Why CNN Struggles to Cover The Economic Panic

The current economic collapse is a difficult story for TV. It's a peculiar period in between an election and an inauguration. This most important story, this great-or-not-so great depression, is also the hardest for CNN to tell. I have more than enough reasons why in this late-night rant.

1) It's not a hurricane so Anderson Cooper of CNN is unable to position himself in the middle of the storm for optimal drama. In other words, TV anchors can't get wet and windblown, while viewers worry about their safety. The state of the economy is a disaster but not a natural disaster. Nobody's leaving the studio for this one. There's no place to go.

2) It's like a war and we keep losing ground each day. In the place of casualties, we have falling stock indices but it's hard to show the real damage. There's only so much you can do with oversized charts to tell a story. The war on terrorism featured a real enemy. We've just never been able to find them, no matter who goes after them. (Maybe it's not so different.) Campbell Brown ("No Bull, No Bias") should say that what the capitalism's finest did to themselves and to us was worse than any terrorist could have imagined.

3) Few CEOs, fewer economists, and almost no one in the financial industry, want to step forward and say with conviction what will happen. A year ago we couldn't get them to stop telling us what great things to expect in the next quarter. Not now. They don't know what's coming and they aren't willing to say even that much. They are MIA. Insider information is at an all-time low.

Memo to all American CEOs: don't presume in ten years' time to write business books about your leadership skills; maybe there's a gripping survival story to be told about how you held on to your job.

We want them to face the music. Even the Watergate hearings, which had a large cast of characters, were compelling to watch day after day.

4) There is not a President at the center. Bush is just not there. Like us, he's watching TV to find out what to think. Reporting from the White House doesn't have any relevance today. Moreover, the satisfaction in blaming Bush for everything is diminishing.

In addition, with the election over, reporters can't simply ask the candidates to react to the day's bad news. It seldom produced much insight anyway but it filled time. Now Obama is filling time, and he keeps repeating that "there's only one President" but there's really not a President. There's a leadership vacuum waiting to be filled by Obama. (BTW, this story is much bigger and more important than Obama's election and I think he understands that.) Bottom line is we're waiting for a central figure to emerge.

5) Real experts are hard to find, especially ones with big hair. So over-present talking heads such as Suze Orman ramble on and on in front of Larry King and others. Here's an incredible ramble from Suze Orman on CNN:

People feel they need medication because they are panicking. It’s as if the economy right now is in the I.C.U. unit of a hospital. We are in intensive care and they are throwing everything type of medication at us to cure what is going on. They are panicking because why? Nothing is working. They tried this, it didn’t work. They tried that medication, it didn’t work. They are running out of prescriptions to give it. We are going to be in the I.C.U. unit for a while. Eventually, I don’t know when that will be, six months, a year, year and a half, we will get out, we’ll be in the hospital then. We’ll stay in the hospital for about a year or two. After another year or two we will end up in rehab and then we’ll be okay. This is a long stretch. People have to stop panicking.
CNN link
Makes me think of Amy Winehouse singing "They try to make me go to rehab, I say no, no, no." Rehab is taking place over on CNBC.

6) Where are the winning and losing teams? We have learned more about Al Queda cells and Saddam Hussein's Elite Guards than about the people in power behind CITI, Goldman Sachs, Lehmann Brothers, AIG, etc. We know more about the New York Jets than we do about CITI Bank. Are the slow-moving Detroit Manufacturers competing head-to-head against the fast-talking Wall Street Financiers? Please tell us more about these teams as we're entrusting them with such large amounts of public money. Maybe we need to start thinking that, as with football, we care because we're betting on teams to win. We have our money at stake.

7) I can almost hear producers wondering each night if there isn't a better story to lead with. "Isn't there a story we can do on Sarah Palin? Like her or hate her, people can't get enough of her." At least that appears to be the thinking behind her getting the most air-time in the week following the election. Would you rather hear about Sarah Palin pardoning a turkey or David Gergen saying no one knows what to make of the economic mess? At least, the Palin piece will have something interesting going on in the foreground and the background.

8) "Why can't this be happening to Russia or China? If it was only happening there, and not here, we would know how to cover it." CNN would send Christiane Amanpour there. "Live from...". We don't have visuals like people knocking down walls, rushing into the streets or standing in lines. The Fall of the Berlin Wall is the Fall of Communism, the fall of Saddam's statue -- now these are stories of new freedoms. In America today, we have a big fall without a distinctive symbol, without a video loop, without an exotic locale.

Also, how do you explain that China is providing the bail for the bailout? As David Gergen said tonight on CNN, "China's become our banker." Even harder to tell that kind of "freedom" story.

9) The problems aren't going away and there's no timeline. So, where's the equivalent of "America Held Hostage: Day XN"? Nightline evolved from a special report to become a nightly hard-news program to follow the ongoing story of Iran holding American hostages during the Carter Administration. Why isn't this economic story played front-and-center in the same way? Isn't there a TV journalist saying "Holy Christ, this is the biggest story of my career and I'm going to bring it to you every night"? Ted Koppel, Edward R. Murrow, where are you?

Here's my list of names for a new Nightline-like special series on the economy:

10) Lastly, the TV media is no better off than we are at understanding this complex crisis. On a gut level, viewers know what the story is, that it's about them, their future and their children's future. They have specific questions that are difficult to answer (see the Suze Orman blog on CNN where it is promised that she'll answer these many, many questions; she doesn't, of course.) and they have general worries (should I panic?) that are hard to resolve. While we try to absorb as much information as possible, we keep having the same conversation over and over:
Q. What's going on?
A. I don't know. It's hard to tell.


  1. dont mean to scare you, but having a friend that works for one of these very same companies that just got bailed out told me some chilling news over the weekend and here it is, if the dow drops to 6000 points it will be a depression. not only that he told me that his career is over he hasnt made any money for the past two months (he works on commision) he explained to me and told me that before his people could predict the markets and invest accordingly there were tools to predict such trends already in place. now its diffrent nobody can predict this animal anymore. i kid you not he was very distress over it hes been contemplating leaving this behind and starting over, but the problem is he doesnt know where if anywhere to go except to move in back home with his extended family. thank god he doesnt have kids or a wife or retired inlaws to provide for.

  2. I hear you. NPR’s Carl Castle needs to have full editorial rights to an old-school Nightline kind of offering on PBS.

    Entertaining fictions might be possible, too:
    I’d love to see the fantasy football equivalent for business, politics, and design “teams”

  3. lol maybe… but at least they are trying to dance around the D-word much like they did around the R-word not to long ago in hopes of keeping it at bay.

  4. I’d sort of like to see Thunderdome-esque cage battles between some of the corporate & political idiots that got the world into this mess in the first place.

    Unfortunately, chances are nobody significant will be held responsible, and many are likely to find some way to profit from the situation.

  5. I don’t get the Orman/Winehouse bit at all. The Suze, for all her gimmicks and salesmanship, is one of the few commentators that actually continues to give sound financial advice of living in ones means and basic financial literacy. That’s not denial, that’s practicality.

    I mean, what’s the plan of action for the average citizen? Make sound financial choices of savings accounts and long term financial objects, do well at their job and try to ride it out. People like Suze Orman and the networks would be best to give practical advice until people start living in their means and making safe investment choices.

    I mean, people can balance their own finances, but you expect the mainstream media to be able to explain highly theoretical macroeconomic principals that experts in the field only have a pretty good guess as to how they will work?

    It’s not a standard that you would hold the media to in any other type of emergency or war (No talking heads discuss the nuts and bolts of city evacuations, they focus on individual disaster preparedness). People like to think they “get” economics in a way that they don’t understand advanced science or tactical military decisions because they interact with it on a daily basis. But then people interact with plastics all the time, but they don’t entertain illusions of being a chemical engineer. It’s a double standard.

  6. The problem seems to be that there aren’t even any talking heads who can speak knowledgeably about the problems, much less confidently offer solutions.

    When the story is an election, everyone has an opinion and they’re entitled to it and they can somehow back it up, at least arguably.

    When the story is an historically unprecedented economic collapse–nobody is schooled in this, there are no experts. This isn’t what they teach econ majors because there is no precedent. This is why they can’t even pin down a number for a bailout with any semblance of accuracy–will it take 300 billion? 900? 2 trillion? No one knows how much will even make a dent, much less which is most fiscally responsible.

    Further, any discourse on cable news is always and already throttled in this country–it must exist within pro-corporate market capitalism. Regardless of how sensible an idea is, if it smacks of ownership by the people, it won’t make the airwaves. Same for any radical approach that is based on a fear that something radical must be done to avoid collapse.

  7. The real news here is that TV news has just shown its deep inadequacy. In its search to keep the viewer’s attention, it has worked too hard to come up with formulas that just can’t apply to what could be the biggest US, nay, world event since WWII.

    This is the right time for bloggers, vloggers, and podcasters to take over and show the “mainstream news media” how to cover a “technical recession” (I’m using the term that’s being used by the Canadian government, in reference to the effects of this depression on the Canadian economy… the irony of that statement makes me laugh while leaving a bitter aftertaste…)

  8. #3 posted by KierKaGuard
    Entertaining fictions might be possible, too:
    I’d love to see the fantasy football equivalent for business, politics, and design “teams”

    I like this idea. I suppose the stock market is a kind of fantasy league for business. But what if you could pick your own management for GM?

  9. Campbell Brown should say that what … capitalism’s finest did to themselves and to us was worse than any terrorist could have imagined.

    One could say the same for the outgoing administration / Terrorist-in-Chief.

  10. The reason that TV can’t work with this story is that it’s incomprehensible. It’s the end of life as we know it. How can you break that into 10 second sound bites?

  11. the story is poor people (or soon to be poor people) and poor people are depressing and boring. How about reality TV poor people makeover shows? Celebrity poor people dancing? America’s next poor model?

  12. Takuan has it right. People don’t like to hear about the poor. Also, this whole mess can be traced back to the credit culture that was in-turn fueled by the “Follow your dreams!” philosophy baby boomers instilled in their kids.

    Now I’m not against following dreams, but I’m sure there are more than a few people here who have a friend who truly thinks he will instantly make his fortunes as an artist or musician without anything more supporting them than dreams and a credit card. These folks are unique because while everyone in the world has had dreams like that for years, modern folks who do this seems incredibly angered by ANY suggestion they get a *GASP* day job in the interim. In the 1980s I knew a few people who had no problem saying “I work here during the day…” but nowadays, it’s more verboten than ever to say where your money comes from.

    Anyway, rambling. But modern news—and CNN especially—really have no idea how to explain things outside of panic. And telling people “Look, you’re going to have to lower your expectations and work for once…” is not sexy.

  13. The dude abides..and reads The Economist. This is not a visual story yet..It’s a story best covered in many words, in order to provoke thought and new synapses in a reader. Imagine a clock with 1000 gears, all covered in whisper thin machine oil, humming and spinning at its optimum, then throw in a healthy scoop of fine sand. Do you watch the sand, or the gears, or do a story on the ones who threw the sand?
    Visually it doesn’t plug into our image bank of news fetishism. The only thing I seem to see is a series of people deliberately lighting their hair on fire, and I watch their reactions, wondering if it has anything to do with me.
    Meanwhile, in the real world I still have to put my name on a list of 75 people to buy a Wii…

  14. I miss the days when gay marriage was the biggest threat to American prosperity. At least that was total bugfuck nonsense, as opposed to all this ‘real threats’ business.

    Remember that? Terry Schiavo as the biggest crisis since Tuesday? Missing white women all over the place? Britney shaved her head? The state of Bennifer and/or Brangelina’s romances? Now those were worthy of headlines.

    Oh, and that war thing, where the US inflicted massive civilian casualties on another country for some reason which becomes less clear with time and never really made any sense except to the hopelessly gullible. And of course the aforementioned talking heads, whose idea of hard hitting journalism is ‘nodding sagely’ and/or parroting power.

  15. -waste less, savour more

    -might as well use that extra time for exercise and physical play – cheaper than medicine

    -don’t consume culture; make culture

    -eat less junk, grow more food

    -listen to leaders less, think more

    -if you can’t have lots of money, it may as well be a means than an end in itself.

    -grow your clan/tribe

    -keep getting drunk, but do it mindfully and fully.

    -hold less tightly to stuff, and welcome it easily when it comes your way

    -WORK at being kind

    -fix the world before your kids have to.

    …going to have to work on this list, it’ll help keep me sane. Suggestions? Maybe we can take a little comfort in each other.

  16. Dale,

    Quite a compelling read, I commented on something at boingboing yesterday and spoke of a few of the points you’ve made. Yes, this is worse than anything the “terrorists” could do to the USA, this is real shock and awe and it’s comparable to the fall of the Eastern/Soviet Bloc. On the latter point, I agree it won’t be quite as photogenic as there’s no walls to come down but the outcome for many people is just as likely.

    One of the best commentaries I’ve seen so far is posted on the London School of Economics website, it was also broadcast on the BBC Parliament channel. See http://www.lse.ac.uk/collections/LSEPublicLecturesAndEvents/events/2008/20081010t1503z001.htm

  17. This is *exactly* why I love the NPR Planet Money podcast: http://www.npr.org/blogs/money/

    Alex Bloomberg and the other reporters do a wonderful job of explaining all that stuff that others just refer to obliquely (like market indicators – I actually know what some are now!), and defining the jargon that others just throw around. They are making economics less and less an “autistic science” every day. Highly recommended.

    Or maybe I should have put it this way?

    I’m so glad my boss isn’t like that! I’m working with NPR right now, and became a huge fan of the Planet Money podcast (http://www.npr.org/blogs/money/). I especially like the way it helps me understand why we are in such deep shit right now, and the dulcet tones of their radio-personality voices. It’s awesome!

  18. It seems to me that this is the perfect time to invest.I’m still putting a lot of money into mutual funds – as are most of the people I know. I did take $20K cash out – just in case. And yes, I realize that the dollar will shrink just as fast as the economy does – I couldn’t think of a better alternative.

  19. 3 & 5 are the same, a few others are irrelevant to understanding the crisis, and the rest make me want to say “Duh.”

    I agree with everything you said, but you brought nothing new to the table. Your conjecture is no better than those agencies you criticize… Personally, I think it’s worse because it’s delivered under the guise of a critique, and posted on a site that generally makes me think of new things, not dwell on the obvious.

  20. It’s not a critique, it’s a reasoning of the current state-of-affairs on the coverage of this story.

    It made me think.

  21. Dont worry, my girl friend told me today that she just saw MTV Sweet Sixteen episode featuring Dad working for some financial institution giving his daughter $95K Jaguar. See, everything is fine, extremely wealthy people are still rich.

    On a serious note what did you expect people? How many of you makes something tangible? You cant expect to earn by juggling money that dont belong to you in the first place. There isnt much manufacturing left in US, some diggers, bikes, fast food and thats almost it.

  22. @TW15

    Yes, the UK already has one of those ‘Holy-Christ’ reporters, and his name his Robert Peston. As well as doing the standard fair for the nightly news (annoying graphics, analogies, what-this-means-for-you-the-viewer), he updates his BBC blog a couple of times with hardline analysis and summaries of the day’s economic news. It’s really the best thing to read if you want to keep up with what’s going on without having to endure the opinions of an individual. He has, along with Nick ‘tiny-eyes’ Robinson, become the BBC’s most important reporter over the past couple of months.

  23. “The war on terrorism featured a real enemy.”

    LOL WUT?

    Haven’t Americans worked the truth out yet? The reason why the “war on terror” hasn’t worked is because there is no “real” enemy. Just a disparate network of groups who are ideologically opposed to American actions. They act as individuals and are unlikely to stop unless their fanatical ideologies do – something extended war in the Middle East is never going to do.

    Maybe you think Bin Laden was the problem, but then why haven’t you caught him yet? Maybe you think that the trillions of dollars you’re pouring into war and defence are actually stopping terrorists. If so, I have a bridge to sell you, as well as a nice rock to keep tigers away.

  24. One other reason that the media seems to be so apprehensive to supply us with information concerning this financial crisis, is that they are very self-consciouss about their role and influence as the messengers of bad news.
    With the markets being as volatile as they are right now, and people clutching at straws, it doesn’t exactly help if the major news networks are making doom and gloom predictions all day long.
    You don’t want your news story or editorial to be responsible for the appearance of an angry mob outside bank buildings demanding their savings.
    But you can’t flat out lie about the sutuation and paint pretty pastel pictures for people either. They’re likely to lose a bundle because of your downplaying.
    So you say as little as you can. Then at least nobody can blame it on you.

  25. The problem is that economic crisis are almost invariably crisis of confidence, and this is no exception. People are scared, hence they don’t invest, hence the economy goes down, hence people are scared, and so on and so on…

    Look at Northern Rock in England, a run on the bank triggered by tabloids. The role of mass media is a big problem that current economic theory still doesn’t know very well how to factor in.

    Media people know this, and they know that this time they really pissed out of the bucket when they triggered the crash by “discovering” the American mortgage crisis that everyone knew would come, sooner or later. So now they’re scared that talking too much will make it even longer and more painful that it needs to be.

    They are looking for a saviour, a white knight that will miraculously close the news-cycle; look at how the Financial Times is hailing Gordon Brown and his finance minister as geniuses, after they ridiculed them for years. The smell of desperation is startling.

  26. Blm fr cnmy?: Jmmy Crtr -> Cmmnty Rnvstmnt ct -> Bll Clntn -> Fnn M/Frddy Mc Frd = Lbrl Mlfsnc
    f y frc bnks t gv lns t ppl wh cn’t ffrd thm, why b srprsd whn thy dflt n th lns.

    Wth t’s prsnt “wr s pc, frdm s slvry” mndst, CNN (r ny nws tlt) s trrfd f th trth thy hlpd crt.

  27. 6) Where are the winning and losing teams?

    The winning teams are the banks getting free money to buy other banks for really no reason. The winning teams are the employees of companies that by all measures should be unemployed because of their companies bad decisions. The winning team also includes people who bought houses they couldn’t afford, who are getting new low interest loans.

    The losing team consists of the tax payers who are paying for all this free money (either through new taxes or inflation). The losing team consists of soon-to-be-retired retired people that lost 20% of their retirement in a week or two before they could put their money in something safe. The losing team consists of the responsible people who bought houses they COULD afford but, because of the irresponsible people, ended up with a lot less house because the cost of housing was inflated over the last 5 years.

    8 – Why can’t this be happening in Russia or China.

    It IS happening in Russia and China. The price of oil has dropped significantly so Russia is hurting. All the companies that were pouring money into China are hurting so investment there is drying up.

  28. My husband and I were recently seriously considering starting a family at we approach our 30’s, but this economy is the best birth control ever! I wonder was birth rates will look like in 5 years…

    Anyway, I was flipping through the cable news channels last night when I could a snippet of a woman who’s name I really wish I could remember right now, saying on MSNBC’s Hardball to sub David Schuester regarding our low productivity and spending as a nation”

    “The only thing America is exporting right now at a significant rate is debt, and will be for quite some time.”

    She said this in such a matter of fact way that I found myself amused and laughing out loud. This freefall is surreal. Who feels like dancing on the deck of the Titanic?

  29. Well, Some things that could be done that would be interesting to see are:
    Whose fault this mess is, and who is profiting from it?

    What the legalities are, and why there seems to be no investigation into malfeasance on the part of the players or talk of penalties?

    What can be done to prevent this from happening again?

    What have other countries done in similar circumstances?

    Which companies are trying to cash in on the giveaway by becoming banks after the fact?

    Why the public is not getting equity in these companies that it is giving money to?

  30. They’re not covering it because they’re terrified.

    It’s not just a disaster in some far-away place that doesn’t affect us. There’s no enemy that could presumably be defeated. It’s not a disease we can walk to raise money for. There’s no upside, no ray of light. There’s no way to sell this as a positive story.

    They don’t even want to hear it from guests like Peter Schiff. They certainly don’t want to say it themselves.

  31. JACK – “Also, this whole mess can be traced back to the credit culture that was in-turn fueled by the “Follow your dreams!” philosophy baby boomers instilled in their kids.

    Nothing wrong with following your dreams,

    It’s the “don’t bother investing properly for your retirement. just buy a bigger house and hire illegal immigrants to cut costs” is how the Boomers are gonna screw us.

  32. 11 ??) Like all TV, they make their money from selling commercials spots. Telling people that the economy is bad and the US dollar is shot, then 30 seconds later, trying to sell a car, or trying to get you to sign up for your third “American Express Business Plus Special Happy Go Time Gold Platinum Silver Plum Credit Card” might not be as effective as telling them that a toaster might be the next average house hold item that might kill their children. The more scared they are, the more things they’ll want to buy to make them forget…

  33. As to why CNN has a hard time covering all this:

    It’s the same reason the guy with 7 houses and 500 dollar shoes lost, and the guy with 1 house and 4 identical pairs of shoes won.

    Go ahead, accuse me of class warfare,

    then take a look at the CNN anchors shoes.

  34. I’d love to see Anderson Cooper standing on the trading floor at Wall Street getting trampled by traders when the bell goes off ;-)

  35. @Takuan and Moderators:

    #21 (the list) ought to be a Boing-Boing “contest” or at least a separate entry of its own. The objective would be to collect a lot of good one line entries like Takuan’s (which I applaud by the way). One of the “rules” would be that all comments would have to be one line or a collection of one line entries. No paragraphs, essays, or other commentary, or commentary about entries.

  36. @Dale (author of the post)
    “Invisible Hand-Wringing”…you deserve a bonus for that line.

    Where’s the Boing Boing compensation committee?

    @Simplewonder: Good point about the economy being the best birth control. I feel bad for people who just had kids and are now being pulled under by this economy.

  37. It’s working for those of us below the poverty line, at least among people I know– gas prices are back down, and it looks like tax returns might be going up. And hey, I won’t deny a bit of schadenfreude hearing about yuppies waiting for a handout.

  38. With CONVICTION, what will happen:

    – Commodities will continue to decrease in price
    – An unknown number of people will lose their jobs
    – Local communities will organize efforts to assist their neighbors
    – Obama will take office
    – A number of energy bills will be seen, but few will pass. The ones that do will simultaneously create jobs and green energy
    – Soldiers being brought home from the war will take jobs in the new green energy economy
    – In seven years, upper-middle class families will pour millions of dollars in investment into green energy stocks
    – The end of the recession will not be a big deal because we will all be concerned about the increased rain fall, number of hurricanes, etc.

  39. You’re watching the wrong cable network. Try CNBC, where they’re talking and talking and talking about the financial mess.

    I actually have learned some new financial terms from attempting to follow “Fast Money,” a show whose host jokingly suggested ought to be re-named “Where the Heck is My Money?” As a result of watching, I understood why my stock maven gal pal bought Citicorp at $4 a share last Friday. And why day trading could make me a fortune if only I had some money to risk.

    And I have to stick up for Suze Orman, too. Although she has affected a bizarre TV presence in the last few years, full of tacky tics, she has always given sound advice. Didn’t you hear her on Larry King, telling the idiot woman caller not to do this Christmas on credit cards?

    I’ve noticed that the political guys, like Cooper and Matthews and Olberman, simply aren’t paying much attention to the financial news. It’s not their thing.

  40. @Olaf9000, #2:

    “…he explained to me and told me that before his people could predict the markets and invest accordingly there were tools to predict such trends already in place. now its diffrent nobody can predict this animal anymore.”

    Wrong, wrong, wrong. They couldn’t predict the markets, they just made lucky guesses. I’ve not been able to find where I found this link – I could have sworn it was here on BB, but I’ve not found it. Anyway, a good recommended read. It’s a random walk, ladies and gentlemen, and anyone who tells you different is selling something.

  41. Bah. The TV news regularly stops dead when things go “off script”…because they are in fact working from a script.
    Good looks trump reason when it comes to TV.
    The revolution won’t be televised.
    And that is because that revolt must be against the values (loosely so-called) which TV epitomizes.
    TV is a tool of the ruling class.
    TV has limitless possibilities for education.
    What lessons do the US $$ elite use TV to inculcate?
    “War is essential…military spending is sacrosanct…there will never be a non-rightist SecDef, and that’s normal in a democratic republic.”
    I say again, Bah.
    Turn off the TV and laugh at the idiocy of those who do not participate in politics face-to-face.
    Like He-Man said, “You have the Power.” No, wait, he did not say that…

  42. I have a solution. Just watch CNBC. The coverage is far more thorough. Sure they don’t have the same production value as CNN but their chicks are HOT! And just because you don’t follow the economy doesn’t mean you can’t masturbate to it.

  43. Aah Koshin arguing for the fascist outcome…blame the victims, not the bankers…thankfully the victims have more votes.
    Too bad democracy and “robber Baron” free markets don’t mix, eh?

  44. Obama isn’t “filling time”. He is putting together the organization he will need in place this January. I have seen some criticisms both of his choices based on their experience in Washington and the pace of the appointments but perhaps that is a necessity given the current circumstances. One statement made during the campaign that has since been proven prescient is the need to “hit the ground running”. It seems to me the President Elect has already been doing just that and has been taking the measures he is currently able to that will allow him to begin work quickly once inaugurated.

  45. This American Life is your new best friend.

    The Giant Pool Of Money talks about exactly how and why Subprime mortgages and CDO’s started the dominoes falling.

    Another Frightening Show About the Economy talks about the Commercial Paper Market and why market liquidity is so important. Also it explains Credit Default Swaps and why they contributed to a lot of anxiety last month (but I think now they’ve been revealed to be not nearly as big a factor as originally thought.)

    You don’t even have to read them – it’s a radio show so you can just sit and listen.

  46. Obama is currently breaking all speed records in getting ready to work. Bush’s failure to resign and get the hell out of the way is yet more proof that he actively WANTS the destruction of America. Every minute Bush remains in office should be basis for a charge of treason.

  47. One other thing to add that I probably overlooked in the comments: any network media news can and will NOT cover negative truth about the companies that own their A$$. In the current case, they’d indict conglomerate owners and then have to report complicity in their own subsidiary companies. Remember, everything was great a year ago…

  48. The current problem grew out of policy and practices remarkably similar to the overleveraging that led to the Depression of the 1930s. At that time, holding companies bought shares in other companies rather than having product to sell. Stock prices started going up and up, and people bought on margin, borrowing most of the price and counting on rising values to pay for the loans. The subprime crisis was caused by doing the same with overvalued properties. People who invested beyond their means will survive this, even if they lose their holdings. At least here in America there are still opportunities to start over. An important part of the recovery will be investigating and prosecuting all those who broke the law by abusing their authority or perepetrating and/or abetting fraud. Regulators who did not do their duty to protect the buyers should lose their jobs and pensions.

  49. Hey Bloo:

    BB should be a place where you can come to get what you want and need – like it is now. I think people need immediately useful ideas and encouragement to keep going until they find answers. Thanks for your support.

  50. The only thing that triggered this crash was high oil prices caused by runaway speculation, on the back of the US’s destruction of Iraq. Why no investigation of why oil spiked and crashed? “Oh it’s supply & demand.” BS.
    Sleze: Carter is to blame? For allowing out-of-control rightist rogues in the mil/ind/Pentagon complex to sucker Russia into Afghanistan, sure.
    For setting up a Presidency that saw:
    1: Military expenditures through the roof, which all the President’s supporters cheered,
    2. Oil speculators and companies enjoying the biggest profits ever, while the Presidency repeated its slo-mo Enron action, ie “there is no problem” (and thereby triggered the current crash…only oil became unaffordable, really); and
    3. Wall street’s “finest” having all of their losses (and then some) re-imbursed by the Federal Gov., no questions or details allowed;
    I can only blame Repubs (those who have held nigh-untrammelled Power for these many years – Democrats now need 60% of the seats in Congress it seems to pass Legislation, while Repubs only need 50% + 1…) and their apologists, seemingly always lecturing people that they can’t have it so good, and that universal health care and adequate pensions and welfare and food banks are “excessive”, “unaffordable”, and that this is all the fault of poor lazy and shiftless people, and that the Public will, before these goods are obtainable, have to pay for the “fully-equipped with the latest, price no objection” Police and Prisons, as well as to pay for overseas wars and bankers bonuses. Oh and no more declaring Bankruptcy for people, that too was “part of the problem” enabling those “lazy shiftless dirty poor people” to bring about this financial crisis.
    Actually as poor people’s entire life-long experience is one long financial crisis, I think the poor would know better therefore how to rectify these problems than golden boys like Geithner or Paulson or Bernanke…or Bush, who have never known personal hardship.

    Please correct if wrong about that “hardship” part.

  51. Koshn is trying to perpetuate a right-wing meme that turns out to be yet another lie: loans under the Community Reinvestment Act have about the same default rate as loans not covered by the Act. It’s not relevant to the current crisis, except in the fevered imaginations of wingnuts who will blame a Democrat, ANY Democrat, rather than look at how their conservative idols screwed them over.

    The greatest default rates are in places such as Las Vegas, Phoenix and the Inland Empire, where builders and flippers went wild and conjured up fraudulent “creative financing” schemes to keep their bubbles inflated until they could cash out. All that is a minor distraction compared to the multi-trillion dollar house of cards built by investment bankers with CDOs. But arcane financial instruments and huge sums disappearing from accounting databases don’t make good TV.

  52. I feel like a man who has spent seven years in a bomb shelter, who is now opening the hatch into a new, strange world.

    I haven’t watched TV or flown on a plane since the year 2000. I stopped listening to radio in 2001 when a favorite Sunday morning radio piece on NPR was shrilly, angrily calling anyone who questioned Bush’s war on Iraq a traitor. And that was the LIBERAL. I knew my country had gone insane.

    Point: I am in a world of people who can’t process data.

    At least America, some of them, are figuring out that there is no “terrorist” threat that requires our complete and utter devotion and treasury.

    While America was looking for box cutters like a vampire counting beans, I watched the debt climb into Death’s country. I watched the tax cuts and the insane military spending drive us into China’s newly moneyed arms. I watched a Forever War making many rich and bankrupting the nation.

    I watched the housing bubble and cried havoc. I warned people that it would burst and take out all the “wealth” that we thought we had made since 2000.

    I saw the derivative market grow; I heard Buffet warn us that it would destroy us. Where were my people? Watching Iraq being destroyed in yet another Friedmanite takeover of a foreign market.

    I didn’t know about the re-re-re-leveraged mortgage debt, but I should have guessed, watching my mortgage change hands so many times.

    This wasn’t a surprise, this depression. Not only have we made our castle of money on a hill of derivatives sand, but we happily sent our industry overseas while giving the finger to the unions. Pension funds were outright stolen to fund corporations to overwhelming approval. Bankruptcy was made almost impossible for a normal human to use. All it took was a match. And the oil companies and the traders that finance them lit the match.

    We watched in puzzlement as oil and commodity prices, set by casinos, when into the danger range. We watched jobs disappear, and almost no one connected the next dot, which was a wave of default and foreclosure. The match lit the can of gasoline.

    Financial engineers had packaged mortgage debt and sold it as AAA rated investments to the entire world, and everyone made out like bandits. But the insurance company, AIG, which was Too Big To Fail, was unregulated and did not have to actually have the ability to cover losses if a wave of foreclosures hit. The gasoline can started the neighborhood on fire.

    Everyone assumed bubbles go on forever. For the Smartest Men in the Room, who got out early and are now posed to buy our country for pennies on the dollar, this has been a raging success. You all are not processing this: this is Disaster Capitalism. They made a fortune, and now the disaster they made is the opportunity to buy us cheaply. And here’s what is making people so surprised and puzzled: they are being gifted with 8 trillion of our money,with no strings, to buy us up with. Truly, it is good to be Milton Friedman’s Chicago Boys. After Bolivia, Brazil, Venezuela, Indonesia, Poland, China and Russia, the United States of America is now similarly poised in shock, waiting for the Brick, the book the free-marketers used so many times in other countries, to be opened and used against us. We’re about to be Russianized, kids. Shock them until they’re dazed and uncomprehending, then hit them with “reforms” too fast to follow until that perfect market is achieved, and half the country – actually, more – is made destitute and invisible.

    At least, that’s how it usually went. Here’s hoping Obama doesn’t listen to the Chicago School Boys, as so many did before.

  53. Obama is a Chicago school alumnus.
    There is a reason your police/military is well equipped, and it is not to defend you…

  54. Oh and catbeller, you’re right.
    And TV is a big part of the problem.
    Reagan gave America the Fox network, while dismantling the equal-time rule.
    None of this is co-incidence. Your leaders torture and order killings without trial already for “foreigners”. How long before these “powers” get a domestic try-out?
    Remind me again what the numbers show about prisons and population in the USA?

  55. Ugly Canuck, you’re almost completely wrong on each of your points.

    The only thing that triggered this crash was high oil prices caused by runaway speculation, on the back of the US’s destruction of Iraq.

    A drag on the economy, for sure, but the crash(es) were caused by phantom value mortgage derivatives, plain and simple.

    Oil speculators and companies enjoying the biggest profits ever

    Since the oil companies’ books are open to the public, we can see that they were paying massively increased prices themselves and not the source of the markup. Their margins are actually quite small–they just happen to be gargantuan companies.

    Wall street’s “finest” having all of their losses (and then some) re-imbursed by the Federal Gov., no questions or details allowed

    That’s not even remotely accurate. For example, Joseph Lewis bought roughly 7% of Bear Stearns before it collapsed for almost a billion dollars. He lost over 90% of that investment. That same story, on a much smaller scale, is everywhere in the financial sector.

    You’re angry. We all are. But misinformation isn’t helpful to anyone.

  56. It’s funny — I’m slacking from $DAYJOB, in which I write about the financial crisis, I come to bb, and end up… commenting about the crisis.

    Dale, I want to comment on Point 3. Analysts and economists aren’t unwilling to comment on the situation; they’re unable to do so. There aren’t any reasonable models for the entire scenario because it’s never happened before. The Great Depression is a bad reference point, except in terms of scale, because so much complexity has been added to the system since the 1930s.

    No one in their right mind is going to come out and say “we’re going to be through this storm by April 11th, 2010.” If you focus on a particular segment of the world, you’ll find people far more willing to comment. I haven’t had any trouble getting analysts to comment on the sector I’m dealing with (mining and oilsands).

    Based on said interview, I’m going to contradict Purly@46.

    Commodities prices *aren’t* going to continue falling. Mining firms are already cutting back on exploration activities, and the hyperinflated commodity prices of the last couple of years are at least in part explained by the previous commodity bust: No exploration ten years ago means no new resources to develop and mine today. And since we’re already falling far short on the supply side, even a short-term decrease in exploration activity is going to jack up the prices in a few years. In the immediate future, I agree, prices will keep crawling down as the demand decreases. But the only thing that will impact things over a long term is a catastrophic collapse of the Chinese economy, which isn’t very likely.

    Interesting tidbit: The pain in the US is affecting China, but not as much as you might think — exports account for only 10% of the Chinese GDP.

    Now excuse me while I copy-paste this into the piece I’m getting paid for.

    I’m so glad my boss isn’t like that! I’m working with Meadow Creek Dairy (http://www.meadowcreekdairy.com) right now, and became a huge fan of the Jersey cow. I especially like the way it keeps escaping and going on wacky adventures along the local roads. It’s awesome!

  57. Sigh. So TV “news” isn’t really journalism, what else is new?

    I suggest some good old-fashioned digging. There’s always a compelling story. Right now is the time for classic investigative reporting.

  58. WTH. This is a simple story to cover: REPORT!

    All the media needs to do is go out and find affected people and interview them. Then they need to show on camera how they are trying to interview the CEOs who got us into this mess. That is all the media needs to do. That is it. It can make for compelling TV if they have any talent whatsoever.

    And the bonus? The media can become relevant again as a trustworthy institution by DOING ITS JOB: Being tough as nails until these assholes talk.

    That is all.

  59. The media cannot cover this crisis because it can be explained in a few sentences, and they have 24 hours to fill. 1. We have built large parts of our economy out of nothing. When investments subjective value have no relation to its intrinsic value, you have castles in the air. 2. Between consumer debt, government debt, and raiding the social security funds, we sold our future. The baby boomers are about to become a weapon of mass destruction on the economy as they retire. 3. Americans have lost the drive and the ability to sacrifice needed to get through the coming depression. I hope the hard times renew us as a country and as a people.

  60. “The war on terrorism featured a real enemy.”

    –filing under “sentences I never thought I’d see on Boing Boing”.

  61. Hey, it’s me, Revolution! Remember, we used to go to school together back in the late 60’s? It’s been a long time, how’ve you been?

    You’ll never believe this, but I’m actually an accountant now! Rebellion against oppressive elites just wasn’t paying the bills, and…well, you know that design firm Situationist got hired at? They needed an accountant, so here I am.

    Anyway, seeing all this stuff on the news about the economy collapsing and the mass plundering of working class and poor people’s wealth…it kind of reminded me of old times, you know? You and me and Civil Disobedience, taking over buildings and clogging the streets with sit-ins…ah, things were pretty crazy back then, huh? Fighting the establishment, standing up to the rich and powerful…

    Where are you these days? I was hoping maybe we could get together again.

  62. Actually, there’s some classic journalism opportunity here:

    Think about the countless stories of everyday people from all different demographics that could be told. Of hardship and inspiration, both by reporting the numbers of their daily grind, and to how they cope at major milestones (like Halloween, Thanksgiving, Christmas, New Years, summer/winter holidays). It might not have the visual hit of foreclosure signs running down the length of a surburban street, but it’s good journalism that the American Idol-prepped audience should be able to connect with.

    Sure, that’s a lot of walking and talking – not something anybody in the “news” business does well these days…but this is how careers can be made.

    Incidentally, I wonder if we’ll see a boom in National Parks recreation in spring and summer – it’s a relatively inexpensive vacation for families.

  63. Well you know me Dale…

    I think this truly illustrated the need for transparency and to get out there and use the cognitive surplus.

    We may not always understand the big picture but we all know “our” stuff and can document that.

    That’s why I keep slugging away at financing the transparent federal budget project. I hope that if we allow everyone to document it one paragraph at a time. We can figure things out. And the press could then cover things one bit at a time and maybe start to help us find the bigger picture btn all those connections we would create!

    We need to do the same in regards to business. All of those that are being bailed out need to open up their books. We the people are paying therefore they need to be answerable to us. And the press could easily see the largest errors to highlight.

    and yes Dale – I promise open data format for all so you can create a fantasy budget game out of it! I mean – why not!

  64. National park vacations are only inexpensive if you can afford to get there. The gas to drive to Moab ain’t cheap, from anywhere!

  65. #59 posted by catbeller ,

    Don’t know if you will be back, but your comment is really well said. I feel like we are twin sons of different mothers. You have a new fan.

    Sleze, I think the poster, Ugly Canuk was referring to this person who has totally absorbed the neo-con talking points; “Neo-con: The people who brought you George W. Bush, the Iraq War and coming soon, “The Great Depression, Part II!

    #33 posted by KoshN , November 26, 2008 4:03 AM Blame for economy?: Jimmy Carter -> Community Reinvestment Act -> Bill Clinton -> Fannie Mae/Freddy Mac Fraud = Liberal Malfeasance
    If you force banks to give loans to people who can’t afford them, why be surprised when they default on the loans.

    With it’s present “war is peace, freedom is slavery” mindset, CNN (or any news outlet) is terrified of the truth they helped create.

    I’m going to go out on a limb here and guess that KoshN listens to Right Wing Talk radio and watches Fox.

  66. Contrast CNN’s befuddlement with Charlie Rose’s constant pity-party for all the poor, suffering Wall Street investment houses.
    It seems that, ever since the shit hit the fan, his show has been one long sob-song for Wall Street, featuring economist after economist extolling the virtues of throwing as much fed money at Wall Street as possible.

  67. Of course the media CAN tell the story, it is that they have chosen not to. Most media companies are owned by big business and until there comes a time that there is absolutely not hope whatsoever that there will be any light at the end of the tunnel, it is the mandate of big business to make sure that people keep spending what little money they have. The fear -rightly so- is that if they really tell people how bad things are -as the media are doing in the rest of the world- no one will spend anything during the Christmas season. Of course they WON’T be spending, but big business is still pretending at least that will happen.

  68. I can try to make a few predictions, based on trends I’m seeing:

    the cost of transportation (for goods) will fall for a time, then go back up as the gov looses the ability to subsidize the companies responsible for that transportation due to inflation and a continuing erosion of value on the US dollar. The cost of commodities will dip down and then shoot up, as those companies attempt to shift the burden to the consumer, rationalizing that people have to have commodities. This is something which is already happening in third world countries and will happen here in the US.

    Since commodities prices are set by trading futures (contactual future prices), the continuting erosions in the dollar, without the assurance of subsidy and the confidence in leadership or the future of that section of the economy, chances are quite good there will be the kind of inflation seen in Russia or post WWI Germany. This would be why all the ‘stock market rallies’ are attended by what amounts to a discussion of stock market morale.

    As a result, there will be riots (like those which have already occured in Florida over housing), which, thanks to the militarization of culture, will result in injury and further rioting. Many of the security guards I know are being pressured to be trained in the use of lethal weapons right now, ostensibly due to the fear of business owners, but also, I think, to allow them to forcibly quell looting by people who have reached that point where they have no confidence in their ability to ‘make it’ in the system.

    A whole lot of people are going to get a crash course in barter economy. Skills in repair and crafting are remarkably good thing to have in a barter economy, fyi.

    There is going to soon be an attempt to revitalize the US economy in particular by attempting to generate more directly stimulating job activites inside the national borders (as opposed to internationally). This will likely take the form of ‘green’ jobs, but also a reflexive effect on other industries, including bringing some jobs back onto US soil in the tech sector due to a decreasing ability to arrange newly revitalized communication networks in other countries.

    It is equally possible to see those jobs move elsewhere, however. I know less about the long-term effects of this on the tech sector.

    I think this localization will mostly be in terms of manufacturing, however. We’re seeing a call for inter-US drilling; unless something is done to prop up our farming interstructure/the creation of commodities for use inside the US, this will be less effective in terms of fending off serious infra-structure problems, however.

    I think it is entirely possible we will see some of these motherfuckers held responsible. Because so much of the success of any economic rescue plans rely on the morale of the people involved, I see a strong need for someone to scapegoat or otherwise make an example of. I think, however, that this administration will be somewhat hesitant to do so, but will be convinced with continuing decay to do something of that kind. I would expect that there will not be as much convcitions as I would hope, but it would be difficult to avoid something along those lines to bolster morale. (We are fortunate to have Obama because he is good at bolstering our flagging national morale.)

    I think, though, that the panic which all the subsidies we’re seeing are an attempt to avoid is inescapable. We’re propped up, as a nation, by subsidy, and I don’t think our economy is currently built on enough concrete, non-speculative things to not have that panic. The ability of the gov to subsidize these failing business is not endless. If you’ve been paying attention, the line-up for handouts is full of repeat offenders who can’t stay afloat any other way and represent huge portions of the US economy. The question is how the panic will play out.

    I’m thinking this is a great time to invest in local networks, where the relationship between what is bought and what is valued is fairly direct. Also local social networks, for the sake of barter. Those should be (should) best able to weather the panic.

    I give the panic six months or so before we really start seeing it. I’m already seeing people locally going door to door on businesses, begging for work. Most of the people I know are out of work. I’ve been lucky, but a number of people at the college I’m working at are newly out of work (as of the end of the semester) and mysteriously didn’t get paid today. Could be a hiccup, could be nothing, but my spidey senses are tingling.

    Hope I’m wrong.

  69. The point where KoshN missed the target was when he insinuated that it was only the Left’s fault.

    From I’ve gathered (based on events that happened when my only concerns were scraped knees and bullies), the problem arose around a few key elements.

    At some point the whole country decided that everyone had a right to own their own home and both sides of the political spectrum began competing to increase the number of homeowners during their time in power.

    The Left created systems that would help people into homes that they otherwise could not afford. Market goes up.

    The Right said, “No, no, idiots. Let the free market work,” and removed all federal oversight on the system that was in place. Market goes up.

    The people who ran the companies saw that, in a rising economy, they could make a lot of money by purposely lending money to people for houses they could never afford and repossessing them to sell at an even higher price. Market goes up.

    The news media never pointed out the risks in these uncontrolled systems because a crash was unthinkable in such a bull market.

    The war on Terror happens.

    Speculation on oil, plus unhappy Saudis, plus consumer level Hummers, plus a dragging domestic oil industry cause gas prices to skyrocket. Commodities rise; suddenly no one can pay their mortgages and the companies have to buy them back faster than than they can afford while the real estate market starts to fall. Foreign banks who got in the game when prices were up, collapse, thus making the crises an international one.

    Lots of guilty parties all around. Doesn’t matter that Bush was the one who pulled out the bottom card when the entire house was made of fucking cards in the first place. All because both sides wanted to beat down the other side rather than work with them. Hopefully, thats what President Barry-O will try to get changed.

  70. My father (who is otherwise a complete asshole), said to me about nine years ago that the thing he had noticed about the way technology is interacting with society is that a class divide was being created based on the people who know how to use technology/can afford to not know how and the people who do not know how and cannot afford to remain ignorant, and that he thought this would eventually create a serf class. He is a defense industry engineer, and it was his take on why I shouldn’t go into the arts.

    While I differ with him on the specifics, I think part of our problem has a great deal to do with access to information: financial literacy is only a part of the problem. The other part is general literacy, reading comprehension and the assumption that you can trust specialists.

  71. Dale nailed it, what more can one add except that in response to the economic woes the Fed and Congress are probably doing the polar opposite of what they should be doing, which is letting the biggest failures fail and using the 700 billion to help expand the viable banks and brokerages to take on the “assets” of the failed banks (but really, can one call anything from a failed bank an asset? This is bizarro logic!)and help the borderline ones succeed, which would also be cheaper to do. Congress’ failure (or refusal) to see the opportunity to clean house and actually fix the economy instead of using this bailout socialism/corporatism for the wealthy is borderline criminal and is unsound economically and will only prolong the agony in the long run and possibly in the short run as well. They are doing the same things they have done in the past for lesser financial collapses, and here we are again only this time it’s the mother of economic collapse.
    This could get really bad as poster #79 says…

  72. #76 posted by Pipenta , November 26, 2008 10:41 AM
    National park vacations are only inexpensive if you can afford to get there. The gas to drive to Moab ain’t cheap, from anywhere!

    Sure, the closer Parks to population centers will have the greatest increases, but a camping fee and a tank full of fuel is less expensive than a packaged vacation or hotel stay for a family of four/fourpointfive.

    How many “staycations” before families start murdering eachother? *g*

  73. Ah right fer publicly-traded oilcos (not all are) but the oil speculators need not reveal any position to US Regulators, ever, IIRC.
    How much of the high cost of oil is only a reflection of the high costs of US production of same?
    If the oil regions of the world were at peace,( ie no war/”regional instability” premium on mid-east, that is, the lowest-cost oil,[ which “regional instability” co-incidentally started getting real bad (with the iad of a little multi-party spookery) at the same time the oil spot market was invented by Mr. Marc Rich in the late 60s /early 70s, “the first oil shock”] ) what would the US oil cos. have left to do? Set tanker schedules?

  74. The problem (one of them) with the Community Reinvestment Act argument is that CRA loans do NOT account for even a sizable portion of defaulted mortgages. They’ve historically been fairly profitable and nearly always paid back.

    The loans lent to people that couldn’t afford them and then weren’t paid back were often not in poor minority neighborhoods–they were expensive homes with inflated value that people thought would continue inflating. Then they didn’t.

    This had nothing to do with CRA. Cut that shit out.

  75. @85 “…the continuing [erosion] in the dollar…”
    I have to admit, that’s really funny.
    If you were paying attention you would have noticed that European currencies have lost at least 25% of their value against the U.S. Dollar since July, while Asian currencies have gained slightly.
    The Euro.
    The British Pound.
    The Yen.
    The Hong Kong Dollar (The Chinese Yuan is not completely convertible as a currency -guess why-, so the HKD is a ‘proxy’ for the conversion of the Yuan.).
    Astute observers will notice that most of the gains, or losses, that the U.S. Dollar has made against these currencies has all occurred since July of this year, right after the SEC made the announcement to the markets that they would investigate anyone who was speculating in the price of oil, which, coincidentally, was about the same time that Bear-Stearns and Lehmann went tits-up. Hmm.

  76. @91 Ugly Canuck:
    only 1% of Americans own 40% of all financial assets. […]More disinfo for deviant I guess.

    Why do so many people think our economy is Pareto efficient? Also, this is one of the goofiest statistics out there, because it’s entirely meaningless without additional information. The top 400 wealthiest individuals are worth almost 10% of GDP: 1.5+ trillion. That’s people like Bill Gates, Michael Dell, etc. The people nearer to the 1% cut-off have absolutely nothing in common with them.

    In other words, that wealth figure is driven by outliers. These outliers tend to be responsible for massive economic growth and job production. Your point in bringing this up is…?

  77. well…they could cover this story quite well, but that would bite the hand that feeds them. This would be a great opportunity for the news media to return to their roots of reporting the news instead of trying to make it. Why aren’t they going after all the titans of industry who have not only bankrupt their company and investors, but who are morally bankrupt as well? This has been a huge violation of the public trust and the reason the news media is not digging deep and exposing the truth is because these are the very companies that support the news media with advertising.

    They are missing a great opportunity here. In these troubled times when these once considered revered institutions were trusted to the point that everyone felt comfortable to invest in them, we now know their corporate malfeasance has not only destroyed the American economy, but maybe the American dream. The story is not only the corporate captains of industry, but the legislators who allowed themselves to be lobbied to the point of conflict of interest and corruption.

Comments are closed.