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Blaming the Bears
Posted By Barry Ritholtz On October 30, 2008 @ 5:31 pm In Economy,Financial Press,Psychology,Uncategorized | Comments Disabled
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.
Article printed from The Big Picture: http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2008/10/blaming-the-bears/
URLs in this post:
 Consumers Drag Economy Down: http://norris.blogs.nytimes.com/2008/10/30/consumers-drag-economy-down/
 earlier: http://www.ritholtz.com/blog/2008/10/gdp-negative-03/
 http://www.nber.org/cycles/recessions.html: http://www.nber.org/cycles/recessions.html
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