"Squawk Box" co-host Joe Kernan encouraged Corzine to consider accepting the job if offered, even as the former U.S. senator expressed his contentment as governor. "You could save the world" as Treasury Secretary, Kernan said.

As election results rolled in, the hosts on CNBC's election coverage speculated what a win by Democratic presidential nominee Sen. Barack Obama might mean.

CNBC "Kudlow & Company" host Larry Kudlow warned Obama shouldn't misinterpret the election results to unleash an attack on vital parts of the economy.

"My point is Obama can not go far to the left if he is winning states like Ohio and New Mexico and let's say Virginia and the others," Kudlow said. "In other words, these red states that are hotly contested are sending a message to Sen. Obama he must in fact govern as the moderate."

Reporter Clive Crook really likes Barack Obama and in a November 3 op-ed practically endorsed him for president. But, the Financial Times reporter worries, the Illinois senator has some loopy economic ideas.

Yes, your just read that correctly. A reporter for one of the Anglosphere's well-respected financial newspapers admits he'd vote for Obama were he an American citizen -- Crook is a subject of Her Majesty Queen Elizabeth II -- but he hopes his stump speech populism is all a vote-getting gimmick.

As you read this, imagine the clamor, if not outright outrage, if a conservative-leaning foreign journalist like say Mark Steyn endorsed McCain only to question his foreign policy prescriptions (emphases mine):

According to one UCLA economist, the U.S. is economically sound, but people have panicked because of "scary" warnings surrounding the $700 billion bailout.

"Periods of crisis often beget bad policies," Lee E. Ohanian, an economist at the University of California, Los Angeles (UCLA) said in an interview with Reason.tv. The professor stressed that six weeks ago the fundamentals of the economy looked "pretty good," before bailout "rumors" caused "panic":

What I mean by fundamentals are the amount of factories and office buildings and capital equipment we have in place, there's no change in that. There is no change really in individuals' interest in working. We've got the same work force right now we had six weeks ago. Productivity is about the same as it was perhaps even higher. All those fundamentals of the economy are the same.

Ohanian said Gross Domestic Product growth over the last five to six quarters was "on average," and productivity growth was "very high"

Video after the jump.

Wall Street is definitely watching all those polls the networks keep touting.

CNBC's Erin Burnett told MSNBC's "Morning Joe" that Wall Street was predicting that Sen. Barack Obama will win the presidency, but an upset from Sen. John McCain might boost it:

This market has priced in Obama, has not priced in McCain. Some people say that if McCain were to have an upset and win the market might get a big pop, who knows, but down here the conventional wisdom is, is that Obama has been priced into stocks.

When asked to explain the term "priced in" Burnett said, "It just means the market expects it. So, if Obama wins the market probably isn't going to do anything one way or the other."

Washington Post reporter Sholnn Freeman frontloaded his October 31 business section front page article, "Airfare Surcharges Stay Despite Oil Price Drop," not on examining the valid business reasons for why some airlines retain the fee but in citing a liberal politician seeking to grandstand the issue.:

When oil prices were rising rapidly, many financially-strapped airlines started adding special surcharges to ticket prices to cover the bill. So now that oil prices are falling, are the fees coming off? Not yet.

The lag is drawing complaints from air travelers, consumer watchdogs and a member of Congress. Sen. Robert Menendez (D-N.J.) is sending a letter to U.S. Transportation Secretary Mary E. Peters asking the department to investigate whether the charges "have any basis in reality or if they are being used to mislead travelers, reduce competition and increase fares."

It's obvious The Washington Post's "Style" section is broadening it horizons beyond fashion, music, books and other fluff, plus of course - Howard Kurtz's media column and the comics. The editors of that section are tackling important events that changed history by commemorating them as milestones.

The Post's Oct. 29 "Style" section allotted two-thirds of the front page to observing the 79th anniversary of the Oct. 29, 1929 "Black Tuesday" stock market crash.

Normally such attention is given to anniversaries that fall more under the definition of a landmark: the 25th, 50th, 75th, etc. But with the American public seeing the economy as the top issues in the presidential election - and the media tendency to compare current economic conditions to the Great Depression already well-established - the Post has deemed the 79th anniversary worthy of attention.

Sometimes government tries to fix the problem; then it makes the problem worse.

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.

Who wrote the following?:

"Societies in which the few are allowed to fatten themselves without limit on the labor of many are not just."

A. Friedrich Engels
B. William Ayers
C. Michelle Obama
D. Timothy Rutten

Any of the answers would make sense, but the headline kind of gave it away. It was Timothy Rutten of the LA Times who penned that immortal line in his column of today.  In doing so, Rutten echoes other in the MSM, as here and here, who in the wake of the financial markets' travails indulge in a certain anti-capitalist chic.

Let's have some fun deconstructing the intrepid class warrior's musings . . .

You know the news media is doing a poor job of covering Sen. Barack Obama and his running mate when a supporter of the Democratic ticket criticizes the media for giving them a "pass."

Megan McArdle, a blogger for TheAtlantic.com who has said she's voting for Obama, slammed the media in an appearance on Reason.tv's "The Talkshow" for not bringing up Sen. Joseph Biden's past as a "corporate sellout." McArdle said that was quite relevant when the Democratic candidates try to oppose financial deregulation in campaign appearances.

"And here is where I am willing to say the media is giving Obama a pass on a bunch of stuff that they shouldn't be ... It's ridiculous that no one is bringing up every time - every time Obama says anything about financial deregulation, Joe Biden's history should be trotted out and it's not and I'm not sure why," McArdle said to host Nick Gillespie.

Video after the jump.

In a stunning on-air admission of his desire to re-regulate radio and infringe on free speech, Obama supporter and New Mexico Sen. Jeff Bingaman (D) argued recently that the so-called Fairness Doctrine -- which would mandate equal time for opposing viewpoints on radio programming -- would elevate talk radio to a "higher calling." Bingaman lamented that radio without the "Fairness Doctrine" has become less "intelligent."

Radio Equalizer's Brian Maloney has more here. You can hear the audio by clicking the EyeBlast embed at the right.

A transcript appears below the page break, courtesy of NewsBuster and MRC Director of Communications Seton Motley (emphases mine):

You have to give credit where credit is due. The lead editorial in the Oct. 20 Washington Post didn't declare free-market capitalism dead after the failure of several financial institutions led to massive government intervention - as a front-page story on its Oct. 10 edition declared. Instead, the editorial pointed out the how the market that failed wasn't exactly free to begin with.

"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."

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.

But Kernen didn't stop there:

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:

On Tuesday’s CBS Early Show, co-host Harry Smith talked to former New York City Mayor Rudy Giuliani and asked about negative attacks in the campaign: "Alright, one of the things that's happened in the McCain campaign over the last couple of days is the personal attacks seem to have at least subsided or quieted down a little bit. Do you think, in the long run, this might actually have been a fatal wound to the McCain-Palin campaign?" Giuliani responded: "I think there's a tendency on the media to blame it more on John McCain and Sarah Palin than on Barack Obama and his campaign but, to me, it's -- you know it's been coming from both sides." To that, Smith sarcastically replied: "Yeah, it's got to be the media's fault." Giuliani laughed and added: "Don't be defensive, Harry."

This is the not the first time Smith has denied Giuliani’s charges of media bias. On September 12, Giuliani criticized the media for attacking Sarah Palin’s experience but not applying similar scrutiny to Barack Obama: "The whole issue of whether she knows world affairs or not, these are questions that were never asked of Barack Obama, never asked of him to this day." Smith angrily denied any such bias: "That's not true. That's not true...That's not true. That is absolutely not true...That is absolutely not true. Those -- all those questions have been asked over the last 19 months." However, Smith himself conducted eight interviews with Obama and only asked two foreign policy questions of the inexperienced Senator.

The stock market is casting a vote of "no confidence" in Barack Obama (D-Ill.) and his Republican opponent is missing an opportunity to slam the freshman senator for an economic agenda that is a rehash of the worst of Presidents Herbert Hoover and Jimmy Carter.

So argued on-air editor Charles Gasparino in an October 13 op-ed in the New York Post, where the CNBC talent mentioned that even Obama's Wall Street backers are nervously telling him to change course on his economic plans (emphases mine):

Overall, his [Obama's] plan includes some of the most lethal tax increases imaginable, including a jump in the capital-gains rate. He'd expand government spending massively, with everything from new public-works projects to increases in foreign aid to a surge in Afghanistan - plus hand out a token $500 welfare check that he calls a tax cut to everyone else.

This is clearly the wrong way to go in the wake of an economic meltdown - yet Obama, for all his talk of how willing he is to compromise, of how he'd bring people together, is sticking to his tax guns.

I know at least one top Wall Street executive, an Obama supporter from the start of his campaign, who has recently urged Obama to rethink his tax plan - and that was before last week's record losses on the Dow.

Given 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):

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?"

The editorial's body begins thusly:

A former San Francisco Supervisor pleaded guilty Friday to three felonies Friday that go to the fundamental integrity of city operations.

Both the Associated Press's Paul Elias and the San Francisco Chronicle's Wyatt Buchanan did not see fit to name the party of Ed Jew, who is, naturally, a Democrat.

Interesting, Jew attributes his downfall to the examples of others, and, according to Buchanan, "is prepared to name others who he says have engaged in similar actions." Though there's clearly an element of personal responsibility avoidance at play here, it's nonetheless worth noting that AP and Buchanan still had no interest in learning where Jew picked up what Elias described as "lessons taught by other politicians."

Here are the first five paragraphs of the AP story:

Who you gonna call to fix the economy? Kids.

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: