The Fed gets Fed up with the Media
Remember that Johnny Carson joke about the imminent shortage of toilet paper? Well…that little joke caused the public to stock up on TP, eventually causing the shortage that Carson had joked about. Well, it’s happened again. Except this time every major national media source is taking Johnny's place and the toilet paper is your stocks.
The stock market quasi-crash of 1-21 is the new 9-11, according to media sources. This week’s market dives have been the largest since 2001, and the Fed has responded by taking a 25 year high bite out of interest rates. The Fed went to work at chugging securities hoping to calm media thirst for a juicy story while softening a potential recession.
Black Monday/Tuesday took on a shade of grey as analysts hoped that the interest rate cut would do the job. A cut of 0.75% reduced the rate of 3.5%, plus a speech by Federal Reserve Chairman Ben Bernanke was hoped to lighten the mood of nervous investors. Recession was considered a 4-letter word during the speech, and never did Bernanke suggest that recession was imminent.
Spin doctors to the rescue!
Just moments after Bernanke’s hopeful announcement, news releases confirmed that the economy was indeed on its death bed. From CBS to NBC to countless other news sources, the public learned that Bernanke apparently begged for economic first aid, inviting the media to apply such dirty words as crash, recession and slump to the situation.
Selective quoting may be the cause of all the kerfluffle, according to Nathan Burchfiel of the Business & Media Institute. While Bernanke did suggest that the economy was predicted to slow, Burchfiel notes that he also suggested that growth would still remain positive, although lower than last year's rates. Apparently Tuesday was media opposite day.
Welcome to Slumpsville. Population: everybody
Investor legs may be dangling from their high rise window sills as we speak, with volatile markets continuing to stagger. The Dow Jones Industrial Average has dropped almost 20% since its October 2007 high, with most global markets suffering large blows all this week.
It’s now suspected that the Fed will respond with more interest rate drops, at least until perceived volatility is reduced. Getting the media monkey off its backs will likely put the Fed in a slightly better mood. But little do they know, this monkey's feet are coatedwith crazy glue.
The Newest Rumor is…
We heard a humor that the national media is hiding all the toilet paper in their underground "the sky is falling" bomb shelters. Better stock up!