Thursday, October 02, 2008

How much of the financial crisis is psychological?

Is your head spinning from all the doom and gloom being blasted from the media and Congress day and night about impending financial disaster? Mine is, and frankly, I sometimes wonder how much of the financial picture is accurate and how much is manufactured in order to get a Democrat elected. One has to ponder about the timing of all of this bad news.

Why the crescendo of economic collapse right before the election? Why didn't the media and congress act just as concerned some time ago or wait until sometime after the election to go into crisis mode? The timing of the current financial crisis seems too planned and calculating to be just a coincidence. Polls show that people's number one concern right now is the economy and that for the most part, voters believe Democrats are somewhat more likely to help with the economy. Could it be that the liberal media and those in Congress, knowing that, is blaring the bad economic news from the rooftops in order to manipulate voters into voting for a Democrat? If so, it won't be the first time.

Mark Penn, chief adviser to Clinton, acknowledged in his book Microtrends that people thought because of the media that the recession and economy prior to Clinton getting elected was worse than it was:

I have found over the years that there is often a huge disconnect between belief about the economy and the true economic state of affairs. Until the statistics are actually published, people tend to assess the economy through the eyes of the national media. In 1992, when Bill Clinton won the presidency based on worries about the economy, the statistics that came out after the election showed that the period leading up to November had actually been a period of record growth. . . . In his 1996 State of the Union speech, President Clinton said we had the best economy in thirty years -- a statement that sent a flurry of reporters to check actual statistics rather than popular political movements and sweeping, politically motivated statements. The more people looked at the facts, the more they agreed, and six months later, there was near-unanimity that the economy was in good shape. Had the economy changed? No, what had changed was knowledge about the true facts of the economy.


My guess is that if Obama gets elected, the true facts of the economy will come out. Suddenly, our economic outlook will look much brighter after November 5th. In the coming months and years after the election, we will be told how Obama has managed this crisis and overcome it, despite the fact that he and other Democrats had their hands in the Fannie Mae and Freddie Mac fiasco and caused some of it, but that's another story. But by then, it will be too late. Those who voted for Obama based on economic fear may realize too late that they may have buyer's remorse.

Labels:

74 Comments:

Blogger TJIC said...

I tend to discount a lot of political comments such as "the worst congressman ever", or "the most cynical pandering ever", etc.

...but it really does seem to me that the left wing media, which always pulls for the Democratic candidate in the way in which they shade the news, has never before been as obvious or blatant as they're beeing this time around: such intense coverage of Palin and the total pass given to Biden and Obama on far far worse charges, and - as you say - the economic "disaster" that just happens to make headlines right after McCain briefly pulled ahead in the polls.

7:26 AM, October 02, 2008  
Blogger Helen said...

TJIC,

I think the left wing media has just given up this time around, realizing that they are becoming less and less relevant as people turn to more and more alternative media. Perhaps they figure this is their last hurrah and they no longer have to pretend they are "unbiased." I hope they die a quick death.

7:33 AM, October 02, 2008  
Blogger DADvocate said...

Helen - I hope you're right about "their last hurrah." Good riddance.

As for the economy, there is a huge psychological aspect right now. How many times has some newscaster said "it may not be a recession but it feels like a recession." The facts don't support what they want so they appeal to feeeeeelings.

I work for a marketing research company. Marketing research is sensitive to the economay and market as many companies cut marketing research first when times get bad. Business is booming. We're in our 4th straight year of record sales, profits and growth.

8:49 AM, October 02, 2008  
Blogger Larry Sheldon said...

Sorry for appearing to dis your trade, but as near as I can tell ALL of this "crisis" is war, right out of the Marxist-Leninist-Stalinist-Maoist literature.

11:16 AM, October 02, 2008  
Blogger Unknown said...

I would like to think some of the general public would disregard the left wing media and their inflated stories but I know too many people who like Obama because he's "nice." Ugh.

11:41 AM, October 02, 2008  
Anonymous Anonymous said...

"...but I know too many people who like Obama because he's "nice." "

-----

A lot of manipulators are very charming. I think Obama is a manipulator times ten. Lots of people think he's the Messiah, though.

I say let him get into office. The US has to bottom out, I guess.

11:47 AM, October 02, 2008  
Anonymous Anonymous said...

In other words: Let's see what he can do, not how well he talks.

He's a good talker.

11:54 AM, October 02, 2008  
Blogger dienw said...

If this bailout passes, the economy will pass into the hands of the Secretary of the Treasury: both bills declared that the Treasury Secretary will insure the economic well being of every American. We will be a socialist nation no matter who wins the coming election.

1:37 PM, October 02, 2008  
Blogger Soccer Dad said...

It's an interesting admission from Penn, as "It's the economy, stupid," was James Carville's brilliant formulation for the 1992 campaign. In fact, the economy was improving in the final months of Bush 41's term, but that wasn't what the Clinton team wanted people to believe.

Similarly, when Clinton left office the economy was slowing down. Fortunately, during his two terms in office, Clinton - under the guidance of Robert Rubin and Larry Summers - mostly didn't interfere too much and things went well. Whether the slowdown at the end of Clinton's presidency was just the business cycle asserting itself or the result of the stupid anti-trust lawsuit brought against Microsoft is immaterial, Bush 43 inherited a slowing economy. And yet it was Bush who was blamed for the slowdown!

One of the big failures of the media is that they look at snapshots rather than longer term trends as long as the snapshot suites their purposes.

2:18 PM, October 02, 2008  
Blogger Jack Steiner said...

I have several businesses that I help run and have been a part of for a number of years now.

At least two of them are fighting to stay alive. That is not because of poor management but a direct result of economic conditions.

I was a customer of Washington Mutual and Wachovia. It is hard for me to watch these places collapse and believe that things are not all that bad because they certainly aren't good.

2:39 PM, October 02, 2008  
Blogger Michelle said...

jack:
Did WaMu and Wachovia collapse due to the economy or due to their own poor business practices? Do I get to blame the economy after I run up my credit card bill with no way to pay for it?

2:58 PM, October 02, 2008  
Blogger Hawver said...

I think it's fair to say this crisis isn't physiological in nature. Taking a look at the major economic indicators (Unemployment, manufacturing orders, inflation etc) it becomes clear we're mired in a serious recession that shows no signs of improving any time soon.

3:05 PM, October 02, 2008  
Blogger Todd said...

Hawver, but how much of that is a result of everyone constantly hearing that things are bad?

I am reminded of a news report from a few years ago whereas the media was pushing that the economy was bad. Most of those interviewed said that they thought the economy was bad, they were doing alright but were worried about their friends. Most were doing OK but because the drum-beat every night was how bad the economy was, everyone thought it had to be for everyone else, otherwise why would the news keep saying so? Cause it was in their interest to, that is why.

I know times are tight but the great depression it an’t. It isn’t even a recession no matter how hard the media tries to say otherwise. Recessions are called after the fact, after at least 2 (or 3) quarters of negative growth. The media has been calling recession for months now on nothing more than wishful thinking.

3:13 PM, October 02, 2008  
Blogger Larry J said...

It's an interesting admission from Penn, as "It's the economy, stupid," was James Carville's brilliant formulation for the 1992 campaign. In fact, the economy was improving in the final months of Bush 41's term, but that wasn't what the Clinton team wanted people to believe.

Similarly, when Clinton left office the economy was slowing down. Fortunately, during his two terms in office, Clinton - under the guidance of Robert Rubin and Larry Summers - mostly didn't interfere too much and things went well. Whether the slowdown at the end of Clinton's presidency was just the business cycle asserting itself or the result of the stupid anti-trust lawsuit brought against Microsoft is immaterial, Bush 43 inherited a slowing economy. And yet it was Bush who was blamed for the slowdown!


When Bush 43 was running for office, he talked about the slowing economy. Clinton complained that he was "talking down the economy." That comes fromt he man who (along with Al Gore and unchallenged by the press) spent 1992 saying it was "the worst economy in 50 years." I guess it was ok for him to talk down the economy with lies but wrong for Bush to tell the truth about the economy under Clinton.

Back in 1992 when Clinton was spreading his lies, I remember watching the nightly news and seeing story after story about how bad the economy was. They'd then announce poll results indicating consumer confidence was down. My then apolitical teenaged son would sum it up with "Well, duh."

3:34 PM, October 02, 2008  
Blogger Larry Sheldon said...

Anybody notice what the markets are doing today.

Rimes with bank, and rank.

3:42 PM, October 02, 2008  
Anonymous Anonymous said...

I don't think the left wing media will ever be anything but left. I also believe they won't give up or give in to talk radio or the net, because it will mean their own demise.

Should Obama win, we will see the "Fairness Doctrine" become law, and attacks on the 2nd Amendment far beyond what we have seen to date. Hopefully, both will be tied up in court for years.

Socialism is the end result they want. An armed populace of freedom loving individuals will fight socialism, literally. If it comes to that, I know where I stand.

And yeah, larry. Once again, it's working.

5:55 PM, October 02, 2008  
Blogger Joe said...

Taking a look at the major economic indicators (Unemployment, manufacturing orders, inflation etc) it becomes clear we're mired in a serious recession that shows no signs of improving any time soon.

No it doesn't. It doesn't even show a minor recession. All that can be said for sure is that we are facing a possible recession. Job losses, for example, are actually quite mild. The biggest worry should be the effects of dumping billions into the economy vis-a-vis the bailout.

(I think we're about to see an economic book and have bet one of my 401k accounts on it--not as big a deal as it sounds, since that account isn't exactly loaded.)

6:09 PM, October 02, 2008  
Blogger Journey Man said...

All this talk about "psychology" is very interesting, but it seems to miss the point that a modern bank-based economy is in fact a giant confidence game propped up by psychological factors. So while unscrupulous people may manipulate the media message to erode confidence, they do so at peril of causing a run on a bank. Or two, or four. The loss of confidence is a chain reaction, and there is a point of no return.

Normal recessions do not start with overextended credit systems. So we can look for signs of a recession, but that's not really the risk. The risk is a panic run of capital from securities.

This seems obvious and I would be very surprised if the media were willing to gamble with the economy in such a way to get their man elected. I prefer to believe that they aren't thinking at all, and instead are just spewing doom and gloom to sell papers, same as ever.

Oh, one final thought: the WSJ has been as strident as anyone. They're not trying to elect Obama, I trust. I conclude the crisis is real, and the tipping point is near enough to scare the crap out of them. (By the way, they blame the exec teams of the banks.)

But perhaps I'm just being manipulated by psychology! 8^)

7:42 PM, October 02, 2008  
Blogger Micajah said...

The New York Times published a description of the events leading up to this week's votes in the House and Senate.

I can't tell who started the run for the door, but it sure looks as though fear was a prime mover.

It seems that the big investors and banks simply stopped trusting each other. Buying the "toxic" mortgage-backed securities is simply a way for the Treasury to put some dollars in their hands, but the "MBS's" seem not to be the reason behind their lack of trust. The lack of trust appears to have come from their recognition that a lot of their colleagues were leveraged to the hilt, or even deeper -- and they couldn't tell who was in too deep.

8:47 PM, October 02, 2008  
Anonymous Anonymous said...

A lot of good comments regarding the economy.

What it all boils down to is that some very poor decisions were made by many people, including politicians, that created financial hardship for many companies.

As the problems multiplied, they began impacting the psychology of other people and other companies not directly affected by those poor decisions, and then fear set in.

Now banks refuse to lend to each other because no one knows which one will fail next.

So it is not an either/or situation between a legitimate crisis and mere psychology. They feed on each other to create a cascading effect that ultimately undermines John Q. Public's confidence in the entire financial system.

Economic transactions are based upon our trust in the other side's ability and willingness to meet their obligations of the transaction.

Once we doubt the other side's ability and/or willingness to live up to that obligation, then the system stops working.

In short, the system is grinding to a halt because of the psychological trauma caused by too many bad decisions.

9:48 PM, October 02, 2008  
Blogger SBW said...

This is one of the bizarre posts I have ever read. You can't be serious.

A Republican president, a Republican Treasury Secretary, and a Federal Chairmen who assumed office during a Republican administration continue to place enormous pressure on Congress to pass a massive, unparalleled theft of the American taxpayer, and you're talking about the left-wing media hyping economic destruction? Who is talking financial Armageddon if this bill doesn't pass? Who is talking credit crisis and enormous economic destruction if the bill doesn't pass? Hint: they are mentioned above. Sure, Reid and Pelosi supported it – it was their idea to begin with, right?– George, Hank, and Ben are just along for the ride?

I have great respect for the House Republicans, like my own Representative for the 2nd District of Nevada, Dean Heller, who voted no on the bailout. But they rebelled against their own party leaders, who are directly responsible for this media hysteria with their ‘we don’t have time to debate this’ crap.

We will see increased layoffs in the future, they are starting now in earnest where I live, and it was most assuredly a bipartisan effort to put our country on a credit binge. I will continue to support the minority of Republicans who are truly fiscal conservatives, but to say all this is media hype is nonsense.

10:40 PM, October 02, 2008  
Blogger Reno Sepulveda said...

I'd like to think this slump is all a media plot to get democrats elected. But things have been tough here for awhile. First it was health care. I remember W talking about tax breaks giving us more take home pay but higher premiums for crappier coverage more than made up for any gains there. Our rates and deductibles have skyrocketed. Retirement savings have taken a back-seat to paying the deductibles.

Then fuel prices took off. Now milk and bread. I don't think the media had anything to do with that.

12:22 AM, October 03, 2008  
Blogger Unknown said...

Do you really think the Democrats are to blame for AIG, WAMU and Wachovia failing 6 weeks before the elections or the $20 - 30 million salaries their execs were drawing?

I hope you're right and when Obama wins, the economy begins to boom again.

1:24 AM, October 03, 2008  
Anonymous Anonymous said...

Yes, Helene Taylor, Esquire, when the Messiah Obama takes his rightful place on the throne, all problems will melt away. There could possibly be a slight dip in pharmaceutical stocks because everyone will always be happy and never take anti-depressants.

2:26 AM, October 03, 2008  
Anonymous Anonymous said...

Truth, or facts, are always the first casualty.

The problem goes back to the Carter years and moves forward. Unexpected consequences may have also reared their ugly heads as well. It all bobs and weaves like nobody's business. The people have never been fully informed of what was going on, how it was being handled, etc.

The original 3 page bailout failed, as it was meant to. Capitol Hill with a 3 page document? Ha - ha - ha! They needed more time to write the pork filled 435 page bailout, that no single person voting on it has possibly had the time to read and understand.

Throw the bums out. The democrats for lies and deceit, and the republicans for cowardice.

7:52 AM, October 03, 2008  
Anonymous Anonymous said...

Pardon me.

Make that complicity and cowardice.

10:58 AM, October 03, 2008  
Blogger dienw said...

This is a "manufactured crisis" begun deliberately in the F.D.R. years with the creation of Fanny Mae; if was furthered under L.B.J. with the creation of Freddie Mac; and, under Carter, the crisis was deliberately intensified with known consequences with the creation of the Community Re-Investment Act: the forced lending of mortgages to minorities - reparations folks. Under Clinton, by the end of his term, the requirement for banks was to have 50% of its mortgages as subprime.

In the '70s, this strategy of manufacturing crisis in order to cause a breakdown of the government and private sector was called the Cloward-Piven Strategy. Obama was closely aligned with ACORN in pushing for subprime mortgages; they knew what they were doing.

5:09 PM, October 03, 2008  
Anonymous Anonymous said...

The "bailout" is not a whole lot different from a Ponzi scheme. Except, of course, it is our government running the scam.

6:47 PM, October 03, 2008  
Blogger Job said...

The "bailout" is very different from a Ponzi scheme. In fact, I can see no relation whatever.

The government will purchase distressed assets for which there is temporarily no private market.

If the govt is reasonably smart about what they purchase and for how much, they will both make a lot of money for the taxpayer and recapitalize the banking system.

There might be better ways to fix the problem or the problem might not be as serious as some fear.

But this is not a "bailout" -- no one is being given money, the govt is buying assets.

8:47 PM, October 03, 2008  
Blogger michaele said...

I remember how the NYTimes ran screaming alarmist headlines right before the 2004 election about a munitions dump in Al Qaqaa that was supposidely raided by possible terrorists. The Times made this out to be a HUGE scandal and a reason not to reelect George W. Bush. Interestingly enough, once the election was over, the story totally disappeared. Hard not to feel really cynical about major media.

10:23 PM, October 03, 2008  
Anonymous Anonymous said...

job:

Assets worth less today than yesterday, but not as little as tomorrow. The taxpayer (or small investor) is left holding the bag.

10:52 PM, October 03, 2008  
Blogger Michael Lee said...

The thing I thought would never come to pass has come to pass: I'm a single issue voter now.

I will never vote for anyone who supported this bailout. I will contribute whatever money I have left to destroy their careers.

This is Bastille Day in America, and it's all about head-chopping now.

If the terrorists pulled a Clancy on the Capitol Building, I'd stomp and cheer as long as they did it while the weasels are in session.

I don't care if the bailout seems to "work" or not. We the people told these bastards, overwhelmingly, not to do this, that we'd take our lumps, and they did it anyway, to protect themselves and their friends.

If we the people re-elect the incumbent weasels who voted for this, then we the people deserve what we have just gotten: a coup against freedom. "Those who value security above liberty deserve neither."

9:45 AM, October 04, 2008  
Blogger DADvocate said...

If the govt is reasonably smart...

ROFL!!!

The smartest thing the current Congress could do is resign.

...they did it anyway, to protect themselves and their friends.

Yep! The way this thing intertwines it's less Dem vs Repub and more everyday American vs the high and mighty.

If you calculate the $700 billion cost against the number of people who received the economic incentive checks, ostensibly taxpayers although many paid no income tax, the cost is over $6,000 each. So we get a pittance to "stimulate" the economy and then have to give back 7 to 10 times as much, probably more.

Screw the financial giants and give us the money. Tomorrow we'll hear how the gap between the rich and poor is increasing. Wonder why.

I'm ready to join Michael Lee. Vote the bums out. Part of the problem is reflected by SBW. Many of us like our individual Representatives and Senators. We need to vote them out anyway.

10:13 AM, October 04, 2008  
Blogger Jenifer & Richard said...

"I sometimes wonder how much of the financial picture is accurate and how much is manufactured in order to get a Democrat elected."

Since the current economic crisis was first, foremost and almost totally trumpeted by the Bush administration, including President Bush, that's a pretty serious charge.

Does Dr. Helen really think George W. Bush and his economic team want to get a Democrat elected? Let's talk more about this.

11:03 AM, October 04, 2008  
Blogger SGT Ted said...

I remember distinctly the day after Clinton won over Bush 41 the complete reversal of the press bashing the economy changing to Hosannahs about how GREAT the economy was. This will be repeated should that empty suit gutless Marxist get power.

12:01 PM, October 04, 2008  
Blogger Jenifer & Richard said...

I particularly was annoyed at how that liberal Lehman Brothers timed their collapse to help the Democrats.

12:31 PM, October 04, 2008  
Blogger Jenifer & Richard said...

And why did Dick Cheney phone members of Congress and stress the seriousness of the economic crisis?

Why hasn't Dr. Helen written about Cheney's sneaky attempt to get Obama elected?

12:36 PM, October 04, 2008  
Blogger Jenifer & Richard said...

Even Karl Rove has been on the TV announcing the seriousness of the economic situation.

My God, how deep is the conspiracy to elect Obama! And only Dr. Helen has discovered it...

12:51 PM, October 04, 2008  
Anonymous Anonymous said...

Jenifer & richard:

I assume you know that some economists are saying the following (and it makes sense to me):

The collapse of a number of banks can be traced back to over-exposure in "sub-prime" loans, meaning home loans to people who shouldn't be getting a home loan.

The sub-prime loans were driven by pressure on banks, Fannie Mae and Freddie Mac to make more loans to blacks and other minorities, even if they had terrible credit. The idea was that every American should own a home.

As a concrete example, "community reinvestment acts" were passed. That is concrete pressure on lending institutions to make "sub-prime" loans. I also believe this explanation a bit; the houses subject to foreclosure in Michigan, for instance, are not in the suburbs of Farmington or Bloomfield Hills, but instead south of 8 Mile Road in Detroit.

Now if you are interested in blaming Bush & Co., I'd like to see a chain of events, backed up by fact, such as what I provided above. Like, really.

-------

I realize that America is getting more and more stupid and more and more fixated on ideas in movies and on TV. So Obama is now the superhero.

It could well be that he is a good talker. His sole accomplishment has been to build a career on rhetoric and hot air. I want to see him in office, because I think America has to bottom out and learn a hard lesson. I really want him in office - if he can live up to the checks his mouth is writing: Great.

1:50 PM, October 04, 2008  
Anonymous Anonymous said...

I may even vote for him. Really.

Jimmy Carter was SO bad ... SO awful ... that it turned America over to the Republicans for decades.

Obama could top him.

1:52 PM, October 04, 2008  
Anonymous Anonymous said...

Last note:

Anyone remember the "misery index" under Carter (double-digit inflation plus double-digit unemployment)?

Obama may be facing an economic meltdown, 1930s style, he may be facing terrorists with nuclear weapons, he may be facing countries that are no longer going to play second fiddle to the US (like China).

He better be as good as he says he is.

1:54 PM, October 04, 2008  
Blogger Val McMurdie said...

I agree with the comment of sbw above. The financial crisis is real; not generated by either Democrats or the media.

Over time the risk is not a 1930s type Depression, but the opposite, a meltdown in the value of the dollar resulting in double digit inflation-stagflation.

That's my view from here in Silicon Valley with halted real estate and construction industries.

3:47 PM, October 04, 2008  
Blogger GawainsGhost said...

I'm not sure how much of this financial crisis is psychological, because it is very real. Freezing credit lines, plummeting house values, failing banks, plunging stock markets, rising unemployment, increasing defaults and foreclosures, entire cities, states and now the federal government facing bankruptcy. This is serious. But the media had very little to do with it, well, other than providing cover for corrupt politicians as the whole sorry affair unfolded I mean.

The real question, I think, is whether the solution to the problem, as evidenced by the bailout bill, is psychological. And the answer to that question is an undeniable yes.

There is nothing in this monstrosity of a bill that addresses any of the fundamental problems that led to this crisis. All it does it take untold amounts of money from the taxpayers, give unprecedented power to the Fed, Treasury and the SEC, abrogate the Constitution, and empower the very people who created this mess in the first place. This in the face of the American people, the vast majority of whom were opposed to it.

Most troubling to me is the provision in the bill that allows the government the authority to modify contracts in bankruptcy courts. This is the single most vicious assault on the American people I have ever seen.

http://senseofevents.blogspot.com/2008/10/biden-promises-to-destroy-american.html

Contract law is the foundation of a free society. Without it, there is only anarchy and/or tyranny.

Most people's wealth is concentrated in their homes. What this provision threatens to do is devalue that wealth considerably and wreck the entire housing market, all in the name of keeping poor people who cannot make their payments in homes they do not own.

This bill is not going to solve anything. In fact, it's only going to make matters worse by postponing the inevitable. Anyone who thinks otherwise is deluded. If you think things are bad now, wait till next year.

5:58 PM, October 04, 2008  
Anonymous Anonymous said...

There will be those who will refuse to see it. Even when sitting in the middle of it.

So I ask again: Why do you really think they want to outlaw guns in this country? That is, guns in the hands of the people. Guns in the hands of "joe six pack" (which is just as demeaning [to me] as anything I've heard from the left.

6:27 PM, October 04, 2008  
Blogger Jenifer & Richard said...

JG:

Our point was never that President Bush is to blame for the crisis. It was only to say that President Bush most certainly believes the crisis is real, and thus it cannot simply be a bogus creation of the media and Democrats in order to get Obama elected.

7:46 PM, October 04, 2008  
Blogger DADvocate said...

Anyone who thinks otherwise is deluded. If you think things are bad now, wait till next year.

Very close to what economist Robin Hahlen said on the radio the other day - "Anybody who thinks they've actually come up with a competent response to the most serious economic problem this country's faced in 80 years is delusional because they have not."

He went on to predict things would be worse by inauguration day.

8:57 PM, October 04, 2008  
Blogger wolfboy69 said...

gawaimsghost - Most troubling to me is the provision in the bill that allows the government the authority to modify contracts in bankruptcy courts. This is the single most vicious assault on the American people I have ever seen.

This started with the Bankruptcy Reform act in 2005. All that did was place more hurdles in the way of people who file for bankruptcy. This is just a continuation of that.

Hold on a moment...someone's at the door....oh....it's socialism. I don't want to let him in, but he already has the keys.

11:33 PM, October 04, 2008  
Blogger wolfboy69 said...

sorry.... that should be:

gawainsghost, not gawaimsghost.

11:34 PM, October 04, 2008  
Blogger cleek said...

Yes, that's right. The MSM and the Dems in congress persuaded Bush, Paulson and Bernanke to try to scare the country into approving a $700B bailout in order to support Obama. and Bush went along with it because he hates McCain. Bernanke went along with it because he doesn't want the job of Fed Chairman anymore. and Paulson went along with it because he secretly wants the Dems to win?

You should lay off the bong.

1:41 PM, October 06, 2008  
Blogger CCL said...

If the liberal media just stopped reporting that major banks all over the world were going under, that banks are unwilling to lend overnight to each other, and that new unemployment claims are the highest they've been in years, none of those things would exist, as far as we know. Oh and while I'm at it, why did they have to report that there were no WMD's in Iraq or that Saddam had nothing to do with 9-11. If the liberal media hadn't mentioned those things, they also never would have been reality. That's why I only read Conservapedia. It's like reality, but chosen by popularity.

1:47 PM, October 06, 2008  
Blogger wj said...

This is truly absurd.

You have: (1) a REPUBLICAN controlled financial sector (Paulsen, Bernanke, etc.)

(2) a REPUBLICAN President

(3) a REPUBLICAN CANDIDATE (John McCain)

These people are the ones who brought up the "CRISIS" and the need for "INTERVENTION" in the first place. I mean, was John McCain so misled by the liberal media that he suspended his own campaign? Really?

2:18 PM, October 06, 2008  
Blogger Helen said...

wj,

As Mark Penn acknowledged, the financial crisis peaked right before Clinton was elected too--yet there was a Republican president in office. I just find it odd that with all of the problems brought up with the economy, many by McCain long, long before regarding Fannie Mae and Freddie Mac, the media and Democrats never seemed to take it seriously until right before the election when polls showed that people were most worried about the economy.

2:33 PM, October 06, 2008  
Blogger cmholm said...

This comment has been removed by the author.

2:59 PM, October 06, 2008  
Blogger wj said...

Helen writes: "all of the problems brought up with the economy, many by McCain long, long before regarding Fannie Mae and Freddie Mac..."

This is again, absurd. When McCain wasn't telling people he didn't understand the economy and so he was glad that Bernanke was in charge of it, he was praising its health. He reiterated, many times, that the "fundamentals of the economy" were strong. HE is the one who suddenly did an about face when it became clear to Paulsen and Bernanke that the fundamentals WEREN'T strong. The public and media reaction to the crisis followed from, and was not the cause of, the statements of Paulsen and Bush to the extent that something drastic had to be done. And while it is true that Warren Buffet was on record since at least 2002 as being skeptical of the credit bubble, there were more analysts who, caught up in group delusion, derided his skepticism as old-fogey pessimism.


Second, www.factcheck.org has demonstrably shown that Fannie and Freddie were not involved in subprime lending during the period that you believe is relevant for understanding the crisis, so whatever John McCain said or thought about legislation back then (in a Republican controlled Congress with a Republican president) has little bearing on the true cause of the crisis.

Professional economists, who actually know something about these things, have said that there are many reasons for the crisis, some of which can be attributed to Democrats and some of which can be attributed to Republicans, and none of which are very easy to understand.

So, on the face of it, your theory is absurd.

But I see lots of comments here about the "left-wing" media, and I just have to ask: Are not the major media outlets controlled by some of the biggest, wealthiest corporations in America? And yet these same outlets are left-wing? Really? That's very surprising.

3:00 PM, October 06, 2008  
Blogger cmholm said...

As someone else pointed out, perhaps we should apply Occam's Razor to avoid over-thinking the situation. In this case, the economic news sounds really bad right after 8 or 12 years of Republican Administrations. Is it primarily because:

a) A cabal within the MSM has an all-powerful grip on public opinion, which they manipulate in favor of the Democratic Party?

b) Current Republican policies tend to allow their major contributors to screw things up after consecutive terms of office?

c) Republican Presidents happen to get elected at the top of economic cycles, Democrats at the bottom?

3:01 PM, October 06, 2008  
Anonymous Anonymous said...

wj,

Just relax. Your candidate Obama will likely win.

And he's going to be just a super-duper president. Super-duper.

No one is going to be disappointed.

3:13 PM, October 06, 2008  
Anonymous Anonymous said...

Probably.

3:17 PM, October 06, 2008  
Anonymous Anonymous said...

Or at least I don't think so.

3:17 PM, October 06, 2008  
Blogger Righteous Bubba said...

I sometimes wonder how much of the financial picture is accurate and how much is manufactured in order to get a Democrat elected.

Clearly it is to the benefit of the moneyed interests that people uninterested in regulating them will lose.

5:20 PM, October 06, 2008  
Blogger Cut It said...

Um, yeahhh.

There is no financial crisis and it's all just an MSM conspiracy. Except for YOUR president was the one proclaiming the impending disaster if Congress didn't do something.

And this crisis (which doesn't really exist) is the fault of the Carter and Clinton Administrations? But the GOP had near uninterrupted control of Congress from 1996-2006? AND control of the White House for the last 8 years?

The GOP apparently supported the CRA or they would have surely repealed it. Or amended it. Or some-damn-thing.

If the GOP can't do anything with control of Congress AND the White House, then they have no business leading. They sure as hell have no business claiming any superiority over the Democrats.

Which is why John McCain must perforce base his whole campaign on the perception of him as a "maverick". He sure as hell can't win as your run-of-the-mill Republican.

5:48 PM, October 06, 2008  
Blogger Aps said...

So how exactly did the liberal media and Democrats in Congress get President Bush, Secretary Paulson and the Fed Chairman to come along for this ride? More importantly, why didn't they try this before if they have this much power over the administration? What kind of "Dr." are you again? I'd stick to my day job if I were you.

6:24 PM, October 06, 2008  
Blogger Your Correspondent said...

Bernanke and Paulson are not working for Obama.

For an objective look at the banking crisis, check out the Ted Spread on this Bloomberg page. Above the line chart, click the 3M button for a 3 month view of the problem. It rises in mid September. Probably not a media conspiracy.

You can read the Wikipedia page on the Ted Spread, but it's basically a fear factor for the banking industry.

11:25 AM, October 10, 2008  
Anonymous Anonymous said...

It's simple, arif. Without drawing in republicans, all the blame would have fallen squarely on the democrats - where it belongs. Paulson is a democrat.

You need to watch and read news from somewhere else besides MSM. It is one sided, eh?

The initial bailout plan was about three pages, with no pork besides ACORN, bringing ACORN squarely to the front, along with a flood of information about who they are and what they are doing. It took congress and the senate to make it a pork filled almost 500 page bailout. And considering the time frame that produced this monster, who on the hill that voted actually had time to read the plan from cover to cover before voting yes or no?
That being the case, how long was this bailout actually being prepared before it was made public?

Better head back into the kitchen at the restaurant. I think the last load of dishes you put in the machine are clean.

8:17 AM, October 12, 2008  
Blogger Nick Smale said...

We have an economic crisis here in the UK, too - but our next election isn't for several years. So I guess the two are actually unrelated...

10:08 AM, October 22, 2008  
Blogger M. Rieux said...

...You're serious? You are actually serious?

Just...wow. I'm sorry, but you guys are nuts if you honestly suspect there's an Engineered Financial Crisis Conspiracy Theory.

11:52 AM, October 22, 2008  
Blogger JamTheCat said...

Of course, dear. Blame the crisis on anyone EXCEPT those who caused it, and please ignore the people who've been warning about this for years. After all, facts should never get in the way of a good conspiracy, nor should history inform on anyone's opinion when that history contradicts everything they believe. Yes, it's all the left wing's fault. Completely, totally and absolutely. And don't let reality tell you otherwise.

1:31 PM, October 22, 2008  
Blogger Unknown said...

Are all repulicans , including Helen ,of the same intellectual standard as George Bush ?

4:12 AM, October 23, 2008  
Blogger gawker said...

Aren't you a psychologist or some such nonsense? I can't understand how you can be any good at your job when you yourself suffer from paranoid delusions?

8:44 AM, October 23, 2008  
Blogger Unknown said...

Dear Dr. Helen,
Based on your post, you have real good potential to be a writer for Stephen Colbert. Your understanding of truthiness is beyond reach of ordinary people.

5:40 AM, October 26, 2008  
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