The global financial crisis. Perhaps the greatest homegrown financial swindle of all time.
Looking for piercing questions as to how we got in this mess -- who's responsible for it, who's profiting from it, and who's left holding the bag? Unflinching explanations as to how the fallout will affect you and generations of Americans not yet even born? Hard-hitting answers that lay out the full scope of the disaster and its complicit parties? Unrelenting demands for accountability and effective solutions to avert future recurrences?
Well, don't look to U.S. mainstream news media. Unconscionably and egregiously asleep at the wheel, America's "newspeak" reporters, editors, and their consolidated big media bosses are a huge part of the reason why financial markets and economies the world over have been rocked to their knees and are now scrambling desperately to save a sinking ship.
As far back as three years ago, anyone with an ounce of common sense could see the writing on the wall. (Can anyone say: the Stock Market Crash and Great Depression of 1929? Market deregulation? Any number of similar speculative bubbles gone bust before and since? Duh!) Mainstream news media turned a blind eye and deaf ear to these precedents, to the inevitable train wreck that lay ahead in the wake of the subprime mortgage speculative frenzy. Virtually no clear or sustained warning cry was sounded by these guys who give journalism and credibility a seriously bad name. Mainstream news media not only dropped the ball, they never even had it. Or else deliberately sat on it. (Serious conflicts of interest in the corporate newsroom/boardroom?)
Sending shock waves throughout the national and global economy, the fallout of the most colossal financial calamity in our nation's history has only just begun -- with Bush asking Congress for a $700 billion(!) government handout to the worst of the growing list of transgressors. The list of serial failures, tax-funded bailouts, bankruptcies, and corporate buy-outs reads like a heap of financial corpses, corporate giants once thought indestructible: Countrywide Financial, Bear Stearns, IndyMac, Fannie Mae and Freddie Mac, Lehman Brothers, AIG, Merrill Lynch. And yet more major national depositor and investment banks are teetering on the edge of collapse -- including Washington Mutual Bank and Morgan Stanley, which are now desperate to find buyers to come to their rescue.
But cogent perspectives from independent, alternative U.S. news and info sources are definitely out there. You just have to know where to look. (A more comprehensive view can also be gained from reputable foreign/international news sources, as classmate Erin McKenzie implied on a previous post.)
As just one example, check out the audio-file link below -- from media watchdog group F.A.I.R.'s recent interview with economist James K. Galbraith, professor at the University of Texas in Austin.
I don't agree with Galbraith's proposal to bail out Americans who bought into the housing boom frenzy -- the greedy more than truly needy ones, that is. Of the former, their motives were absolutely integral to this entire mess. And since when is the government expected to give anyone a non-binding handout for rampant, reckless greed that endangers our entire economy -- just as they're doing right now for the financial giants who are anything but victims either. (So much for the conservative mantra against "big government.") That lax attitude only rewards the very behavior that got us in hot water in the first place. Still, F.A.I.R.'s questions and much of the rest of Galbraith's comments are definitely worth hearing:
Also, below is an Aug. 21, 2008, review of a book written by Yale University economics professor Robert Shiller. Shiller had predicted both the earlier Silicon Valley speculative high-tech bust and the current subprime speculative crash. But according to the reviewer, Andrew Leonard, the book falls far short in its look at the factors and players that led to the current meltdown.
Nevertheless, relevant to our class is Leonard's mention of Shiller's suggestion for "taking advantage of innovations in financial technology to create new derivative markets that would 'tame speculative bubbles in real estate.'" And where that kind of "'liquid market in real estate futures' would allow investors to sell real estate short if they [believe] that the market [is] in a bubble." (Selling "short" means to profit from stock investments that you anticipate will lose, rather than gain, value; a kind of reverse-profit investment strategy. Interestingly, the SEC just issued a temporary ban on shorting.)
Shiller explains that in using such a strategy as a means of market, not government, control: "...then any skeptic anywhere in the world could, through his or her actions in the marketplace, act to reduce a speculative bubble in a city, for such a bubble represents a profit opportunity for short sellers. If the market were widely watched, then home builders would see the projected price declines and scale back their own activities, thus averting huge construction booms such as the one we have recently witnessed in the United States."
But Leonard rightly cautions: "Shiller's proposal is a lightning rod precisely because many observers have pinpointed innovative derivative markets as one of the causes of the subprime debacle. Yet [he] proposes a package of new, state-of-the-art financial products as part of the solution." I don't entirely agree with Shiller's idea either. It's too simplistic. But at least it might help stimulate other long-overdue, outside-the-box solutions to avert such calamity in the future, or at least stop the hemorrhaging sooner. And in our interdependent global economy, shouldn't new safeguards be designed in coordination with other nations' financial markets as well, in order to be truly effective?
And what about solutions to shore up the failures of mainstream American journalism? To serve the public interest and the public trust against widespread corruption and abuses of power AND to empower the public to embrace new possibilities for enlightened, responsible change? Is there a way to funnel smarter, more conscientious reporters and editors into the ranks? Journalists who understand the vital connections between history, politics, national and foreign policy, economics and business, health and medicine, science and technology, the natural environment, education, and news and entertainment media -- so they have the wherewithal to see the tidal waves coming long before they crash and before innovation opportunities pass us by? Well, yeah, "It's called smart journalism, STUPID!" Or, should I say, "Dude, do you do InJo?"
- Misako M.