Here’s the latest act of idiocy: Blaming the media or the Bears for the credit collapse and market crash.

This not only demonstrates a total lack of understanding as to the difference between causation and correlation, but it evinces an utter disregard for the way the economy and markets operate.

A classic example of this form of brain damage can be seen on the comments of a recent Floyd Norris blog post, Consumers Drag Economy Down. Norris notes, (as we did earlier today) “Consumers are clearly in retreat, and the economy is suffering. The year-over-year increase in real G.D.P. is 0.8 percent, the lowest for any four-quarter period since 2001.”

It didn’t take long — the second comment actually — before the ‘tards actually started blaming Norris for the collapse. Let’s see what Mark D. had to say:

Great. You guys are posting stuff that will create a self fulfilling prophecy.

Yes, it was all Floyd Norris of the New York Times who cut rates to 1%, and then kept them there for a long time. And, it was Norris who forced the banks to lever up 40X. It was he who forced the rating agencies to slap a triple AAA on junk paper, it was Norris who mandated that hedge funds, trusts, pension funds and other buy this junk paper.And of course, it was Norris who forced all those mortgage originators to write those NINJA loans, and all those home buyers to take 2/28loans they could not afford when the reset occurred.

Why does the internet cause people to turn their brains off? Does anyone ever think for even a second before posting nonsense like this?

Self-fulfilling prophecy? Here’s a self-fulfilling prohecy: Write thoughtful intelligent commentary on the economy, and a large swath of humanity will trip over themselves trying to demonstrate why IQ tests are given on a curve, and the center point is 100.

A few other observations:

1) Because the NBER has not yet declared this a recession only means the official start and end dates are unknown. A recession can occur regardless of their declaration.

2) No, Charles J. Duffy, a recession is Not defined as “two consecutive quarters of negative real growth” since the 1970s. The NBER definition is here: http://www.nber.org/cycles/recessions.html

3) By that official definition, we have most likely been in a recession since December 2007, or perhaps January 2008.

Category: Economy, Financial Press, Psychology, Uncategorized

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

22 Responses to “Blaming the Bears”

  1. dark1p says:

    Damn that Floyd Norris. I knew he couldn’t be trusted.

    Seriously, Barry, where is everyone? Are they not registered with WordPress to leave comments?

    The site takes a bit more downloading time now, with all the images in the masthead.

    One thought: the imagery kind of overwhelms your logo because of the snazzy pic colors. The colors are fun and all, but I wonder if Remo should knock back the images so the colors are less vibrant. They do draw the eye, at the expense of the logo. If you want brand over eye candy, you might consider reversing the color strategy so the logo pops more than all the little pics (which, by the way, I like more than I thought I would).

    Everything else is very nice, very readable. Keep up the great work!

  2. bradp says:

    Yes, takes a bit longer to load, but overall looks very nice.

  3. karen says:

    “Everyone” will come here when they get cut off at the old site. You know how people fight change :)

    I like the column on the right with the Quote of the Day. Having the log-in feature makes posting easier, too.

  4. Upandaway says:

    Nice! Me like it.

    There’s some heavy “Economist” content in the header tho. I presume they’re only placeholders…?

    (Have you *paid* for that?! =-P)

  5. Simon says:

    OK I guess I could get used to it…

    I hardly ever smile anyway.

  6. Back in April Floyd Norris wrote a column titled, It’s a Crisis, and Ideas Are Scarce. I found his analysis very disingenuous and ill-informed. It smacked of journalism in an age where sophist crap about “the end of history” is in some circles intellectually PC. Thus, it is from some lack of regard toward history it demonstrates that I would suppose the media should accept its fair share of responsibility for current events.

    And, no… Larry Kudlow’s commutations with Alexander Hamilton are no adequate substitute.

    (The man should be put in a padded room.)

  7. wisedup says:

    scrolling down — lots of dead white space — where are the ads? no where to go — guess I’ll just have to post this and get back to work

  8. jmay says:

    BR, are you seriously going to pick fights with jackass commenters? Did you not see the giant “DON’T FEED THE TROLLS” sign when you entered the internet tubes this morning?

  9. batmando says:

    Agree with dark1p that the function-less masthead images are a distraction. Do they add to the download time or just provide a visual distraction while waiting for the download to complete?
    Would often use a link to a complete (or at least longer) chronological/historical list of posts rather than only 4 0r 5 “Recent Posts”, or am I missing an Archives link somewhere? So often want to go back and find s particular post of yours or a comment thereon.
    Will we be able to click on a commenter’s handle and see their collected previous posts?

  10. matt says:

    I find as many people outside of the Internet that have their brains turned off. I guess we need to restructure the media in addition to the financial and political system, as this whole “blame the bears” attitude is perpetuated by the media in addition to the regulators.

  11. truth08 says:

    “a total lack of understanding as to the difference between causation and correlation”

    Exactly. The level of financial and economic ignorance out there is amazing. I’m no financial genius, but I do make an effort to understand how this stuff works, and it blows my mind when I learn about how the Fed works and how the Fed and government and big business interact and what the try to pull over on us, and especially how they ARE able to pull all of this over on us. It seems Bush and Paulson and Bernanke are a little confounded as to why the smoke and mirrors that normally work are no longer working as economic reality starts to set in. At least some people are paying attention…

    One way to thwart the thieves…

  12. merc73 says:

    Can anyone enlighten me why Bank lending is still growing despite the credit crisis and the tightening of lending standards? Since the economy is already slowing/contracting for a while, shouldn’t banks be contracting their books?

  13. Winston Munn says:

    thruth08 wrote, “I do make an effort to understand how this stuff works.”

    Wow. Dude. How do you ever know who won American Idol? Chill, man. You only need to do three things to keep informed: Fox TV, Rush on the radio, and the WSJ Op-Ed in the john.

    Otherwise, you risk being un-American. A word to the wise.

  14. AGG says:

    Well, here I am. Very snazzy site, Barry. Congrats.
    Hey, who are all these weird people here, anyway?
    Just kidding, fellow weirdos.
    Don’t take it personally, karen.
    You people are all right. I don’t care what Robert says about you.

  15. Simon says:

    Well I clicked on the RSS feed button but it leads me back to thebigpicture not rithholtz dot com. Teething is to be expected…..

  16. ADB says:

    Been meaning to warn you Barry.

    After all these years of rdg your exc blog, and now switching to your new site, I’ve signed up to congratulate you and thank you for your great work.

    And also point out there is no shortage of people who seriously believe this Blame the Bears idiocy. Shoot the messenger is as old as history and is especially alive and well in our great country. My concern is that with the increasing levels of stress in the ongoing shock and economic readjustment a lot of really bad behavior is going to come out on the street.

    Only 1.2 pages views? Well I like your new Cafe…especially long post on dues paying time. It is time we start consuming within our means. But with a large number of Americans believing and saying “the American Way of Life is non-negotiable” I predict that many of these same Americans insist that our leaders use ANY MEANS NECESSARY to preserve the status quo.

    You are at the top of my blog roll, and your work is a great lead in to my WSJ, NYT, FT, Economists, Barrons, etc daily reading. I’ll sign up for your F – IQ service.

    Totally excellent work!

  17. c kincaid says:

    let’s see, 1% interest rates (for too long) was one of the culprits . . . . hey, guess what? we’re now back to 1%

  18. arl says:

    Barry-

    Self-fullfilling prophecies are one of the root causes of this meltdown. The lack of confidence in the system caused a run on the banks (mostly I-banks) and the freezing of the credit markets. Yes, deep problems were imbedded in the system but the media was irresponsible in their dissemination of the information.

    Come on man, get serious. Defending the media in this crisis while still a practicing member of it. Your mug is all over CNBC on a regular basis. Talk about a conflict of interest!

    CNBC has one job and one job only: Drive ratings for NBC and the parent company. Are there enough potential viewers out there who are true students of finance who would be drawn to a straightforward presentation of business news without the hype? I think not (Just take a look at Bloombergs ratings). CNBC makes its money on mom and pop, casual investors who will be drawn to the entertainment and fear mongering that runs rampant throughout CNBC under the banner of a serious news channel. At least Fox business doesn’t pretend to be anything other than a joke.

    Headlines and programs like those titled “Is your money safe?” or “Wall Street Crisis” are designed to get viewers to tune in. The result, panic in the streets.

    More serious however is the rampant rumor spreading. Want a specific example? Faber leading off his conversation with Alan Schwartz with a question about partners ceasing to trade with Bear Sterns. Thanks Mark, you just put us out of business.

    Don’t get me started on Gasparino. Just listen to his Lehman voicemail excerpt that is making the rounds. To summarize for those not wanting to waste their time looking for it, it goes something like this: “Call me back or you will be sorry.” Now Charlie, what possible threat could you actually follow thru on. Oh yeah, you have the ear of the finacial world and can drop not so subtle hints about the demise of individual organizations in order to seal their fate. Using this bully pulpit, he furthers his own career. Sounds a bit like another guy we know…Spitzer.

    Anyway, thanks for letting me rant. Love the new site and despite all the venom spewed above, you are one of the good guys. Great insights and relentless coverage. Thanks Barry.

  19. Darrell says:

    Barry– “Why does the internet cause people to turn their brains off?”
    I think you’re confusing correlation with causation. Just because you observe lots of people on the internet with their brains turned off doesn’t mean their brains aren’t turned off the rest of the time too:)

    BTW, I really like the redesign.

    Arl– You’re fishing for data that confirms your thesis. How many times has Gasparino said something negative about a company that didn’t go out of business? Faber has been gloomy and bearish about lots of things for years, yet you think he suddenly acquired the power to take down Bear Sterns with a single question? If so I’d expect to see a long trail companies destroyed by “Faber bombs” over the years. I’d also expect gold to be trading at $3K per oz. and the dollar to be worthless. That may happen, but it won’t be because of anything anyone says to the media. They don’t control events, they just report what happened yesterday. You should turn off the TV. When you start believing what’s said there matters it means they’ve got too much of your mind share.

  20. arl says:

    “When you start believing what’s said there matters it means they’ve got too much of your mind share.”

    Exactly Darrell. Thank you. The general public is not capable of deciphering fear mongering from hard facts. therefore, they should just turn off CNBC. It goes in the other direction too. No wonder Hickey calls it “BubbleVision”.

    A Modern Day Run on the Banks: Echoes of the depression
    I hear what you are saying about Faber but the difference is that, in this case, he was directly questioning the confidence that the system had in an I-Bank. In the end, the entire banking system is a confidence game (the reason for the implementation of FDIC insurance in the first place). Once this confidence is gone, the downward spiral is unstoppable (unless the governemnt intervenes…which they eventually had to do). So yes, the media does have the power to take down a company whose business is based on confidence simply by questioning its viability in the most public of forums: TV/CNBC. If you were a trading partner with Bear Sterns on that day. (ie. a buyer of commerical paper) and heard that one of your competitors had decided that Bear was too risky to deal with, would you ask: What do they know that I don’t? Lets be safe not sorry. Stop dealing with them.

    I won’t argue that Bear Sterns, Lehman et al didn’t get what they deserved but they got it more quickly, at the expense of more jobs, at the expense of tax payer dollarsand at the expense of investment portfolios because the media was irresponsibly promoting a story to sell ad time. By pumping the story, it becamereal and they introduced the system to a breakdown as opposed to an orderly unwind.

    Thanks. Like the lively debate. Can always count on Ritholtz fans to be on their game.

  21. Darrell says:

    Arl,

    I won’t dispute that media coverage can make a difference in the timing of big events. Bear probably did go down a little faster once the media shone a bright light on its problems. But what’s the alternative? The managements of Bear and Lehman were using insane leverage to make very risky bets with other people’s money. Executives drew huge bonuses based on the illusion of profitability, and the rest of us are now stuck with the bill for their excesses. How much bigger would that bill have been if the media had ignored the story?

    I can’t buy your argument that by pumping the story the media turned what would have been an orderly unwind into a breakdown. It seems to me that it’s the other way around. Societies that don’t tolerate dissent and don’t have a free press are the ones that hide their problems until they’re too big to fix (the USSR was good at this). I don’t know if we’re going to be able to pull ourselves out of the economic mess we’re in, but if we do it will be in part because people like Faber, Roubini, our own Mr. Ritholtz, and others asked some hard questions and raised public awareness before a few scoundrels in the financial sector drove us over a cliff. I think the public can handle the truth and needs to hear it even if they overreact on occasion. I understand your concern about people using the media to spread false rumors, but in the cases of Bear and Lehman the rumors were true. If you smell smoke and are starting to sweat it’s OK to ask management if the building is on fire.

    I also appreciate the generally intelligent discussions on this site. It’s nice to post to a board where debates don’t devolve into petty name calling after a few posts. Thanks for your considered remarks.