Forbes: Four wrong reasons for pessimism
February 29, 2008
President Bush’s unpopularity . George W. Bush is stuck with a 30% approval rating. It’s nearly impossible to see what might lift Bush’s rating during the 11 months remaining in his presidency. Seventy percent disapprove of the Bush presidency (or are undecided) and, amazingly enough, that’s the same percentage as those who say America is on the wrong economic track. Does that too tight correlation make you suspicious? It should. When asked about their own individual economic prospects, half of Americans say they feel positive about the future. About their lives, 84% say they are satisfied. So which numbers should you believe–the 70% who say the whole country is on the wrong track, the 50% who are rosy about their own economic futures or the 84% who report themselves satisfied?
I think the 50% and 84% are more telling figures. The 70% who say the country is on the wrong economic track are merely expressing their Bush fatigue.
Presidential election year. This is the most compelling presidential primary season in memory. By far the superior drama is the Democratic race … and it is going down to the wire. The press coverage is huge. Both Democratic candidates describe the U.S. economy as in terrible shape.
If you belong to the out party–this year, the Democrats–your gambit is always to say the economy is in bad shape. You need a justification for change. In 1992 Bill Clinton’s campaign slogan was: It’s the economy, stupid. In 1980 Ronald Reagan asked Americans if they were better off than they had been four years earlier. The out party will always justify its challenge on the basis of a weak economy.
This year the out party, the Democrats, is giving us more drama, which gets more attention in the press. Thus, their negative economic outlook gets more attention.
Business press incompetence and fear. Want to know the truth about business journalists? Most of us are failed sportswriters. There are exceptions, and a good many are found between these pages and at Forbes.com. Think about what it takes to be a first-rate business journalist. One must be facile with numbers and financial statements and have the confidence to talk to CEOs, high-level executives, board members, analysts and so forth. One must delve deeply into the industry one writes about–what is the competitive landscape, what are the technological disruptions on the road ahead? It is also critical that one have a coherent global economic view to be able to put a story into context. And one must be a good storyteller.
Now, if one possesses all of these talents, what are the chances one goes into the low-paying field of journalism? Not great. One instead becomes a Wall Street analyst, a Booz Allen consultant or just goes into business, perhaps to raise money and start a company. Low-paying journalism can’t compete for pick of the litter. (Unless it’s Forbes, where journalists flock to a higher moral purpose!)
The thin talent pool in business journalism combines with two other forces: Journalism is populated by left-of-center people, many of whom are hostile to business; and traditional journalism itself faces threats of disruption from the Internet, leaving business journalists in a fearful mood, which gets projected into their stories.
Trouble with numbers. When reading about any business problem or challenge, how often do you see the problem stated in relative terms? For example, what dampens spirits today? The subprime mortgage mess. How big a problem is this? No one really knows, but so far banks have written off about $150 billion in bad loans. Now, $150 billion sounds huge. But it is only 1% of America’s annual GDP. It is also less than 1% of the market capitalization of U.S. stocks. In any typically volatile trading day U.S. stocks gain or lose $150 billion every hour. How often does one hear that?
“Surely that $150 billion will grow,” you say. No doubt. Let’s say the amount of bad paper doubles or triples. Would that finally bring the U.S. economy to its knees? I don’t think so. The nearest historical comparison we have is the savings-and-loan crisis of 1986–95. On a constant dollar basis–so we can compare apples with apples–the S&L crisis saw $700 billion in bad loans. Nearly five times as much as we’ve seen in the subprime mess so far.
The S&L crisis caused some damage, to be sure. But during the 1986–95 period the U.S. economy grew and stocks went up. We survived stock shocks in 1987 and 1989 and a mild recession in 1990. The country did not collapse into a 1930s-like depression.
The financier George Soros calls today’s credit crunch the worst global financial crisis since World War II. He’s wrong. See the second reason for the explanation.
Here is a letter I wrote and sent to our Congress men and women of Arizona I hope to inspire you to take back control and write your own or just attach your name to this letter copy and paste it and resubmit it with your name to our Representatives and Senators. We are only heard if we say something a loud or to someone. You’re your voice heard it does count! http://www.nationalatlas.gov/printable/congress.html#az,
Arizona in the 110th Congress
(1st Session)
To retrieve much more detailed biographical and contact information about a given Congressmember, click on the member’s name.
Residents of Arizona are represented in Congress by 2 Senators and 8 Representatives.
Member Name DC Phone DC FAX Electronic Correspondence
Senator John McCain (R- AZ)
202-224-2235 202-228-2862 http://mccain.senate.gov/public/index.cfm?
FuseAction=Contact.ContactForm
Senator Jon Kyl (R- AZ)
202-224-4521 202-224-2207 http://kyl.senate.gov/contact.cfm
Representative Rick Renzi (R - 01)
202-225-2315 202-226-9739 http://www.house.gov/renzi/email.shtml
Representative Trent Franks (R - 02)
202-225-4576 202-225-6328 http://www.house.gov/franks/IMA/email.shtml
Representative John B. Shadegg (R - 03)
202-225-3361 202-225-3462 http://www.house.gov/formshadegg/emailtemplate.htm
Representative Ed Pastor (D - 04)
202-225-4065 202-225-1655 http://www.house.gov/writerep/
Representative Harry Mitchell (D - 05)
202-225-2190 202-225-3263 http://mitchell.house.gov/contact/
Representative Jeff Flake (R - 06)
202-225-2635 202-226-4386 http://www.house.gov/writerep/
Representative Raul Grijalva (D - 07)
202-225-2435 202-225-1541 http://grijalva.house.gov/?sectionid=49§iontree=249
Representative Gabrielle Giffords (D - 08)
202-225-2542 202-225-0378 http://giffords.house.gov/contact/email/
Thank you for the opportunity to voice my opinion. I feel this or any Bail out would be Disastrous for our way of life. We have the people and the creativity to do better than this, and we should trust in the system to correct itself. That is the idea of Capitalism we have supported and occasionally fought for is it not? I just feel so passionate about this subject. Our free market can absorb this recession be confident of that the creativity of our people the diversity of our people can and will endure without this so called sell out oh I mean bail out. I warn you it is long and rough but I think it makes my main points. I just felt that this had to be said and at least weighed in on. I am just an average veteran, citizen, American here in Arizona. I hope you take a chance to listen. Thank you. LET’S PLEASE THINK THEN DO FOR ONCE. With a reemerging RUSSIA and an emerging China this seemingly socialistic bailout the best image we can put forward for the rest of the world. Have we given up on Capitalism and the American way? I think if we do this we spit in the face of every Veteran of every war we have fought over Socialism and Communisms expansion. I also believe that FDR was criticized for his approach being eerily close to Socialism, and in comparison to this plan that was all American. This plan is anti American and literally a bail out it bails out the fat cats in Washington it bails out the Boards the businesses that decided enough wasn’t quite enough. The Congress that did not act responsibly and possibly looked the other way. Everyone was Fat Dumb and Happy. It even excuses all their behavior and lack of foresight or wisdom. They all let down America public with their greed and recklessness and now instead of admitting fault and taking decisive action and nonpartisan politics to save the greatest country on earth they come up with cowardly approach that may or may not work in the experts own words. I think that this bail out is Socialism and at best a free pass for Congress and the fat cats in business. What would happen if you or if an average American failed at work we would be fire what would happen to us if stole we would be jailed and the money’s returned. What if we failed the nation? All that failure was for their own personal gain. I tell you we would be ashamed and asked to make amends whether through prison or community service. I believe if the product is inferior then we ask for our money back and or restitution in some other way. I think the Boards of these businesses where reckless and should instead of fail up as so many in our political system and financial world do. I think they shouldn’t get paid at all. Why pay someone for reckless and wasteful behavior it only encourages it. Do we want that? I believe if we took all their salaries for the duration of time they were in charge of these failing intuitions and used them to pay the bill we would have a fare and just system while still maintain our integrity. If we allow for the best business men and woman to shine and give them the tools like temporary tax breaks and our unwavering belief in a creative and vibrate Capitalistic economy we can and will leave this avert or diminish this and all disasters in the future. This will redeem everyone and allow America to honor our Veterans and enable us to hold our heads up high to the world. Telling the world we are still strong and will not allow even our so called own to bring us down, and that a Democratic Capitalism is the only way the best way. The American public would not only be giving up on the idea of our system and our economic ideals but us as well. It seems in today society you get rewarded when you fail, and no lesson learned. A do over just hit the reset button. We the average American get to feel the sting though. We feel the sting because we allowed them to run muck, and rightfully so. How about we trust our economic system give the businesses tax breaks until we stabilize the economy cut back on spending and allow the businesses to fail. Yes we all will feel pain, and we should we as Americans have been all too spoiled. This a good dose of reality and we need to hold the business leader’s accountable congress accountable for allowing lobbyist to infest Washington, and finally all of us for allowing it to happen. We set precedence for the world with this Bail out. We diminish ourselves and our Nation with this bail out. We need to offer better creative solutions for this problem. We are Americans our diversity our way of life demands more of us… all of us. We also need to allow ourselves a little pain for pain reminds us and teaches us never to jeopardize our values and our way of life again not for money not for anything. I also believe that the government must hold the overly creative and greedy accountable and that the American People will hold the government accountable for this from now on. I for one will I start this pledge by writing you and all the Arizona Congressional members. I will make it my duty to inspire as many disenfranchised Americans to stand up against waste and corruption starting today with letters and with our votes. WE must believe we are the government and that we are all Americans first and that the government is only working for us when we are working for it. Tony Velez