http://irisheagle.blogspot.com/2009/03/its-not-all-media-hype.html
Wednesday, March 04, 2009
It’s not all media hype
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Twice this past weekend I found myself talking to two men – separate conversations – who believe that the “economic crisis” is mostly media hype. “They’ve got to sell papers”, is what one of them told me.
I didn’t know what to say. As someone who’s fairly well convinced that we’re heading down and fast I didn’t know where to start. I simply let each of them say what they had in mind and walked on. I was shocked. I have no idea what these men do for a living, but I hope to God they’re right. I’m sure they’re wrong, but I hope they’re right.
Today the news is full of the “mini-budget” or emergency budget or whatever you want to call it coming at the end of the month. I’m sure there’s a reasonable explanation for waiting a month – having been about 4 months late realizing how bad things are – but it’s lost to me. I can’t understand why they don’t just impose the tax hikes right now. What does the state gain from such a delay?
There’s a small part of me wondering if there isn’t something bigger being planned for the economy than 2c extra on the tax rates.
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Comment
It’s bad, there’s no denying that – but there is an element of Chicken Littleism to the media reporting, the herd pack mentality running headlong off the cliff together. The media moves its focus in shifts, and now the hot story of the moment is the sky falling; you have to sift to get the nuance and balance that goes beyond the populist trend. So yeah, I’d agree that we aren’t getting a true picture of what is going on. The media is a populist beast.
Carrie
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MY RESPONSE:
Well, there is a measure of truth to the “hype” argument. If you extract the financial firms from the indexes, the numbers don’t look absolutely terrible. It’s the options and derivatives that are putting downward pressure on the market. Where everyone of the experts really “stepped in it” imho is the failure to use bankruptcy as “medicine”. If they (the gooferment) had said “Sorry, corporations can use the Chapter 11 or one of the other options.”, then there would have been some immediate pain, but it would have been over. Quick and clean. The gooferment could have properly provided the bankruptcy judge with transitional financing assistance to the debtors taking over.
Bet there would have been a lot more serious consideration of the corporation’s options. After all, hard to be an executive if there’s nothing to be an executive up. THe law and implications are well understood.
AND, the market would have formed of “carrior eaters” who would “feast” on the “bones”. A tranche of mortgages would have gotten a quick proctology exam to determine what was good and what was toxic. Various vultures would have bid on the “remains”. The results would have been well-known.
The real estate bubble would have been popped and, while traumatic, it wouldn’t be in “limbo”. That’s why the Street is reacting badly. Uncertainty.
And the gooferment acts like they could NOT find their own A Double Q in a dark closet with a flashlight. This is like the Great Depression in that the gooferment interference in the marketplace is making the problem worse.
My fear is we are going to have a gooferment induced “Lost Decade” for the next 20 years. Like Japan.
Argh!
reinkefj 03.04.09 – 11:37 am
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