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 â€“ 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.