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Baseball game, Manzanar Relocation Center, Calif. (LOC) by The Library of Congress
Time to beat up on really really bad news reporting. The stock market doesn’t tell people why it does what it does. We have commentators who bloviate on what they think caused the market to rise or fall, but they don’t really know and they could be completely wrong.
That is why it was incredibly irresponsible for NPR to tell listeners in its top of the hour news segment that the market plunged because Standard and Poor’s downgrade of U.S. debt. NPR does not know this to be true and it certainly is not obviously the case.
The market that should have been most immediately affected by the S&P downgrade was the U.S. bond market. However bond prices soared in the trading immediately following the downgrade and continued to rise through Wednesday. If there was greater fear that the U.S. would default because of the downgrade, then bond prices should have plunged as investors demanded a higher risk premium. This did not happen.
The most obvious alternative explanation for the plunge in the market is the risk that the euro could break up as the debt crisis spread from relatively countries like Greece and Ireland, to the euro zone giants, Spain and Italy. The prospect of a euro zone break-up raises a real risk of a Lehman-type freeze up of the world financial system. It is far more plausible that this prospect led to the plunge in the stock market than the downgrade by one of three major credit rating agencies.
This point is important because many political actors, including National Public Radio, are trying to use the debt downgrade as an argument for cutting Social Security and Medicare. Their argument will be furthered if they can claim that the downgrade had enormous consequences for the stock market, since so many people involved in political debates (i.e. columnists, policy wonks, reporters, congressional staffers) have substantial amounts of money invested in the stock market.
20 Comments
That was my (depressing) thought when listening to their less than enlightened coverage. Using the debt downgrade “as an argument for cutting Social Security and Medicare”? I’ve been ambivalent about NPR’s news coverage for some time now, but I’ve not thought they were necessarily joining the bandwagon in promoting Social Security and Medicare cuts. Then again, thinking about it, I see where the case can be made. Depressing. Depressing to end your thoughts with “depressing”. Happening much too often.
I see the best thing to do with the S&P downgrade it to ignore it…as the market ignored it. Those who are trying to tout it as the “Tea Party Downgrade” aren’t doing anyone any favors as hitching your wagon to the S&P star also means getting on board with entitlement cuts.
Damn, is this the propaganda that rahm is now “catapulting”?
NPR should be fully defunded – it is now just another propaganda vehicle. The wingnuts should pay for it, not the taxpayers.
There’s coordination at the highest levels (IMF/G20) to cut the social safety net in the US as well as other countries.
I called Edward Schumacher-Matos, NPR political hack and the dude that wears the hat “ombudsman”.
I pointed out facts about social security and the deficir. Just like faux news, the woman that answers the phone tried to pretend these were opinions.
I proceded to outline other stories that clearly are not accurate based on observable, objective, verifiable information: Facts
Got the same crap. When I pointed out that the media is entitled to opinions, but not to dishonest representations of equivalencies, she said “I am going to hang up now”.
I spoke slowly, softly and said nothing stronger than “alec/koch/walmart et all should fully underwrite NPR like they do the rest of the consrvative media – it serves no purpose to have taxpayers support propaganda”
Please take the time to call them on their bs – please call, don’t send emails/letters because these may be read on the air and used to create further dichotomies and false equivelents.
They need to hear from us and hear from us in a format that is hard for them to misrepresent and deceive with.
NPR serves absolutely no legitimate purpose as a public-subsidized entity.
Note: I called 202-513-3232; it you listen to all the voice mail crap, you will get someone that pretends to be glad you called, proclaims they work with ombudsman (that is not avail to talk to you) and will listen to what you say unless it doesn’t fit their political agenda – then they hang up.
Please, lets make them hang up on people all day today!
Thank you Mr. Baker for calling out NPR for yet another disappointingly shoddy bit of what they like to call reporting.
http://www.nprcheck.blogspot.com/
Arbeit Macht “Frei”, INDEED!
Over the last few years, NPR has become the CNN of radio — very bland, carrying water for corporations and government — all the while defensively maintaining that just “report the news”. It actually is not quite as low as CNN, but it’s moving in that direction. Amy Goodman is still the best news person on the air today. She makes all the rest look really uninformed and tired.
Thanks for this post, but the 800 pound twin gorillas in the room are excess leverage and rampant speculation by the hedge fund crowd.
The problems in Europe are real and significant, but don’t come close warranting the wild trading activity we are currently experiencing.
NPR is about where network radio was in the 1960s, which puts possibly a little ahead of present-day CNN, but not enough to warrant support. I dropped them five years ago, and told them why. I like VPR for the local stuff, but damned if I am going to let a penny go to the DC operation, so nothing to Vermont either.
Well done!
I called. I couldn’t leave a message or talk to anyone in person.
IMHO, you are being very generous, very VERY generous. Walter Cronkite had infinitely more integrity than the the hacks on the radio at npr today.
If its happening, respectfully, how can you justify a statement that “don’t come close warranting the wild trading activity we are currently experiencing.”
Not meant as attack, just believe that proclaimations that fly in the face of what we are actually seeing need a more robust examination (and a link to show what information supports this exploitation helps too).
well, as a Sox fan, I thought it was because the Cubs won, that the stock market plunged… I mean I hate when that happens.
You are all wrong!
It wasn’t the cubs, white sox, or baseball at any level.
IT WAS MRS. O’LEARY’S COW!
Did anybody listen to Steve Inskeep’s interview with Barney Frank? It was disgusting. Frank kept trying to explain that if the wars were ended that would completely erase the need to go after entitlements and that SS was a totally independently funded program anyway and was not responsible for increasing the debt. But everytime Frank spoke Inskeep would quickly interrupt him and very forcefully inject the “Entitlements are killing us” mantra. Truly appalling and made me glad I stopped contributing to NPR.
in simple logic if A infers B, because B is true does not mean that A is true.
If the weather is sunny I wear shorts. So if I wear shorts does that mean the weather must be sunny?
He/she is simply stating that C has a bigger effect on B than A does at this moment. I don’t know if that is the case, but its not illogical.
On the Irony isn’t dead frontier, the stock market and treasury market showed that the Literal Market Fundamentalists are right, they know bullshit when they see it. In spite of Europe and the White Sox, the market held off crashing while there was theoretically a chance to avoid an all out bi-partisan embrace of Austerity.
After the Scary default crisis was dealt with, the S&P downgrade happened, and the resulting seal of approval for Austerity today, Austerity tomorrow, Austerity forever, the Teh All Knowing Market rendered its judgement saying bullshit, selling stocks and buying T Bills.
Luckily this black decision by the market was reported far and wide as white, not as a refutation of the policies embraced by the Tea Party and Obama but as an endorsement.
Wasn’t taken as an attack, and you have a fair point.
I just don’t have the time or skill set to provide the appropriate links that share my point of view, but speculation and excess leverage have been commonly discussed as sources of destruction in the financial markets since the 2008 meltdown.
I’m sure searching the google would provide lots of articles on both topics.
An unremarked but salient reason for the sell-off was earlier reports that showed consumption was on a downward trend.This meant America could no longer be the consumer chump who absorbs global overcapacity by running up trade deficits with purchases of slave-wage exports that further eroded our manufacturing base.