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The Economy
Old 11-17-2008, 08:04 AM   #1
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The Economy

Several years ago there was a TV story about 'Sharks in the Water'. The jest of the story was that sharks had been seen on the east coast. It showed a condensed two weeks of stories on the national news. Talking heads warning of 'SHARKS IN THE WATER' and going on to tell people of the threat. Only thing is that there were not more sightings than normal. Just more hype.

So this brings me to the economy. Is it really as bad, or has it been made worse by the talking heads. Consumer confidence seems to be a large part of the economy. We presently have a 6% unemployment rate and consumer confidence is down. However, last January when we had a 4.5% unemployment rate the papers were talking recession, yet none existed. We now hear just about everyone on TV and News Papers talk about how bad the economy is. Is it? Sure the stock market is int he tank, but we certainly are not 'great depression' as some have stated. Is it irresponsible journalism that has contributed to the current state of affairs, or is the economy really that bad?
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Old 11-17-2008, 08:27 AM   #2
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Originally Posted by Rustic23 View Post
Is it irresponsible journalism that has contributed to the current state of affairs, or is the economy really that bad?
Hang on a minute while I check MSNBC...
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Old 11-17-2008, 09:02 AM   #3
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Interesting that you bring this up. I asked my SO the exact same thing yesterday. Unfortunately I have no answers.
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Old 11-17-2008, 09:16 AM   #4
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I think it is a combination of both, which IMHO is a perfect storm. Things are bad, and the media hype is making things even worse. Investor/consumer attitudes are probably the single most important factor in the heath of the economy, and too many people do not look beyond the headlines to get their attitude.
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Old 11-17-2008, 09:29 AM   #5
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I'm hardly the financial guru, but have at least tried to keep abreast of things to avoid loosing my shirt. My best read is that most of our financial problems are at an institutional level that would be less likely to be affected by the media.

No doubt some things like retail sales, consumer confidence, and maybe even US auto sales are being fueled by the media, some of which I imagine are trying to be a bit sensational. But I think there are more fundumental problems that are causing the bulk of our woes.
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Old 11-17-2008, 09:53 AM   #6
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If it weren't for the constant stream of doom and gloom on the nightly news, I wouldn't have any reason to think that we're in a financial crisis.

I know my retirement savings are down (way down!) but I'm not retired yet, and I don't know of a single person that's been adversely affected by the current economy - not even a friend of a friend of a friend of... I suppose some areas of the country have been hit hard - or at least that's what I hear on the nightly news.
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Old 11-17-2008, 10:00 AM   #7
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I think back to other similar bear markets in terms of magnitude -- say 1973-74 -- and wonder how much worse it would have been if they had CNBC and 24-hour cable news.

The media didn't cause these economic problems. But the more they remind people that everything sucks and we're all doomed, they are helping a self-fulfilling prophecy occur. I have little doubt that their constant fear-mongering has consumers clamping their wallets shut a lot more than they would otherwise be.

At some point, reporting becomes economic commentary almost, and at which point do the media go beyond merely reporting and into the realm of actively scaring the crap out of people with anecdotal stories about how bad it *might* become or anecdotal stories about one family's financial ruin?
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Old 11-17-2008, 10:08 AM   #8
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I think there are several factors in the reaction to the current economic news
1. The election - dems had to play up the fear, blame Bush and by association McCain
2. News Media 24 news channels - needs something to talk about & have you every heard them going against the conventional wisdom, putting things in perspective or doing good research? They sell fear to get you to watch.
3. We haven't had a general recession since the early 80s - previous ones were more "rolling" recessions, therefore people are fearful of it and don't know what to expect, or how to handle it.
4. Difficult to understand the current economic issues
5. The housing decline is something people can see in their neighborhood.

Yes, the economy is fundamentally sound - business are open for business, and unemployment is relatively low. 5% unemployment was/is considered full employment by some economist.

You will hear Obama say next year that the economy is fundamentally sound but he feels the pain of those out of work etc.

++++
This does not mean you should not worry about it - just not now.
And what to worry about is not clear at this point.

Generally, for years the US government has been attempting to soften the affect of the business cycle only to push the true affects off to the future. I think we will be OK for the two Obama terms - that gets us to 2016. Don't get complacent and don't get married to the US stock market or US Dollar after that.

A recession is painful. But it does serve a purpose. It gets rid of excesses in the economy and provides a good base for future growth. There is not such thing as an economy that only goes up.

http://www.news.com.au/story/0,23599...rom=public_rss

"And that we shouldn't worry about the deficit next year or even the year after. That short term, the most important thing is that we avoid a deepening recession,'' he said.
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Old 11-17-2008, 10:25 AM   #9
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I think back to other similar bear markets in terms of magnitude -- say 1973-74 -- and wonder how much worse it would have been if they had CNBC and 24-hour cable news.
That reminds me of the time some engineers determined that bumblebees couldn't fly because of the aerodynamics involved. The bumblebees, being unaware of the findings, continued to fly anyway.

In 1973-74, I was starting a new job that paid more money than I'd ever seen and was literally more than I knew what to do with, so paychecks just kind of piled up on my dresser. I just cashed a check when I ran out of lunch money.

So, not knowing the economy was in dire straights, I went out and bought an airplane. What recession?
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Old 11-17-2008, 11:05 AM   #10
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I agree the media is way over the top--Sunday's Chicago Trib featured stories by people who can remember the Great Depression and how awful that was. Don't think we're there yet. And now that the election is over the msm has to fill those pages and airtime with something so it will only get worse imho.

Also think it's because so many people's investments now are directly affected by market turns (and can react to them in the market). In 73-74 and even in the 80s, we had indirect market connections through pension plans and our good old passbook savings accounts. And now we can check holdings 24-7, and even if we don't, we still have the media throwing it in our face. Used to check any market holdings (like those of the company we worked for, since that was what our retirement money was invested in pre-Enron ) in the morning paper for the day before, if then.

But also more people work in the financial industry today, I think, so we are more vulnerable to downturns in the economy, jobwise.
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Old 11-17-2008, 11:16 AM   #11
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when exposed to the public eye, the best way through a dilemma is to come quickly clean because it is always a slobbering mess when subjected to the high priority function of the press which is to dog a question.

for instance, the european union has already announced it is in recession. so has japan. but the united states still fears recession. we might be in recession. there could still be a serious recession and so the press pushes on...

Quote:
The U.S. economy will contract 0.2 percent in 2009 after growing 1.4 percent this year, according to the median estimate in a poll of business economists taken by the National Association for Business Economics. A majority of respondents said the U.K., the euro countries, Japan, Canada and Mexico are either now, or will soon be, in a recession.
source: Bloomberg.com: Currencies

edit: just to make my point (best posted as i was typing)

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I agree the media is way over the top--Sunday's Chicago Trib featured stories by people who can remember the Great Depression and how awful that was. Don't think we're there yet.
that's the thing: we don't know. not even the honorable, smart & informed people on this forum. people who would have screamed tin hat, tin hat at the slightest transgression of confidence now keep some tin in their back pockets too.

as long as there is question, as it should, the press presses on.

edit: how funny. i just start to go through yahoo! finance news and this is what i find there (sound familiar?)
http://finance.yahoo.com/tech-ticker/article/129039/State-of-Denial-America-in-Recession-But-Policymakers-Fear-'R-Word'?tickers=%5Edji,%5Egspc,%5Eixic,SPY,DIA
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Old 11-17-2008, 12:41 PM   #12
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Many people view economic troubles through their own situation or that of family and friends, and if they don't see troubles they underestimate the bigger picture. A cool look at the numbers point to a very troubling economic outlook.

Unemployment, a backward indicator, has already increased by 2 million people (from 4.5% to 6%) If it reaches 7.5% - a mild recession, that's another 1.4M. In the more likely case of a deeper recession, unemployment can rise to 8-9% - for a total of between 11 and 12 million people unemployed. That's a lot of people and a lot of consequences - especially debt not paid, which has a cascading effect.

This recession has two important differences when compared with our recent past - say the last 30 years. More of our net worth is concentrated in home equity and capital markets and our household debt levels are higher.

I am not defending the media portrayal of the economy - they are far too superficial in just about everything they do. It is no different than any other reporting, and will soon be replaced by another, greater story with compelling imagery (california fires, Obama cabinet, what's Bill C up to, dog in the white house, etc...)

But it is a mistake to underestimate the potential severity of the economic challenges we are facing.

just my $0.01 (was $0.02 but I invested it in the stock market)

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Old 11-17-2008, 01:11 PM   #13
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I agree that hiding in the sand is wrong--last year and even the year before I kept picking up on people saying we would be in a recession by the end of 2008 and wouldn't come out of it including housing until 2010 (I picked up on this because dh was planning to re in 2010 so the dates hit me). There are a lot of facts out there to report, fine, and if the US doesn't meet some official definition of recession, that's the ONLY one we don't meet, imho.

But going straight to old people's memories of the Depression (colored by time, of course) seemed to be a little alarmist imho. The whole paper is already full of ways to beat the poor economy and how businesses are coping--I guess those weren't pulling in enough readers, that's all.

By the way, I heard this morning that there were no new housing starts last month. To me that is good news because the last thing we seem to need are more houses. At least until Lazy's property gets sold
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Old 11-17-2008, 01:17 PM   #14
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Keynes explained that recessions are partially the result of self-fulfilling prophecies. If people think things are going to get worse, they stop spending and start saving, that decreases consumer demand, businesses lay off workers, etc.

So anything that makes people pessimistic also makes recession more likely. The media certainly likes dramatic stories, and one firm laying off 1,000 workers is more dramatic and easier to cover than 100 firms each hiring 10.

Of course, the media can go in the other direction too. I wonder how many "The stock market hit a new high today" and " XYZ.com did an IPO that made its founder an instant multi-millionaire" stories played in the 1990's and helped fuel the stock bubble.

This isn't a new phenomenon. Newspapers (and that exiting new technology for instant information, radio) carried lots of dramatic stories both on the way up and the way down in 1927-1933.
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Old 11-17-2008, 01:19 PM   #15
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round two:

the media is far too superficial.

the media digs too much.

the media is slanted this way.

no, the media is slanted that way.

the media kept writing stories about how good real estate was.

the media keeps writing stories about how bad real estate is.

the media doesn't tell stories, they just hype stories.

if someone didn't tell me that i had food on my face, i'd be walking around all day with food on my face and wouldn't even know it.

the media the media the media. pat buchanan? is that the media? cnn? the media? charlie rose? to what singular universal media do you refer? how about that little editor in your own head. is that the media?

as to references to the depression, as the media informs and wakes people up to real issues. as we educate ourselves and open our eyes to the smoke and mirrors of our economy, i would not be surprised to see this thing eclipse the great depression. i would not be surprised to see what is now being discussed, a new world economic order. and if that is true, then i suspect the transition to that, like all growth, might be a little painful. that might be paranoid or that might be forward thinking. only time will tell.

but if you do not think so, then tell me, how do you fit in the future economies incorporating the vastness of the populations of china and india without first a bit of contraction just to make room.

the free markets, in their expansion, have committed suicide. and all it took was for socialistic china to give the free markets a little extra rope. too much money going after too few assets. now lets see the west work its way out of that. this was as easy as pi.
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Old 11-17-2008, 01:22 PM   #16
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Sorry....
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Old 11-17-2008, 01:23 PM   #17
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Old 11-17-2008, 01:27 PM   #18
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I agree the media is way over the top--Sunday's Chicago Trib featured stories by people who can remember the Great Depression and how awful that was. Don't think we're there yet. And now that the election is over the msm has to fill those pages and airtime with something so it will only get worse imho.
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Keynes explained that recessions are partially the result of self-fulfilling prophecies. If people think things are going to get worse, they stop spending and start saving, that decreases consumer demand, businesses lay off workers, etc.
So anything that makes people pessimistic also makes recession more likely. The media certainly likes dramatic stories, and one firm laying off 1,000 workers is more dramatic and easier to cover than 100 firms each hiring 10.
Hey hey hey, let's lay off the media so that they can talk the stock market down another 20-30%. I have my eye on bargain-priced shares that just keep getting better & better!
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Old 11-17-2008, 01:47 PM   #19
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I think there are lots of people... some in the media... some not.... who deep down really DO want to see it all fail. Hmm... but why is that... afterall... they are part of it too right? Well... that is where certain basic philosophies come into play. Fear causes panic. Everyone knows that people that are panicy do not think very well. People that are not thinking very well can be used... and even exploited. I personally believe that there is a certain segment of america that wants to control everyone else. The easiest way to get that is through fear. Fear will cause people to give away control of lots of things in their life for the promise of "security". Just my thoughts...
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Old 11-17-2008, 01:52 PM   #20
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i remember when my mother caught me with cigarettes when i was about 15. "i never want to see that again," she demanded of me. mom didn't see me smoke again until i was 28.

it isn't that we want to see it fall. we want to see it grow up and take responsibility for what it is. and not the kind of taking responsibility like our polititians do: "i'm sorry. it's all my fault. the buck stops here. (but i won't let you punish me and you just won't catch me again)."

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Lazy, you having a bad day?
having a great day. just playing with concepts. thank you.

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