Have the media learned anything from the crisis?

It makes my blood boil when I see headlines like this one from the Globe online: “Economic optimism boosts markets”. They are, of course, not talking about the markets that matter for most families’ day-to-day lives – those markets are still tanking. No, the Globe is talking about the stock market, as if an uptick of optimism among our financial speculators is equivalent to a booster shot in the arm.

The continued obsession of the mainstream media with the ups and downs of the stock market tells me they have learned nothing from the economic crisis. A major underlying factor behind the crisis is the notion that “investing” for the future is tantamount to purchasing financial assets or real estate and waiting for double-digit capital gains to lead to a retirement nest egg. I’m not the first to point out that this speculative behaviour is not the same thing as making real investments in the economy that create jobs and produce stuff.

The media seem to be waiting for the financial plumbing to unclog and then “poof” we are back to 2006 and roaring capital gains in asset markets. It is totally lost on them that this led to asset price bubbles, and the bursting of those bubbles is now what we are dealing with, as household balance sheet are out of whack, having taken on too much debt that is now matched against lower asset prices. This problem is not going away quickly and will be further undermined by growing unemployment.

The parade of statistics continues to be sobering. Back in late-January’s federal budget, the ever-optimistic private sector forecasters were cited in projecting a drop in real GDP of 0.8% for all of 2009. Roll tape forward and we find that in January, real GDP fell by almost that much (-0.7%), just since December. That follows on month-over-month drops of 1.0% in December and another 0.7% in November.

All of which demonstrates why fixed election dates were thrown out the window last Fall and we had our election in October.

Going back a year to January 2008, real GDP only dropped by 2.4%. I say “only” because the string of month by month numbers suggest things are in fact much worse. Of course, it is hard to say how the rest of the year will go, but I strongly suspect the contraction will continue. Still, 2.4% is the largest year-over-year drop since 1991, and the year is just getting started.

At least the Prime Minister is coming around to our point of view. At the G-20 meetings, he said:

“I think, if anything, leaders should overact rather than under act at this point. I think there would be a risk of under acting. Let’s assume we need dramatic action. Let’s do it.”

Wow, that is eerily reminiscent of commentary on the PEF blog four or five months ago. The story I’m quoting from lambastes the PM for saying the right things to an international audience, but doing the right-wing things back home.

In the meantime, what if the media stopped covering the stock market and just reported real economic news. For a month or so. At the end of that time, would viewers care and demand reinstatement of the latest Dow Jones and TSX numbers? I doubt it.

7 comments

  • Reporting real economic news is hard work, and in the current economic climate, they can’t afford that.

  • Actually, one problem is that there *isn’t* much in the way of real economic news. We’re now into April, and we only have a sketchy idea of what happened in January, a much less well-defined idea of what happened in February, and no freaking clue about March.

    The US will be releasing its household survey and its payroll survey tomorrow. StatsCan will come out with the LFS next Friday, and the SEPH will come out many weeks later.

    Nature abhors a vacuum, I guess.

  • Not sure I would agree with Stephen. Are we supposed to believe that we don;t know where we are. We are in dire straits.

    I would love to be an optimist, but I am a realist and I do not believe in monsters that can somehow change the minds of the masses.

    We have seen billions and billions thrown at the banks to stem the credit crisis and the financial meltdown. We have witnessed huge job losses, that still have not worked there through the economy. We are now witnessing the beginning of the public sector meltdown. We have an international situation that although there was a small attempt at shoring up the international functioning of money and markets, it was mainly piecemeal and not the kind of systemic change that is required. Which leaves us all potentially exposed to a crumbling American economy and a shaky international dollar.

    The last time I heard of a hiring, I think it was for a swath of bankruptcy lawyers, or wait I think that was prison guards, no that s not right either, I think it was Employment Insurance administrators. Yep all pointing a big finger at a turnaround!?

    I think the media and the marching orders from above to put the brakes on negativity and stomp on the media accelerator for economic positivity. Potentially doctor Frankenstein is busy in his lab creating a new beast that we can all bubble up on and get our financial high for the next 2-4 years.

    Marc it is sickening to see this reporting. Why can we not have a systemic attempt in the media at say, greening the economy and presenting and promoting an economic culture for such a world. Instead we are subjected to a media that is addicted to the casino variety. If the best that our economic landscapers can do is dream of a return to that what we had in 2006, then we all had better start moving to the farms.

    I say, I to had quite a negative reaction to the flowery crap in that article. Baseless cheer leading will never get us to where we need to get to. We need some serious transformations here, and the media has a big role to play in it.

    It’ll never happen in our country, at least until we get a change in the rulers, cause there are no rules for rulers. Especially the bad ones.

    paul

  • What’s impressive this time around is the extent to which things have changed. This wasn’t an option until recently and it will be game changing as people educate themselves about what’s really happening to their savings and their jobs.

    The mere fact that we’re able to critically dissect an article like this and add our own articles and thoughts through comments, blogging, texting and Tweeting shows that the traditional model is broken and has actually changed for the benefit of all of us who care about what’s going to happen next.

    And what model is that? The economic model for starters, but also the carbon-intense environmental / production / distribution models that we rely on for poorly produced goods, the marketing model that the Fortune 500 and other rely on to shout at us to buy stuff and, most importantly, the fact that people are questioning what they’re buying for a wide array of reasons.

    Getting back to the media model, I don’t think they really want to talk about what’s happening and what’s going to happen because it’s a little too worrisome. Print publishers are gasping their last gulps of air and are about to face extinction. They sugar-coat stories, hype tragedies and push madness simply to sell another issue. Happily, the folks that are going to survive are those independent online publishers that have been surviving already on shoe-string budgets and making concessions for producers and advertisers that actually have a purpose in this world.

    Of course, one thing that will really push us further into ruin is the array of bailouts that we continue to flush into bad companies. Why don’t we focus instead on financing new ventures with companies that have plans for the future, not companies that plan to sell us more Tahoes, Escalades and Suburbans?

  • I am not sure that the media as a whole is overly focussed on stock markets. I have been struck by the fact that tunning into CBC’s radio news does not tell me what happened to the TSX that day. TV newscasts typically flash the TSX index, Dow index, and exchange rate on the screen for a few seconds partway through the program. It is really newspaper business/finance sections that emphasize stock markets, which is hardly surprising.

    Some focus on stock markets is warranted by their economic importance. A major part of the current economic crisis has been a stock-market crash as severe as 1929.

    In a capitalist economy, growth and employment largely depend on people who control money being confident enough to make investments. While buying stocks is only tangentially related to real capital investments, stock markets are an important barometer of confidence among people who control money.

    I think both Marc and I would like to see governments play a far larger role in making investments. But unless one envisions a sudden overthrow of capitalism, a recovery of the real economy will have to be preceded by some recovery in investor confidence and hence in the stock market.

    Of course, stock-market gains are not a sufficient condition for an improvement in the real economy. And even when real GDP starts growing, it will take much longer for labour markets to improve.

    I would submit that we need better, rather than less, media coverage of stock markets.

  • I was just thinking about the bear market rally and how much the media seems to have the 6 times burned finally shy attitude.

    Yet, at the same time, I cannot help but think that the bear market rally signals the degree to which the markets are convinced we get back to 2006.

    They are reading the unemployment in a text book fashion, i.e., unemployment is a lagging indicator, the new masters of the universe are committed to making the old masters somewhat whole again and too boot, there is the nice example of making auto-workers go prostrate for a pittance.

    However, I cannot stop thinking “JAPAN” mitigated by positive population growth and exacerbated by slumping export markets.

    2006 does indeed seem a long way off.

  • Trevor Peterson

    Can you give me examples of real economic news?

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