Left Wing Bias: Let's Hope So!

That’s a title we never thought that we would write, but before we chase away our regular readers who share our political and economic world-view, please let us explain: it’s not as bad as it looks.

In Kimberly Strassel’s WSJ column, Hillary of State, Ms. Strassel describes how the mainstream media have now returned to providing a favorable opinion of Hillary Clinton’s foreign affairs qualifications (to be Secretary of State). 

We must admit that that this is the first time in our life that we viewed overly-favorable coverage of any Clinton to be a good thing, or even the possible indication of a good thing.

But, again, we caution regular readers: it’s not as bad as it looks. 

Take that exclamation both ways: first, we’ve not changed, and second, we speculate that the economy isn’t as bad as the recent losses in the stock market suggest.  Although, we have no doubt that current government officials could turn that negative perception into reality, and may have already done so with their extant actions.

So here’s our short argument:

1. Prior to the collapse of the stock market, losses were highly concentrated among financial intermediaries.  
2. Now, words can hurt…the economy.  The hyperbole and/or outright panicky speech (or some combination of both) by elected officials and appointees, primarily Messrs. Paulson and Bernanke, helps create the recent collapse. 
3. Misguided actions can be damaging, too.  The government’s effort to stem the crises, which we believe that they still consider to be a singular crisis, has been very damaging, too.
4. So, equity values have decreased substantially and the economy is less sound than it was.  There maybe be something close to a depression or not.
5. Fortunately, the media’s general high regard for Mr. Obama, and their desire to help him succeed during the new administration’s honeymoon period, may generate sufficient goodwill to positively influence the attitudes and perceptions of consumers and investors to prevent the potential disaster that we have been talked and erred into by said officials.  Ergo, in this instance, media bias may be a good thing if it influences the zeitgeist towards optimism and away from economic devastation.

Now here’s the longer argument.

Concentrated Losses

We very much enjoyed Peggy Noonan’s column this week, Turbulence Ahead.  Much of it deals with the lack of evidence for what she abbreviates as GDII, or Great Depression II.

Despite the economic slow-down this autumn and the stock market crash, we’ll take her observations as evidence of a phenomenon that we have written about extensively: the high concentration of losses in this mortgage and financial crisis compared to earlier ones.  Please continue to ignore the “domestic” auto manufacturer (as most of you have through the many years of buying “foreign” cars that were made in other countries and in our country).  The outsized publicity that the industry receives about its problems far overstate its value to the economy.  Moreover, bankruptcy does not imply liquidation; so, there is no reason to think that at least two of the three will not survive.[1. Smart Japanese or German manufacturers might wish to consider moving their headquarters to the U.S.A., and becoming a leading domestic manufacturer.  Think of the goodwill such an act would engender, including the invaluable free publicity.]

While not directly related to this post, Ms. Noonan speculates about the nature of GDII, and her comments are wise and consistent with our observations living in a relatively depressed region of the country: Western Pennsylvania, during and after the collapse of the steel industry.  She talks about the gradual, almost imperceptible changes that may take years to realize.  Those who spent their lives here were/are much less sensitive to the change, whereas having spent a decade away, we noticed the general unkempt shabbiness immediately upon return; one can continue to see it in the peeling paint and dirty facades of many small businesses.

Epic Governmental Mismanagement

See most of what we wrote about the crisis since September although we might have criticized Mr. Paulson before that.  This morning, in More Evidence of the Lack of Forethought that is TARP we summarized our criticism of certain aspects of the government’s response: the words and actions of elected and appointed officials have been extremely damaging and their efforts often counterproductive at best.

As we wrote several months ago, no single firm could destroy our economy.  Such an outcome can only be achieved through government action.

Like Ms. Noonan, we’ve really not seen any panic among consumer–whether they are family, friends, acquaintances or strangers at the mall.  However, the government’s response to the crisis has the continued potential to (continue to) harm the nation’s economic psyche and make bad times worse.

When Will We See the Bottom?

We had a conversation with friend earlier in the week who was much concerned about the future (who’s not?).  He wondered if equity markets had reached their nadir and had cited some anecdotal evidence suggesting that his acquaintances were internalizing their substantial loss of wealth.  They were not paralyzed with fear but had surveyed the economic environment and their own weakened financial condition and were getting on with life.

The Potential Benefit of Media Bias

Clearly, words do matter, and the media can frame and emphasize issues and perspectives.  Directly and indirectly those words affect the behavior of citizens, consumers, investors, and entrepreneurs. 

If the mass-media’s desires to aid Mr. Obama positively affect perceptions and improves the general economic outlook of the nation (and therefore the world), then the probability of escaping truly devastating economic conditions improves.

In that and many other respects, we certainly hope the best for Mr. Obama.¹

So, starting today and continuing for a few months, we’re all for left-wing media bias.

Of course, we ask Obama? BWAMA?

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