Watching financial and news TV channels this morning, it is incredible to note another change in the slant of the newscasts. It’s an ongoing changing scene and would be really entertaining to observe if it weren’t about such a bad situation.
During the past months the media has been reporting that the USA and UK are in a recession. However, since mid September ‘Father Christmas’ came early for the media, as the ‘Credit Quake’ took over. It was a much greater disaster to ride and make headlines with than with something as silly as a recession.
This is how it went, more or less. The financial markets took a huge tumble. Bad lending practices as well as some nasty rumours led to a few banks pleading poverty. Liquidity crunch was the reason given for this. Bad management decisions might have been a reason as well, one wonders. So the governments of the developed world pumped money into the affected banks and the financial market at an astonishing rate.
Then the oil price fell from an economy killing high of just under $150 per barrel. It’s now fluttering around the $80 mark. Suddenly this was bad news. Really? This tumbling oil price, from levels only supported by the greed of the oil traders and producers, was perceived to be a disaster. What? It’s almost unimaginable to think that anybody would consider a falling oil price to be bad news.
After all a low oil price could only mean one thing and that is economic decline, recession or worse. Maybe it could make goods cheaper? Nah, never. Some analysts were even starting to use the dreaded ‘d’ word. As an aside, as quickly as the pump prices responded to this increase, one would imagine they would fall at the same rate? Nope. Makes one think doesn’t it.
And next? There had to be a next. The stock exchanges in the big economies went through a roller coaster ride that was unheard of. Daily declines and ups of record breaking proportions made the news. The newscasters were hysterical — an even bigger Christmas for them.
Of course to keep the momentum going, only analysts who were prepared to predict doom and gloom were allowed onto their news shows. Yes, it became a show. Hollywood had arrived on Wall Street.
A clue to this weird performance was the fact that there was absolutely no logic behind any of the movement. Some shares climbed mountains, others hit the lowest pits. Tech stocks, manufacturing, financial, retail and commodities et al had their turn to take a bow. It did not matter what reports and results had been posted, and there were some excellent results such as those posted by IBM and Tesco.
What reasons did the analysts who appeared on TV give for this? It couldn’t be the financial crisis anymore, could it? It had to be something else. So they all sprouted about the recession — back to that then. Investors had now decided that after all, it wasn’t about the liquidity crunch anymore; it was all about the underlying problem, which had now suddenly been noticed. The RECESSION.
Was it possible now, they unanimously put out, that the economy was in recession? Remember that these same people had already been talking about this for months. The media in the UK has been pronouncing this as a fait accompli. But now it is being predicted as about to happen. So what happened to all the previous announcements?
Possibly some of the experts appearing on TV have read the figures and have not been able to find the statistics to support their analysis. But that would be too easy. What is more likely is that these folk have no idea what is going on. And they sprout forth whatever comes into their little minds.
The media checks on who might be supporting the theories with the most hype. They check for the people talking the most doom and gloom. They want the people who are seeing the end of the world as we know it. Have we heard that recently? Oh yes. And as for the TV presenters: no words can describe the inconsistent drivel that comes out of their mouths.
Those are the people we are seeing on TV. We are not hearing from the people with measured opinions. There is nobody invited to appear on TV who would have the guts to say that the bulk of the economic turbulence has been caused by the media and its focus on bad news in order to sell itself.
And it works. I wouldn’t be watching the awful Bloomberg TV if it weren’t for this distressed situation the global economy is finding itself in. I mean, who in their right mind wants to watch 20 second suspect sound bites of supposedly expert opinion interspersed with two minutes of advertising?
But it’s all very well looking at the show the media is producing as a Hollywood wannabe. The problem is that the ordinary folk are starting to get scared. The consequence of this, besides living with unpleasant feelings of panic, is that the consumer has shut his wallet with a huge and loud snap. No spending, so no growth and the result is that the economy going into a recession will be a self-fulfilling prophecy.
However, just in case you might be depressed by the general news, here is something to think about. Do take some hope with you as we head into the weekend where there is no share trading and therefore no doom and gloom opportunities for TV stations. So far the leading economies are not actually in a recession. They are still posting positive growth albeit smaller numbers than predicted. According to the IMF growth should reach 4.8% globally with the UK at 2% and USA at 2.3%. No recession!
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