How the Media Sold Their Souls to Wall Street

If you are like me, the pundits, and 99.9% of the American public, you really don't know much about economics. And despite Monday's refreshing moment of rebellion in the Congress, in all likelihood the House and Senate will pass a modified version of the $700 billion handout this week to fat cat Wall Street financiers.

The likely result, according to Nobel economist Joseph Stiglitz: "The unemployment rate will still increase, growth will remain anemic, house prices will continue to fall, the number of houses in foreclosure will continue to rise, credit will be harder to get, states and localities will remain in a fiscal crisis, and there will be cutbacks in basic public services. .... Our living standards in the future will be lower than they otherwise would have been. "

Here's the problem: None of us really know that the hell is going on, and what the largest financial bailout in the history of our nation would actually achieve. Based on McCain and Obama's hasty support of the bailout, it would seem they are both too far under the thumb of Wall Street to look at viable alternatives to an unprecedented handout to the same reckless bankers who got us into this mess.

And like they did in the run-up to war in Iraq and the passage of the Patriot Act, the media are compounding the problem rather than helping it. While TV devotes 24/7 coverage to pretending that mudslinging Democrats and Republicans represent the full range of debate, while right-wing radio hosts scream socialism, and while pundits like Thomas Friedman implore Congress "to give them the capital and the flexibility to put out this fire," the American people are getting virtually no hard economic analysis about what the bailout would achieve or what the range of options are.

Why aren't Luc Laeven and Fabian Valencia on television right now? They just submitted a comprehensive report to the International Monetary Fund after studying 42 banking crises over the past 37 years. Their conclusion: Bailouts often do not work, they often result in more bad practices, and they distort economies by transferring wealth from taxpayers to bankers and their customers.

Why hasn't economist Dean Baker been invited onto a single television program in the past week ? He is one of the guys who actually predicted the current crisis. He wrote this week: "There is no way that the failure to do a bailout will lead to more than a very brief failure of the financial system. The worst case scenario is that we have an extremely scary day in which the markets freeze for a few hours. Then the Fed steps in and takes over the major banks. The system of payments continues to operate exactly as before, but the bank executives are out of their jobs and the bank shareholders have likely lost most of their money. In other words, the banks have a gun pointed to their heads and are threatening to pull the trigger unless we hand them $700 billion."

Why isn't New York University economist Nouriel Roubini all over the news right now? He says the claim that "spending $700 billion of public money is the best way to recapitalize banks has absolutely no factual basis or justification. This way of recapitalizing financial institutions is a total rip-off that will mostly benefit - at a huge expense for the U.S. taxpayer - the shareholders and even unsecured creditors of the banks. ....The pockets of reckless bankers and investors (will) have been made fatter under the fake argument that bailing out Wall Street was necessary to rescue Main Street from a severe recession."

Roubini continues, "Instead, the restoration of the financial health of distressed financial firms could have been achieved with a cheaper and better use of public money. It is pathetic that Congress did not consult any of the many professional economists that have presented alternative plans that were more fair and efficient and less costly ways to resolve this crisis. ... and it is a scandal that even Congressional Democrats have fallen for this Treasury scam that does little to resolve the debt burden of millions of distressed home owners."

But turn on your television - the place where more than 60% of Americans get their primary news - turn on your radio, or open your local newspaper, and you're not going to see what these top economists are saying. It's a McCain quote, an Obama sound byte, and the same pundits who have proven their incompetence over and over. The result is an American public that is fundamentally uninformed about the issues that matter most - like economics, health care, and war - and over-informed about those that matter least: sports, celebrity, the latest campaign ad, and horserace analysis of elections.

The deregulation of our media and financial industries have occurred concurrently, and have resulted in equally disastrous outcomes. We now have a highly consolidated media system, where a few commercial conglomerates control most of the TV channels and newspapers - the place where vast majorities of Americans get their news. As these companies consolidate, four bad things happen:

1) Profit becomes paramount, so reporters are laid off, and cheap-to-produce programming prevails in the form of yakking pundits and reality shows;

2) Advertising reigns supreme, so politically controversial and unsavory reporting is replaced with noncontroversial fluff, while programming is designed to appeal to the middle and upper classes;

3) Government policies granting further consolidation, free airwaves, and monopoly control of markets become increasingly valuable, so media steers clear of investigating corrupt politicians or asking tough questions that could piss them off. They stick to more trivial stories that don't rock the boat in the halls of power;

4) The get-it-first, 24/7 news cycle, driven by an unquenchable thirst for higher ratings, compels reporters to cozy up to government officials in hopes that they will get the next big scoop. Reporters that ask tough questions are thrown off the bus and out of the press room.

Finally, in case you're wondering, the news anchors that dominate the airwaves are not part of a grand conspiracy. Rather, people like Wolf Blitzer, Brian Williams, Charles Gibson and Katie Couric are people whose world view and approach to reporting dovetail with the sensibilities and business interests of their employers. They are the reporters who are promoted, while those who challenge power are not. Just look at the firing of Phil Donahue from MSNBC when he criticized the war in Iraq, or the fact that Bill Moyers is not on commercial television.

With a few notable exceptions like Katie Couric's recent interviews where she is asking tough questions for the first time in twenty years, we have no reason to believe that the press -- and along with it, most politicians -- will ask the tough questions, expand the range of debate, and bring the facts to the American people. But until they do, our economy - and our democracy -- will continue its race to the bottom.

Comments

[bbrecht]

Excellent post. The media was using specific language like "rescue" instead of "bail out" and calling Congress's vote (when they voted against) a "failure" "what went wrong"? they asked.

It sounded to me like a PR campaign was underway and I would love to know who funded it, how much did they spend and what did the press releases look like.

[dgscol]

How many bankers have been interviewed about this crisis? At least the media have done a decent job of interviewing economists.

[larry278]

Mr Silver has analyzed, thoroughly analyzed, another sin of the MSM. This can be like browsing DSM IV or other catalogs of pathology in moments of leisure.

[LouisvilleLiberal]

I have thought it very strange that Congress didn't interview economists about this "crisis". Instead Paulson was the only expert they listened to. This means to me that whatever he told them motivated them so much that no further consult was necessary. Further, they felt that an economist couldn't explain the current situation to them....perhaps because they don't have the inside knowledge that Congress and Paulson have.

To me this says that the story we've been told is not the truth.....just like Iraq. When I see Congressmen prounounce that 1 trillion dollars evaporated Monday (without acknowldeging that half "evaporated" before the vote and the other half came back the next day), while other Congressmen say that the stock market has nothing to do with the "crisis" -- it's the "frozen" credit markets that are the problem.....I know it's BS.

My suspicion is that non-democratic governement "investors" in our federal debt demanded that Washington buy back "investments" that proved to be worthless. They did it by refusing to loan us any more money unless we comply. I am sure that the money goes straight to foreign governments who get Treasury Bills in return for their bad "paper" in addition to more TBills because they had to loan us the money too.

I am beginning to worry for our very country for the first time in my life. I wonder how long a Government can be indebted to powerful foreign interests and survive before it must file bankruptcy itself.

[watchTVgetSTUPID]

Josh

After reading your inspiring article I made you the first and only one on my fan list. You point to the root of the problem. As long as the consiousness of mainstream America is controled and limited by corporations, we will be manipulated to progress from freemen to sharecroppers to serfs to slaves.

Corporations will buy and sell their ownership of the huddled masses through debt ownership. The people will progressively be squeezed into an economic prison where they are allowed to leave and starve or submit and survive. Eventually, even the most minor acts will become illegal unless you pay the man .

Where does this lead? The credit card corporation that controls your financial allowance through debt agreements and the law will be able to sell that ownership to others.

[UrbanNight]

Good article. It succinctly sums up the problem. And thank the Lord for the Internet.
We would be in much bigger trouble if we didn't have it!

[JBS]

Yeah, you can see just how effective the internet was in stopping this travesty!

[jimzy]

A lame and shallow response. You have been watching too much television., JB.

[JScott]

Correct. And not only that, its the other programming that broadcasts the subtle message, corporations are good, acquiring more stuff is good, you aren't good enough unless you get this product or service, one should aspire to be a celebrity, eat more meat and cheese and processed food, more humans on the planet is good etc.---there is almost NO discussion of the consequences.
It was most telling when
I happened to be watching news show where Paul Theroux was presented with some award and then he said the biggest problem was too many people and of course to the assembled crowd of media, there was a hush, and he them remarked on their reaction. MEDIA JUST DOESN'T GET IT!!!!!

[Yermammy]

Where's Walter Cronkite when you need him. It's a sad state of affairs when you look at the National News as just a Corporate Talking Points Memo. I USED to think Tom Brokaw was credible. Kinda like finding out your girlfriend has been cheating on you for the last 20 years. PUNKED. When Nancy Pelosi opens her mouth, I want to take a two-bit axe to my Sony. Bill Moyer is the last journalist, worth a damn, in the entire world.

[rginfotech]

Hi,

I am a new guy, i am not able to say more, but after reading this i find that your article is really interesting, thanks

[January]

I get tired of rhetoric, even from those I agree with. Do we really need another article about how the mainstream media suck?

Yes, we know that the head of the FCC is a Bush puppet. Those who have found it necessary to resign have made that clear.

It is true that in metro LA I have ready access to 3 PBS affiliates. They provide more by way of education and news than I have time available to absorb.

Just as you criticize what the msm distorts, can you not be criticized for failing to mention any alternatives? Yes, Moyers' dismissal from PBS was a scandal. The guy who dismissed him got fired and Moyers brought back. I agree that Donahue was a cut above. Doesn't everyone know that the Shrub terrorized his opponents? Stop telling us what we already know and do some investigative reporting on your own. Yeah, I know. That might be work.

[WritusMaximus]

You had both left-leaning and right-leaning pundits using "interviews" to savage politicians who voted NO on the taxpayers-bailout-of-Wall-Street bill. Funny thing, these pundits by and large didn't read the bill nor pressed those that voted Yes! Icing on the cake---both McCain and Obama voted Yes on a 600-plus page bill. You think both read what they voted for? I'm no McSame fan, but me thinks the Obama administration will spent most if not all of its time trying to streer the American Titanic clear of the many an iceberg on its path, for as long as there is an Obama administration. Obama insulted the American people's intelligence by stating that he would revisit the legislation AFTER he takes office! More like he will frame it and put it next to his portrait. LOL! That Obama a joker he is!

[xrepublican]

uh,....Katie Couric asking 'tough' questions ...... please......

Katie has pitched more slow balls square in the strike zone to Palin - and Palin STILL can't get a hit.... There's been NO real follow-up, indeed katie keeps giving Palin second and third chances to come up with SOMETHING... it's almost as if Katie is PLEADING with Palin to say SOMETHING they can put on the air.....

The fact that someone as uninformed as Palin can be chosen for VP shows just how much of a charade our political system has become

[WritusMaximus]

Charade indeed! Bush got elected twice, didn't he?

[OmniDude]

Bush got Selected twice. Not elected

[DuganS1]

I can't believe the author used Nouriel Roubini's comments as some kind of justification that this is a bad deal. Maybe the author doesn't believe that Roubini for years has been a virtual joke, because he's been saying there will be a massive recession every single five minutes for the last twenty years. I remember Roubini predicting a "massive recession" in 2004, in 2005, in 2006, in 2007, etc. If someone makes the recession prediction, at some point he'll be right because eventually there will be one as they're inevitable. I remember Roubini calling for recession in Q1 of 2006 and the initial GDP report was 5.6% growth. I remember the "massive recession in Q2 2007 when GDP came at 4.8%. Roubini is just plain ridiculous. He's a doom and gloom guy and has always been.

[susie1776]

You know what, I listened VERY CAREFULLY last night when Warren Buffet told Charlie Rose that he has never seen things this bad and that the rescue plan is essential. Who are you going to listen to, Warren Buffet or some economics professor? Remember the old adage...those who CAN, DO, Those who CAN'T, TEACH. Nuff said.

[watchTVgetSTUPID]

Warren stands to make or lose billions on the bail out. He is on the air because one reason. Selfish profit.. He is against anyone learning anything that gets in the way of him making billions.

[AngFL]

Josh, check out RFK jr. speak about this: http://www.truthout.org/video/robert-f-kennedy-jr-rove-has-already-planned-steal-election. Basically we need to recreate the Fairness Doctrine. Our media is just another form of entertainment.