Why oh why does this man irritate me so? Now don't get me wrong, John Stossel is probably a nice man. But for a man who can garner audiences, he is "dangerous" (well not really, but the guy's on TV and he is on the ra-ra free market Right's side promulgating this crap) with his half ass grasp on our economy. Recently, on Daily Kos's evil twin, he wrote up a piece on how the economy really isn't doing bad. That it was all media hype.
Now for a man who wrote a book called "Myths, Lies, and Downright Stupidity: Get out the shovel- Why Everything You Know is a lie", one would think he knew that the way they compute much of the economic indices was complete crap. Yet, his basis for his "optimism" is stemming from official data produced by the likes of the Bureau of Labor Statistics. In a sense, I'm really disappointed in John. He's always trying to show where there's a scam or something, and you'd think he would've done his research on this. Alas, no.
He thinks that the media tends to over do it by comparing the state of the US economy to that of the Great Depression. His source is a study done by the Business & Media Institute (formally known as the Free Market Project), whose mission statement is:
The mission of BMI is to audit the media’s coverage of the free enterprise system. It is our goal to bring balance to economic reporting and to promote fair portrayal of the business community in the media.
And if one still doubts the political leanings of BMI, consider who founded it, the Media Research Center. Now for those who don't know who they are, just turn on Faux News (if you can stomach it) and wait for them to have a talking head going on about "liberal bias" in the media. Alas, if you're STILL not sure, here is there statement from their 'About Us' section:
" Leaders of America's conservative movement have long believed that within the national news media a strident liberal bias existed that influenced the public's understanding of critical issues. On October 1, 1987, a group of young determined conservatives set out to not only prove — through sound scientific research — that liberal bias in the media does exist and undermines traditional American values, but also to neutralize its impact on the American political scene. What they launched that fall is the now acclaimed"
Now that you know where Stossel is basing his crappy article on, you begin to see how the whole thing could fall apart. He likes to harp on how the media likes to harp on gloom and doom. The underlying premise is that the whole thing is a lie to make you feel so bad that you will vote for a Democrat. He tends to slide in his underwhelming economic analysis in his statements.
America is not in recession, and who knows -- maybe we'll be less likely to have one if my compatriots would just chill. A recession is defined as two quarters of negative economic growth. We haven't even had one quarter of negative growth.
Yes, growth has slowed, and many people are suffering because of falling home prices and higher food and energy prices. These are real problems, but watching TV, you'd think we were in a recession so severe it must be compared to the Great Depression.
- excerpt from "Dire News from My Colleagues", Townhall.com
Ah...this is something I have heard from Larry Kudlow and Rush Limbaugh. Listen to any conservative or libertarian free-trader on the media, and chances are you would've heard that shpiel about two quarters of negative growth. Yes, classically, that would be true. But, as everyone who follows economic numbers knows that the way they calculate has changed. Several times, but most notably under Reagan and then Clinton, they changed what they counted. Each time, there was no real economic/scientific reason to change the way say inflation or unemployment was figured; it was always a political rational.
However, if you go based off the way the original designers had intended, or at least the setup before Reagan and Clinton messed with it, one will see a very different picture! There is a site, called Shadowstats, where this fantastic person actually took the time to compile all those government numbers and run them through the original setup. Now the site is subscription-based, so I don't think I have permission to put up a chart (if I'm wrong here, please let me know.). But you can click on the link and see the charts for free.
What you will notice is that despite what Stossel has said, we not only had two negative quarters of growth, but have been in a long period of negative growth. While the government releases a GDP figure of above 2%, in reality we're more like - 3%! Tell me, John, keeping in tune to the theme of your book and being honest, would you say we're still growing?
But wait, my friends, he goes even further off the reservation. He cites BMI's study on how reporters reacted back in 1929 and 2008. That journalists shouldn't be setting off panic today, because well, the reporters in 1929 didn't. To John, of course, how can we say there's an economic Depression when in 1929 reporters of that year didn't? Suffice it to say, I nearly dropped my rum and coke when I read that.
Can anyone tell me what's wrong with this picture? I'll save you the time. 1929 was the year of the infamous stock market crash. In reality the market before that fateful event had been in a downward motion already since the middle of September, losing 17%. The "crash" actually was more than one day, starting on the 24th of October (known as "Black Tuesday") and ending on the following Tuesday the 29th (also known as "Black Tuesday). The market (already off its peak as shown by the graph, of 381 in September) entered on that first Black Tuesday at about 340 and ended the following Tuesday at 230, a 32% drop over seven trading days (it would make a small brief recovery the following few days).
The thing to understand is that the economic impact of all this didn't start to take effect until 1930. Looking at the chart below, one will see that 1929 was a "peak year" for the Gross Domestic Product numbers besides that of the stock market. The year ended slightly below where it started. The economy would begin to tank by the following year, reaching a bottom around 1933-34. So there really wouldn't be all this talk throughout 1929 of economic woes. It wasn't until just after the crash, did the headlines start to flutter about an economic impact.
BMI and Stossel's assessment of news coverage in 1929 is unfair, because that generation of reporters had not seen an economic fallout of the likes that would soon befall the nation. The last time anything close to this happened was the Bank Panic of 1907, where the market then fell from it's peak nearly 50%. So, taking that into consideration, imagine you were a veteran reporter in 1929, and you needed a historical example to go by, what conclusions would you take? Also, something else, that BMI and Stossel neglect to tell you, this was the age before there was a Securities and Exchange Commission and the host of other regulations that would come about with FDR. It was an almost lawless period on Wall Street, and you can't tell me that the bankers didn't have friends with the newspaper publishers (Hearst anyone?).
Of course, Stossel isn't finished, he wants to talk about jobs. He goes forward to 1933 now, when the Great Depression was at its worse. The goal is to highlight how the current job situation now is no where as bad as it were in the 1930s. To do this, he brings up another source, author Amity Shlaes's "The Forgotten Man: A New History of the Great Depression."
As Amity Shlaes points out in her book "The Forgotten Man: A New History of the Great Depression" -- which has just been released in paperback -- by November 1933, unemployment had skyrocketed to over 23 percent. Think about that: 5 percent unemployment today vs. 23 percent during the Depression.
- excerpt from " Dire News from My Colleagues", Townhall.com
Oh John, come on now, 5%? The spread between that Depression-era number and that fake government number is 18%. Pretty wide, big difference between today and 1933! Too bad that it doesn't hold up.
Out of all the government numbers that has seen the most changes would have to be the unemployment one! That equation has been changed, guessing here, about 3-4 times. Now I could be wrong, and feel free to let me know. But at the end of the day, the number you see published isn't the true picture of employment in this nation.
For starters, they don't really count those who have given up. Indeed, the unemployment numbers are basically centered around those seeking compensation. Besides the former, how about those who are underemployed? At my mother's job, they purposely give her under 40 hours. And judging from my friends and family experience, many more are also not getting the hours they need. I won't even go into benefits.
So what's the real deal on unemployment? Alas, John Williams' (no not the famed movie Orchestra composer)Shadow Government Statistics comes through once more! Once again, my apologies for no charts, but without permission, I won't post them, I hope you understand. Anyways, the Shadow Government Statistics site shows that, using the formula the way it was supposed to be, that unemployment is really nearing 14%.
Hey John, a big farcry from 5%, eh?
Yesterday, it was revealed that, despite what Stossel may let you believe, the economy IS getting worse! Unemployment expanded again for another month. And forecasts are now looking good either.
July 3 (Bloomberg) -- U.S. employers cut jobs for a sixth straight month and service industries shrank in June, signaling that the economic slowdown may deepen as the impact of federal tax rebates fades.
Payrolls fell by 62,000 after a 62,000 drop in May that was greater than first reported, the Labor Department said today in Washington. The unemployment rate held at 5.5 percent after soaring the most in two decades in May. The Institute for Supply Management's non-manufacturing index sank to a five-month low.
- excerpt from "U.S. Economy: Employers Cut Payrolls for Sixth Month", Bloomberg.com
Just a second! Did that say employers cut jobs for a sixth straight month?!? Now, if the economy was expanding all those months, they wouldn't really be on a job cutting spree. Of course I could be wrong, we have to exclude businesses that made bad decisions or just a run of bad luck, like GM and other US auto makers. But overall, if they've been cutting, that tells me that for the past six months the economy has been receding. Wait...didn't John Stossel say that the definition of a recession was at least 2 quarters of negative growth? Uh oh John...sounds like a recession to me!
Worst yet, if the Shadow Stats are correct, we're only about 60% of what we saw in the Great Depression! No, my friends, this isn't a mild recession. This ain't even like the one we saw under Papa Bush! This is worse. Borderline economic depression, if you ask me! Sorry John, see you at the soup line!