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):
As Congress takes new aim at speculators for the high price of gasoline, some media reports seem to be following suit. But as The Biz Flog explains this week, there is considerable debate over whether speculators should be blamed for the high cost of oil.
June 23, the same day Democrats on the House Energy and Commerce Committee condemned oil speculators, the "CBS Evening News" and ABC's "World News" blamed oil speculation for a large chunk of the spike in prices.
"There's no doubt speculation plays a role in the skyrocketing price, but how much?" ABC correspondent Ryan Owens said June 23. "Experts say if it were just simple supply and demand a barrel would cost $75. Today it closed north of $135."
Scott Horsley explained oil speculation on June 29 for National Public Radio's "All Things Considered," where he pointed out that there have always been financial players in the oil market and there is still a debate over what influence they really have.
Although the collapse of Bear Stearns happened back in March, the debate still rages as to what led to the failure of the 85-year old investment bank that had survived years of previous turmoil, including the Great Depression.
"Well, you know, he [Dimon] said one thing that I'm just - listen, I didn't watch it," CNBC's Charlie Gasparino said, "I'm just going by what appears to be a transcript here: ‘Where there's smoke, there's fire.' Oh really? Sometimes where there's smoke, there's no fire, Jamie. I've got news for you."
You can win in a court of law and still get attacked in the court of public opinion. That's what former New York Stock Exchange Chairman Dick Grasso would have learned from MSNBC's "Morning Joe" July 2.
Host Mika Brzezinski called Grasso a "poster child for Wall Street excess" in reporting a New York State Supreme Court ruling allowing Grasso to keep his $187.5 million pension payout.
"There you go, a little justice there," Brzezinski said. "Jack Welch calls it justice; I call it a very large pay package. It's a lot of money, Jack."
Brian Williams raised the possibility of General Motors (NYSE:GM) going out of business on the June 26 "NBC Nightly News" to Jim Cramer, host of CNBC's "Mad Money."
"[J]im, I know you talk about this, think about this everyday for a living and have a formula regarding this," Williams said. "But first, what's going on out there? I heard one analyst today said, ‘GM will go out of business,' though I know a lot of people disagree with that and it's a scary thought."
Subtle bias towards emphasizing unfavorable economic news and against reporting good economic news is present in many places. I will demonstrate that it's even sometimes in the brief e-mail alerts many people receive.
This alert I received today from CNNMoney demonstrates a long-known (by me) but, until now, unproven point:
But when the Dow closed above 14,000 for the first time on October 1, 2007, here is what that day's CNN alert had to say:
The Associated Press's Martin Crutsinger got out the gloom-and-doom paint in his report on the Consumer Price Index on Friday morning.
Here are his opening paragraphs:
Inflation rate jumps by biggest amount in 6 months
Inflation shot up in May at the fastest pace in six months, pushed higher by soaring costs for gasoline and other types of energy.
The Labor Department reported Friday that consumer prices rose by 0.6 percent last month, the biggest one-month increase since last November, as gasoline costs surged by 5.7 percent. Food prices, which have also been rising sharply, were up 0.3 percent as the cost of beef and bakery products showed big gains.
Core inflation, which excludes energy and food, edged up a more moderate 0.2 percent in May. But even there, core prices are up 2.3 percent over the past 12 months, above the Federal Reserve's comfort zone.
Trouble is, the markets weren't buying into the negativity Crutsinger was selling, as SmartMoney.com reported after the closing bell:
Update | 10 AM: McCain Campaign Comments to NB on Mitchell Remarks
McCain campaign deputy chairman Frank Donatelli has commented to NB on Mitchell's remarks. See report at foot.
IMing with a friend in England this morning, Morning Joe on in the background, I was vaguely aware that an Obama staffer was on, touting her candidate's economic plan. Signing off my chat, I focused on the tube, only to realize that the Obama staffer was in fact . . . Andrea Mitchell.
Mitchell cast the battle of the candidates' tax plans as McCain's "old-fashioned" supply-side economics versus Obama's "mainstream, centrist" plans that "do help people" while responsibly "paying for everything."
"Good Morning America" highlighted how financial matters have Americans so stressed out, their health is literally deteriorating.
The segment, titled "Recession Depression," blamed personal issues on the "troubled" economy. ABC made yet another comparison between today's economy and the economy during the Great Depression. Only this time, the reference was used to predict a rise in suicides.
"The link between financial troubles and psychological problems is well documented," said ABC reporter Chris Cuomo.
Business & Media Institute Vice President Dan Gainor told the Fox Business Network on April 4 that the government might be intervening too much in the financial markets to address credit problems, and he criticized the media for failing to cover both sides fairly.
"The networks are not portraying at all the other point which is: maybe we're using too much government intervention. Maybe we're using too much regulation," Gainor said. "Instead they're using the worst-case scenario reporting" to support government intervention.
As economic issues move to the front of the on-going presidential campaign, the mainstream media have given an increased amount of coverage to what is happening on Wall Street. However, they have portrayed Wall Street as something completely alien to what happens on "Main Street."
"Now to Wall Street, which, as you know, doesn't always like what Main Street likes, and by the end of the trading day, it was up," NBC "Nightly News" anchor Brian Williams said on Oct. 31, 2007.
But something positive on Wall Street and something positive for Main Street are not mutually exclusive.
Coming off his April 2 interview with Democratic presidential hopeful Sen. Hillary Clinton (D-N.Y.) on his show "Mad Money," CNBC's Jim Cramer told "Squawk Box" his job entails some hazards.
"You know, look, obviously I've had a lot of death threats," Cramer said on CNBC's April 3 "Squawk Box." "They're actual death threats. And, you go to the state police and the state police go to the local police and the local police call the guy and that's what you have to do, or you bring suit against them. I've had to do a lot of that."
Cramer emphasized his active response to anyone who threatened his life.
"You know, the death threats are not cool," Cramer said. "You know, anybody with a death threat, I go after them with everything I have."
Wall Street saw a 391-point rally on the Dow today, the first day of the second quarter. ABCNews.com saw the development worthy of a "Breaking News" tag towards the top of its Web page and put the story in the top headlines rotation.
But it appears that ABCNews.com was alone among its competitors in trumpeting the news. I checked numerous Web sites shortly after 5:30 and found ABC's to be the only one to give the rally top billing. [see the screencaps below the page break]
Just how obvious is it that the media's economic and business coverage is so negatively skewed that it has to be part of a political agenda in an election year?
Obvious enough for the folks at Fox News to do an entire segment Saturday morning asking the extraordinary question: "Media ‘Talking Down' the Economy to Get a Dem Elected?"
Despite my surprise seeing "Cavuto on Business" begin with such a question framed at the bottom of the screen, I was almost enraptured by the comments from Neil's guests which not only included regular assertions that this is clearly about getting a Democrat in the White House, but also that media are "committing a crime against the general public" by creating a self-fulfilling prophecy that will end up costing people their jobs in the long run.
More importantly, "if we have a serious recession, a great deal will lie at the media's feet."
When is a billion-dollar loss a bonanza? When the person suffering it is one of those greedy Wall Street types the MSM loves to hate. Check out how, in opening this morning's show, Today cast the situation of Bear Stearns Chairman James Cayne:
MATT LAUER: Payday! His company imploded and thousands of stockholders went bust, but the Chairman of Bear Stearns cashes in and gets $61 million dollars. Will there be a backlash?
Watching the intro, I assumed the Chairman, despite Bears' fall, had received some kind of bonus or golden handshake. It wasn't until Maria Bartiromo came on later that we learned that Bear Chairman James Cayne, far from receiving a bonus or bonanza, had incurred one of the worst personal financial losses in the history of the street.
"The American public don't know jack," Cramer said in response to a question from CNBC correspondent Michelle Caruso Cabrera about justifying the move to the American public. "They're just glad they're just not going to lose their job. I mean, this thing was so out of control. Everybody on Wall Street thought they were going to lose their jobs 10 days ago. We're thrilled."
CNBC "Mad Money" host Jim Cramer came under fire recently for telling viewers Bear Stearns (NYSE: BSC) wasn't in trouble just days before the investment bank tanked. He has finally admitted some fault.
"No! No! No! Bear Stearns is not in trouble," Cramer said on his program March 11. "If anything, they're more likely to be taken over. Don't move your money from Bear."
The following weekend, confidence in the investment bank disintegrated. On March 17 it was announced JP Morgan Chase (NYSE:JPM) would take over Bear Stearns at $2 a share after the Federal Reserve agreed to back the takeover.
Cramer appeared on CNN's March 23 "Reliable Sources" to maintain that he meant not to move your money from Bear Stearns the investment bank - not Bear Stearns' common stock - on his stock-picking show. However, Cramer told host Howard Kurtz he was wrong about the general health of Bear Stearns.
With Eliot Spitzer gone, Chuck Schumer moves to the head of the list of smugly self-righteous New York pols. So it was particularly satisfying to see Sen. Jon Kyl [R-AZ] put Schumer is his place on This Week with George Stephanopoulos today.
A guest with Kyl for purposes of discussing the economy, Schumer clearly came in with a game plan: to analogize President Bush to the man who presided over the beginning of the Great Depression: Herbert Hoover. After Schumer tried it twice, Kyl had had enough and unleashed a riposte as devastating as it was reasoned.
"Good Morning America" economic reporter Bianna Golodryga narrated a segment on Tuesday's show that featured grainy black and white footage from the 1930s and two references to the Great Depression. The ABC journalist also featured clips from Democratic presidential contenders Barack Obama and Hillary Clinton to amplify the warnings of impending economic doom.
While discussing the collapse of investment bank Bear Stearns, grainy footage of panicked '30s bankers appeared onscreen as Golodryga intoned, "The problems are so massive that the Fed is taking measures not seen since the Great Depression..." And while President Bush was briefly highlighted, assuring Americans that the United States will rebound, Paul McCulley, the managing director of the investment company Pimco, continued the comparison to the worst economic crisis the United States ever faced. Referencing impending action by the Federal Reserve, he asserted, "...You could have the Fed with great intentions but still a downward spiral in property prices that would give you a modern day depression." For comparison's sake, during the Great Depression, almost 25 percent of Americans were unemployed.
In a response to an e-mail posted on his Web site on March 11, Cramer said Bear Stearns (NYSE:BSC) wasn't in trouble and advised the writer to keep his money in the investment bank:
"Dear Jim: Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? --Peter
Cramer says: "No! No! No! Bear Stearns is not in trouble. If anything, they're more likely to be taken over. Don't move your money from Bear."
On the day Cramer posted that on his Web site, Bear Stearns had a stock price of $62.97. As of noon March 17, the stock price had plummeted to $3.80 a share after the market opened. On March 16 it was announced that J.P. Morgan Chase & Co. (NYSE:JPM) was purchasing the beleaguered investment bank rocked hard by the mortgage fallout.
Jim Cramer is known for wearing his heart on his sleeve. But the host of CNBC's "Mad Money" normally lets his emotions show over matters financial. In August, for example, he went ballistic at Ben Bernanke, pleading with the Fed chairman to lower interest rates in the face of widespread home foreclosures.
This morning, however, Cramer got verklempt not over the discount rate but at the falling fortunes of his friend Eliot Spitzer. Cramer went to Harvard Law with the embattled governor and his wife Silda, and over the years has defended Spitzer against the torrent of criticism directed at the so-called sheriff of Wall Street for his high-handed tactics.
Cramer appeared on this morning's Today to discuss with Meredith Vieira yesterday's dramatic Fed move. But at the end of the interview, Vieira raised the Spitzer situation, and that sent Cramer to the verge of tears. The transcript below doesn't do justice to just how emotional Cramer became, so readers might want to view the video.
During a story suggesting that Angelo Mozilo, the former CEO of the mortgage company Countrywide, is unworthy of his millions of dollars and perhaps enjoys too much time lying in the sun, ABC's Dan Harris, possibly not picking up on the former CEO's Italian ethnicity which could be the source of his skin's dark complexion, remarked that Mozilo's "deeply tanned face" could become the "face of the mortgage mess." The story ran on Friday's World News with Charles Gibson, substitute hosted by George Stephanopoulos, with Harris beginning his report: "This may well become the deeply tanned face of the mortgage mess. The face belongs to Angelo Mozilo, the once-celebrated CEO of Countrywide, now facing allegations of predatory lending and rapacious greed." Harris also ended the report seeming to lament that Mozilo is not facing foreclosure on any of his homes: "If the sale [of Countrywide] goes through, Mozilo will walk away with about $40 million. And with not one of his homes in foreclosure." (Transcript follows)
If you haven't gotten to check out the Business & Media Institute's new weekly video blog, The Biz Flog, this week's topic is the media's shift from reporting on "recession" to all-out "depression."
Complete with old-timey piano music and grainy film, this week BMI gives you our take on the many instances when reporters have compared the current economy to a time when soup lines and the Dust Bowl carried headlines.
Granted, the National Association of Realtors (NAR) is a trade organization which will, as trade organizations do, try to put the best face on a bad situation. And granted, part of the press's job is to filter through hype and false sunniness to report the truth of what's really going on.
But that is most emphatically not what the Associated Press did with yesterday's NAR report on the state of the national housing market. Instead, AP failed to report overall statistics in favor of reporting individual metro areas; ignored most of the legitimately good news; ignored an important piece of historical context; and, most importantly, and as has been the case for well over a year in the national business press, emphasized reductions in unit sales while de-emphasizing much smaller reductions in sale prices.
"[T]he truth is, ["Today" co-anchor] Meredith [Vieira], it doesn't matter if we're in a recession," Bartiromo said on NBC's February 6 "Today." "We can talk ourselves into a recession, and that seems to be what we're doing right now and that certainly begets more weakness."
The media coverage has apparently affected voters. According to the February 6 Washington Times, an exit survey from the "Super Tuesday" primaries showed 47 percent of Democratic voters and 40 percent of Republican voters said the economy was the most important issue in making their choice at the polls.
On January 18, Cramer appeared on MSNBC's "Hardball with Chris Matthews" and warned if the government didn't intervene and prevent the failure of two large insurance companies, Ambac and MBIA, the Dow Jones Industrial Average would drop 2,000 points in the upcoming weeks. Cramer isn't talking about that sort of collapse anymore.
"For months I was worried about [MBIA CFO] Chuck Chaplin and MBIA (NYSE:MBI) and ABK [Ambac Financial Group, Inc.] (NYSE:ABK)," Cramer said on the January 31 "Street Signs." "Everyone's worried about it now? Why should I be worried about it? When you have a problem on your hands and everyone's worried knows about it, [New York State Superintendent of Insurance] Eric Dinallo to [President of the Federal Reserve Bank of New York] Tim Geithner, it's done. It's done."
Can you remember where you were at any point during the four years of the Jimmy Carter presidency?
Most people who were alive don't look favorably toward the economic situation during those years. But MSNBC "Hardball" host Chris Matthews, who was gainfully employed as a member of the Carter administration, might look back a little fondly.
It was supposed to be a bad day in the American stock markets according to CBS's "The Early Show." Guess what - they were wrong.
"Hong Kong's Hang Seng market was down more than 4 percent," Julie Chen said on the January 28 "The Early Show." "Tokyo's Nikkei index off about 4 percent. Wall Street may have a rough morning in advance of President Bush's final State of the Union address tonight. We'll be watching the markets throughout the morning."
Assuming American markets will follow the lead of any other international markets is an iffy proposition, as indicated by the performance on Wall Street today. After the gloomy forecast from "The Early Show" for the day, the Dow Jones Industrial Average (DJIA) finished in positive territory on January 28 - at the highs of the day, up more than 176 points. The NASDAQ and S&P 500 also finished in positive territory, both up more than 23 points.
I have referred to Mr. Wesbury's work frequently. That's because he has been, as he is today, a sober voice standing up to Old Media-driven economic hysteria with those stubborn things known as facts.
Wesbury first caught my attention when he expressed alarm in late 2005 that 43% of the country thought we were in a recession -- not about to go into one, actually in one. That same poll metric reads 35% today.
Here are some snips from his Wall Street Journal column today, making a number of points about the current economy, and reminding us that inflation has not been relegated to irrelevancy. He doesn't extensively call out Old Media's gloomy economic coverage, but I don't doubt for a minute that he considers it a major negative factor (bolds are mine):
It is hard to imagine any time in history when such rampant pessimism about the economy has existed with so little evidence of serious trouble.