Taking the pulse of the press
I'm starting to see glimmers of hope — faint as they may be — that major media are waking up to the fact the economy isn't what our fearless leaders make it out to be.
Exhibit #1: A big piece by the McClatchy Newspapers (Miami Herald, Sacramento Bee, etc.) on the growth in food prices, complete with a helpful chart:
The Labor Department’s most recent inflation data showed that U.S. food prices rose by 4.1 percent for the 12 months ending in June, but a deeper look at the numbers reveals that the price of milk, eggs and other essentials in the American diet are actually rising by double digits.
Already stung by a two-year rise in gasoline prices, American consumers now face sharply higher prices for foods they can’t do without. This little-known fact may go a long way to explaining why, despite healthy job statistics, Americans remain glum about the economy.
Meeting with economic writers last week, President Bush dismissed several polls that show Americans are down on the economy. He expressed surprise that inflation is one of the stated concerns.
“They cite inflation?” Bush asked, adding that, “I happen to believe the war has clouded a lot of people's sense of optimism.”
Uh, no Mr. President. The war has clouded your sense of reality, that's all.
The article goes on to cite the major factors behind the price increases, starting with the one that's most familiar to DR readers:
It's partly because of corn prices, driven up by congressional mandates for ethanol production, which have reduced the amount of corn available for animal feed. It's also because of tougher immigration enforcement and a late spring freeze, which have made farm laborers scarcer and damaged fruit and vegetable crops, respectively. And it's because of higher diesel fuel costs to run tractors and attractive foreign markets that take U.S. production.
Kudos to McClatchy for highlighting the numbers, the reasons behind them, and the president's clueless remark from last week, which I'd not seen till now. (Maybe I was too focused on this one instead.) Unfortunately, McClatchy tends to be an outlier in mainstream media. It was the lone organization seriously questioning the administration's stated reasons for the Iraq war before the war started. So it may take the rest of the media a while to catch on yet.
Example #2: The public radio show Marketplace has actually deigned to ask whether Alan Greenspan might — just might — have had something to do with the subprime meltdown and resulting liquidity crisis. Alas, that's as far as my praise can go. Dean Baker says the segment merely made excuses for the Maestro:
The beatification process is apparenly still underway. The one economist cited criticized the critics for using 20-20 hiindsight in talking about the mortgage mayhem and the housing bubble. Of course, some of us critics had 20-20 foresight, we just didn't get our views presented in outlets like Marketplace. (Is being wrong a pre-condition?)
The segment also tried to claim that Greenspan warned about the housing bubble, playing a comment from two years ago in which, in classic Greenspanspeak, he warned that when markets begin to discount risk it can lead to a subsequent depreciation of asset values. I'm sure that gave potential homebuyers pause.
Evidently the producers of the segment overlooked Greenspan's advice to go out and get an adjustable-rate mortgage — just before the Fed started jacking up rates.
But I'll take it as a good sign that the purveyors of conventional wisdom are at least starting to ask the right question, even if they come up with the wrong answer.