I'm not sure it's a double standard (4.00 / 2)

it very well may be that this problem is so freakin' big that the bailout wasn't enough (as well as being poorly designed and slow to get out of the barn.)

Blaming this latest collapse on the credit crunch is accurate. Europe's not collapsing because they're against the bailout, that's for sure. It's collapsing because the credit crunch is enormous, global, and poorly addressed.

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by: Matt H @ Mon Oct 06, 2008 at 18:59:19 PM UTC

yes (4.00 / 2)

Which is why a lot of us were saying throwing $700 billion in a poorly designed vehicle wouldn't solve the credit crunch.

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by: Matt Stoller @ Mon Oct 06, 2008 at 19:18:37 PM UTC

[ Parent ]

Which would make you correct unless (4.00 / 1)

the bailout was too small (as well as poorly designed.)

The front half is the part that's problematic for your argument. And the 2nd half is the problem for my argument. And the fact that it's next to impossible, at least at this stage of the game, to disentangle the two makes it a near certainty that the argument will, and should, continue.

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by: Matt H @ Mon Oct 06, 2008 at 19:38:59 PM UTC

[ Parent ]

not quite a double standard (0.00 / 0)

but the avoidance of any standard at all. I don't know how you found out about the financial crunch, but I read it on the news, so if we can't criticize the media, who, exactly, is responsible for presenting these things to the public?

Most people -- including most of the commenters on OpenLeft but not the front-page posters -- bought the essential story pushed by the New York Times from their increasingly editorial-packed stories:

1. this bailout sucks, it is totally flawed.

2. it must be passed immediately or else that first drop we saw will be followed by another.

... right up until the narrative was blown by actual events (bill passed, more drops.)

At which point wise people like those in the comments will say "hey, it's just the newspaper, don't believe it anyway."

As far as I can tell, those exceedingly wise journalists who blamed the first drop on cowardly Congressmen who only cared about their stupid constituents can't quite figure out what their next narrative is going to be:

1. wait, wait, the bailout is going to succeed, hold on a bit longer, that $700 billion and executive privilege to a Bush crony will pay off soon.

2. those cowards in Congress waited a few days too long... they missed the magical moment when the elves came out and they had to act.

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by: sdedeo @ Mon Oct 06, 2008 at 19:39:18 PM UTC

[ Parent ]

I don't think it's a double standard (4.00 / 1)

I think it's just the media's habit of ascribing proximate causes to events.

You could argue that they lack sufficient focus on deeper causes for events; or you could say that that's not really the job of daily reporting, though maybe it is the job of the newsweeklies, etc. But I think the reason stocks fell last Monday was, proximately, because the bailout failed; and the reason they're tanking today is, proximately, fears about the credit crisis.

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by: Chachy @ Mon Oct 06, 2008 at 19:08:10 PM UTC

then (4.00 / 1)

But I think the reason stocks fell last Monday was, proximately, because the bailout failed

Then why did stocks go down when the bailout passed?  And why did they rally the day after the bailout failed, when it was far from clear the bailout would go through?

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by: Matt Stoller @ Mon Oct 06, 2008 at 19:17:41 PM UTC

[ Parent ]

I don't know (0.00 / 0)

But the correlation was incredibly strong - it tanked exactly at the moment when it became clear that the bailout wasn't going to pass.

But since I agree with your basic point that media coverage has had a heavy pro-bailout bias, I won't belabor the point. Instead, let me mention something I'm surprised you guys haven't blogged about: during the VP debate, Gwen Ifill asked a question about the dangerous "polarization" in Washington, DC, and how it was eroding the ability of government to get things done. Her evidence? The failure of the bailout in the House - one of the most bipartisan Congressional votes in the last decade. Also one of the most high-profile anti-Bush votes.

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by: Chachy @ Mon Oct 06, 2008 at 19:45:20 PM UTC

[ Parent ]

Reasons (4.00 / 1)

1. Stocks dropped when bailout failed because investors were surprised and worried government would not take action.

2. Stocks fell (but not by as much) after it passed because of the unemployment figures.

3. Stocks fell in European trading because the credit crisis is spreading and Europe has a centralized monetary system but not a centralized governing or regulation system that can quickly come up with a solution to the credit freeze.

4. The "bailout" won't start for another few weeks. It will actually require using the money allocated for it to have an impact. This was not some confidence game whereby the mere passage of the bailout was going to fix the credit crisis.  

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by: adamterando @ Mon Oct 06, 2008 at 19:58:31 PM UTC

[ Parent ]

This is not an example of responsible blogging. (0.00 / 0)

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by: adamterando @ Mon Oct 06, 2008 at 19:08:31 PM UTC

obviously it is due to Europe not passing a bailout (0.00 / 0)

:)


New Jersey politics at Blue Jersey.

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by: Hopeful in NJ @ Mon Oct 06, 2008 at 19:09:40 PM UTC

Germany negotiated a national bailout... (0.00 / 0)

for Hypo Real Estate, a big player on the European mortgage market. I guess it was still too small - only 50 billions. Peanuts.  

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by: Gray @ Mon Oct 06, 2008 at 19:15:21 PM UTC

[ Parent ]

oh the media spin was out in force (0.00 / 0)

Clearly the US Chamber of Commerce controls the media for they spun this like no tomorrow.


NoSlaves.com  


The Economic Populist

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by: Robert Oak @ Mon Oct 06, 2008 at 19:14:34 PM UTC

Paulson picks a 2002 ONLY MBA to run bail out! (0.00 / 0)

This is incredible people, absolutely incredible

Paulson picked Neel Kashkari to run the bail out.

This guy was in IT, yes IT!  Security with only graduating with just a MBA (from Wharton, but still) in 2002.  IT?  Security?  the technical aspects to Goldman Sachs?????

No deep background in global financial crisis, CDSes, SIVs, zero background from say the S&L crisis and to make matters worse, he wrote the original bail out bill.

That is like coming over to one of us and selecting one of us to run this bail out.  Seriously....this is not an expert, not a wiz, not a PhD, an Academic, an economist...or a long time expert in the private sector....

a 35 year old 2002 graduate!  Good GOD!

NoSlaves.com  


The Economic Populist

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by: Robert Oak @ Mon Oct 06, 2008 at 19:19:39 PM UTC

the neolib kidz did it for the economy of Iraq (0.00 / 0)

.. they can do the same thing for the economy here! The future is bright!

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by: T Maysle @ Mon Oct 06, 2008 at 19:49:39 PM UTC

[ Parent ]

Did anybody say last Monday: Bailout = NOT doomed? (0.00 / 0)

Can't remember anybody making such false promises.

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by: Gray @ Mon Oct 06, 2008 at 19:21:54 PM UTC

um (4.00 / 1)

Yes, most of the people pushing the bailout argued that it would prevent a meltdown.  Here's Barney Frank:

On the floor of the house chamber last week he told his colleagues, "This is a vote where many of us feel that the national interest requires us to do something which is in many ways unpopular because what we are talking about, to many of us, is the need to act to avoid something worse from happening than is already happening."

The implication is that the bailout would help 'avoid something worse from happening.'  It's not ironclad, but the argument is clearly there.

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by: Matt Stoller @ Mon Oct 06, 2008 at 19:25:56 PM UTC

[ Parent ]

Ok,that's a point for you (0.00 / 0)

He only did imply it, but I don't want to argue about this. He sure should have been more honest about nobody being able to guarantee success.

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by: Gray @ Mon Oct 06, 2008 at 19:32:39 PM UTC

[ Parent ]

glad to see this quote (0.00 / 0)

Right now there is a major blame game but the truth is all of Congress and both parties are to blame.  It's like people are scrambling for a FDR or someone and can't get past the partisanship to realize this.

I know we're all on the left here, but facing facts, naming names is probably the only way to clean up Congress...

I believe some strong primary challenges are needed in 2010 and that is one tough road.

NoSlaves.com  


The Economic Populist

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by: Robert Oak @ Mon Oct 06, 2008 at 19:54:34 PM UTC

[ Parent ]

oh please (4.00 / 1)

As the "no" votes neared a majority on the big electronic board above the House floor, nervous members followed the stock market on their BlackBerrys, and one yelled out "600 points!" - the market's immediate verdict on the negative vote.

http://www.mercurynews.com/ci_...

The drama was palpable in the House chamber when, as "no" votes were outpacing "aye" votes, a Democratic leader began to circle the chamber, repeating: "The market is falling. The market is falling." On the floor of the New York Stock Exchange, meanwhile, traders fell silent as they watched television screens showing the House vote falter.

http://www.latimes.com/busines...

"With the stock market recording its largest point drop ever in the aftermath of this vote, it has never been more clear how important it is to put politics aside and come together to stabilize our economy for all Americans," Reid said. "I hope House Republicans will reconsider their vote and decide to put country first."

http://www.cnn.com/2008/POLITI...

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by: T Maysle @ Mon Oct 06, 2008 at 20:03:05 PM UTC

[ Parent ]

great stuff (0.00 / 0)

I'll snip that and use it.

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by: Matt Stoller @ Mon Oct 06, 2008 at 20:15:37 PM UTC

[ Parent ]

agreed (0.00 / 0)

If the bailout hadn't passed last week, the headlines would say that today's drop was a result of it. Then more and more folks would implore Congress to pass the bailout pronto, and it would eventually pass.

Our only real chance would have been for Dodd and Frank to trash the Paulson plan and offer up the Swedish plan instead. But instead they tinkered around with Paulson's blueprint and bought into the "crisis" framework. A real failure of leadership on their part, and a real lack of skepticism towards the Bush team.

And yes, the media's decision to tie the Dow Jones to Congressional action really didn't help.

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by: existenz @ Mon Oct 06, 2008 at 19:25:09 PM UTC

Thank you for pointing this out (0.00 / 0)

I agree with you wholeheartedly--last week's headlines absolutely implied causality, with no justification at all.

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by: TValley @ Mon Oct 06, 2008 at 19:34:56 PM UTC

Responsible language (0.00 / 0)

Stock markets crash when people panic. Journalists have to be careful not to yell "fire" or "bombed","tanked","crashed" since the real danger is from the panic. In the last 2 weeks the market has lost nearly 20% of its value. In the depression, it lost 21% in one day, then 90% within 2 months. Recession plus panic caused that depression.

I've always hated the way finance news comes up with a one-line reason for complex stock market moves. Now "Bailout fails, Dow plunges" cost us 700 billion, and all the better ways we could have approached our problems.

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by: annzillion @ Mon Oct 06, 2008 at 20:30:41 PM UTC

Is it impolite to point out (4.00 / 1)

that the Dow is a shitty metric to be using to gauge the relative health or sickness of "the market?" Within the last 2 weeks AIG was replaced on the list by Kraft. So the braniacs formulating the list of 30 companies were so credulous as to believe that financial chicanery in the CDS cesspool was better business than selling lots of boxes of Macaroni and Cheese? Until the insurer dropped to $2/share, and then it's "kick that stinker to the curb, we need some new juice!"

Shouldn't the performance of companies kicked off the list of 30 companies be averaged into the overall Dow number for a certain period of time? I mean the entire brand identity for the Dow consists of this notion that they are a stand-in for the market as a whole. Therefore, when the judgement of those running the show turns out to be suspect, as when, for instance, they fill the list with shitty-ass companies who aren't worth the paper they print their quarterly reports on, that should be taken into account, no? Otherwise "Dow" becomes shorthand for "we're too lazy to try and figure what the markets are actually doing."

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by: Mr Blifil @ Tue Oct 07, 2008 at 03:46:13 AM UTC

Hehehe, "kick that stinker to the curb"! (0.00 / 0)

LOL
Also some good points. But the "stinker" is the hit!

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by: Gray @ Tue Oct 07, 2008 at 10:07:46 AM UTC

[ Parent ]