Media May Magnify Market Fears
By John J. Metzler
UNITED NATIONS ― ``Everyone has felt the earthquake on Wall Street. But it has not shaken our resolve,'' stated U.N. Secretary General Ban Ki-moon, bravely adding, ``Banks may be failing. But the world's bottom billion can bank on us.''
Resolute words from the U.N. chief in the midst of a global financial crisis which not only threatens to slash aid to the poor, but to push many middle income countries into the abyss, and to pull developed countries into the doldrums.
But beyond the often arcane market fundamentals, the slew of shameless corporate incompetents, and global stock markets looking like an electrocardiograph, I have the nagging suspicion that many of the problems while certainly not caused by the sensationalist media, are probably partially magnified by it.
What was an economic downturn has morphed into a recession. While business cycles are seldom mentioned, terms like recession and sometimes depression often fly around like autumn leaves only to be blown away by the next gust of the bad news de jour.
Angst is a wonderfully descriptive German word that sums up part of the problem. Fear. Namely what Oxford English Dictionary defines as ``a profound feeling of anxiety or dread.'' origins date to the 1920s when there was plenty angst about hyperinflation of a few million percent which wiped out savings, ruined the middle class, and paved the way for dictatorship.
The gloom and doom scenario is fed by the 24 hour news cycle with constant jabbering, opinion, and moving market tickers. Back in 1929 and the start of the Great Depression, the media consisted of many newspapers with morning and evening editions, the radio, and news tickers.
Information moved well but not too quickly. Even during the previous October 1987 downturn, the 24 hour media outlets were fewer and even with fax machines were still not able to keep up the drumbeat of doom.
But today like an energizer bunny we have Bloomberg, CNBC, Fox Business, and a plethora of cable networks, all delivered by TV, radio, the Internet, blogs, and the Blackberry.
Add the major media networks (ABC, CBS, NBC) who while rightly covering the crisis, at the same time are maintaining the crescendo and fueling a corrosive anxiety through information overload with the special effects of an ongoing presidential election.
People who invest in the stock markets will look to these programs, or to their blackberry to get a stock quote, usually not good, and they then like someone with a high blood pressure reading, immediately take another reading only to get even worse numbers. Angst.
Read the papers between the lines and see a host of sensational stories; AIG executives going on a $440,000 corporate spa retreat only days after their $85 billion U.S. taxpayer bailout; the petro-dollar rich Russians literally buying a chunk of Iceland; nations in the European Union acting like Europeans before the Union; Japanese markets having their biggest fall in 20 years; South Korea's once-robust economy in crisis. Angst.
Last year Wall Street reached a record high of 14,000; now the Dow has dipped well below 9,000. Much of this had to do with reckless lending, laughable oversight in Congressional committees chaired by the controlling Democrats, and an overall lending mantra of ``it's not your fault.''
So pass the bill to the taxpayers and effectively socialize large chunks of the American economy with the U.S. government assuming a colossal amount of bad debt.
Some sobering news though from the International Monetary Fund puts the matter into perspective. While confirming that the U.S. and European economies were already in or close to recession, the IMF views the chances of another 1930-type Great Depression as ``nearly nil.''
Nonetheless the IMF revised its U.S. GDP growth statistics which were 2 percent last year and projected for 1.6 this year downward to 0.3 percent for 2008 and 0.1 percent for 2009. Eurozone and British growth figures are far lower. A U.S. recovery is expected to begin in the second-half of 2009.
A crisis of confidence, rightful anxiety over the shameless sleaze of some corporate executives, and the economic erosion coming from fear is echoed by the media. Perhaps the front cover of the Economist summed it up best: ``What Next?''
John J. Metzler is a United Nations correspondent covering diplomatic and defense issues. He is author of ``Divided Dynamism ― The Diplomacy of Separated Nations; Germany, Korea, China'' (University Press, 2001) He can be reached at jjmcolumn@att.net.