For years NewsBusters and its affiliate the Business & Media Institute have agonized over the astounding economic ignorance of many press members who despite their lack of financial acumen have the gall to offer their unqualified opinions to the public.
No finer example of a media member who should understand her limitations and keep her mouth shut during economic discussions was the Atlanta Journal-Constitution's Cynthia Tucker Sunday morning who on ABC's "This Week" actually said that all the problems in the financial services industry would have magically disappeared if only the Bush administration would have bailed out individual homeowners.
Maybe more interesting was that she began her nonsensical accusation by saying, "I've never understood." As this was the most accurate statement she made concerning this matter, she should have stopped there.
Sadly, she didn't (video available here, relevant section at 11:33, file photo):
Well, there has been, I think, an ideological barrier in this administration to helping homeowners. I've never understood: if in fact this vast economic crisis started because individual homeowners couldn't pay their mortgages, it seemed to me it would have been cheaper in the beginning to help some of those individual homeowners to pay their mortgages. But this administration, Bush administration, good conservatives, nationalize and bailout the banks, help Wall Street, but for heaven sakes, don't help individual homeowners.
Sadly, George Stephanopoulos was moderating the panel rather than someone actually knowledgeable on the subject, for the followup question to Tucker should have been, "So what happens to the almost $60 trillion invested in credit default swaps if these homeowners are bailed out?"
I would have loved to have been a fly on the wall to see Tucker's deer in the headlights expression, wouldn't you?
After all, even the producers and writers of CBS's "60 Minutes" were intelligent enough to understand that the real problem behind this financial crisis is credit default swaps AND NOT John and Jane Q. Public's inability to pay off their mortgage.
Because if all the problem mortgages were suddenly paid off, all the complex derivatives betting on their default suddenly become worthless, and financial institutions all over the world have to writedown almost $60 trillion.
How do you think that would impact banks, brokerage firms, and insurance companies across the globe, Cynthia?
Furthermore, by doing this, the very entities at the heart of the Ponzi scheme -- those that SOLD the credit default swaps -- would be rewarded, for they wouldn't be required to pay off claims by the buyers.
As such, all those that sold the junk paper at the heart of this crisis would get off Scott Free.
Of course, these homeowners still could have been bailed out, but some mechanism would have needed to be created to establish some value to these derivatives. Alas, that is indeed what Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke are trying to work through.
Regardless, it really is offensive how little so many media members know about this matter, and that it is they who molded public opinion concerning this financial crisis just as the nation was getting ready to elect a new president.
After all, Tucker is the editor of the AJC's opinion section, including the editorial page.
Heaven help us.