The role of the media in the recession
Discussion
Welcome to my "square wave" theory of the world around us. First of all let's make sure we know what a square wave is, namely the red line on this diagram. It contrasts with a sine wave (the green line) which reflects broadly how the physical world operates - sound waves, tides, daylight hours etc. The sine wave has properties which tie it closely to pi, circles and other such fundamentals.
In my experience the "real" world tends to follow a pattern similar to the sine wave. Things get better over time then things get worse over time but they rarely stay at a peak or a trough for very long.
On the other hand human nature tends to be more sheeplike and people often believe things will stay the way they are, whether it's all going well or all going badly. The media talk about things but never have to actually "do" anything themselves. As such their tendency is to tell people what they want to hear and this reinforces the inertia in the system. People feel down, they're told things are bad so they feel down...etc etc
The effect of all this is to distort perceptions (and thus some aspects of reality) towards the red square wave with lengthy "booms" and "busts" generated by little more than human nature. So Gordon Brown's declarations that inflation was dead and the boom/bust cycle ended were nonsense from the outset. He was denying the fundamentals.
At the moment things are seen as being on the horizontal red line at the bottom of the cycle despite the fact there are indications the system is more stable/resilient than it was three years ago.
I am therefore optimistic, despite the media doom-mongering!
In my experience the "real" world tends to follow a pattern similar to the sine wave. Things get better over time then things get worse over time but they rarely stay at a peak or a trough for very long.
On the other hand human nature tends to be more sheeplike and people often believe things will stay the way they are, whether it's all going well or all going badly. The media talk about things but never have to actually "do" anything themselves. As such their tendency is to tell people what they want to hear and this reinforces the inertia in the system. People feel down, they're told things are bad so they feel down...etc etc
The effect of all this is to distort perceptions (and thus some aspects of reality) towards the red square wave with lengthy "booms" and "busts" generated by little more than human nature. So Gordon Brown's declarations that inflation was dead and the boom/bust cycle ended were nonsense from the outset. He was denying the fundamentals.
At the moment things are seen as being on the horizontal red line at the bottom of the cycle despite the fact there are indications the system is more stable/resilient than it was three years ago.
I am therefore optimistic, despite the media doom-mongering!
There's a very interesting book called flat earth news regarding the way that news is generated.
To me, the news outlets are only useful for a quick scan to get a very shallow overview of current (newsworthy) events. Oh and to get a better (often fairly in depth) idea of the views of the chattering classes.
To me, the news outlets are only useful for a quick scan to get a very shallow overview of current (newsworthy) events. Oh and to get a better (often fairly in depth) idea of the views of the chattering classes.
Ozzie Osmond said:
Welcome to my "square wave" theory of the world around us. First of all let's make sure we know what a square wave is, namely the red line on this diagram. It contrasts with a sine wave (the green line) which reflects broadly how the physical world operates - sound waves, tides, daylight hours etc. The sine wave has properties which tie it closely to pi, circles and other such fundamentals.
In my experience the "real" world tends to follow a pattern similar to the sine wave. Things get better over time then things get worse over time but they rarely stay at a peak or a trough for very long.
On the other hand human nature tends to be more sheeplike and people often believe things will stay the way they are, whether it's all going well or all going badly. The media talk about things but never have to actually "do" anything themselves. As such their tendency is to tell people what they want to hear and this reinforces the inertia in the system. People feel down, they're told things are bad so they feel down...etc etc
The effect of all this is to distort perceptions (and thus some aspects of reality) towards the red square wave with lengthy "booms" and "busts" generated by little more than human nature. So Gordon Brown's declarations that inflation was dead and the boom/bust cycle ended were nonsense from the outset. He was denying the fundamentals.
At the moment things are seen as being on the horizontal red line at the bottom of the cycle despite the fact there are indications the system is more stable/resilient than it was three years ago.
I am therefore optimistic, despite the media doom-mongering!
There's a term in economics for this called "disaster myopia" which in simple terms means people tend to think "things are bad, therefore they will always be bad." I always preferred to broaden it out to "event myopia" which would mean things are this way and will always be so. This is usually used to explain stock market trends, and the gloriously intangible phenomenon of "business sentiment." However it can also explain many other phenomena in our economic lives. In my experience the "real" world tends to follow a pattern similar to the sine wave. Things get better over time then things get worse over time but they rarely stay at a peak or a trough for very long.
On the other hand human nature tends to be more sheeplike and people often believe things will stay the way they are, whether it's all going well or all going badly. The media talk about things but never have to actually "do" anything themselves. As such their tendency is to tell people what they want to hear and this reinforces the inertia in the system. People feel down, they're told things are bad so they feel down...etc etc
The effect of all this is to distort perceptions (and thus some aspects of reality) towards the red square wave with lengthy "booms" and "busts" generated by little more than human nature. So Gordon Brown's declarations that inflation was dead and the boom/bust cycle ended were nonsense from the outset. He was denying the fundamentals.
At the moment things are seen as being on the horizontal red line at the bottom of the cycle despite the fact there are indications the system is more stable/resilient than it was three years ago.
I am therefore optimistic, despite the media doom-mongering!
We suffered 10+ years of this with the notion that house prices are rising, therefore will always be rising, and we banked our behaviour on this. We have now suffered 3 or so years of the idea that house prices aren't rising, and therefore never will.
What is missed in this is that house prices are not the only indicator of economic growth. In fact they are a lagging indicator of rising incomes in certain areas. If for instance the stock market rises 20% in the next 2 years I wouldn't be surprised to see stock market investment as a favoured investment amongst those who favour investment. Even on such an irrational basis as the level of the FTSE 100, which encompasses everything from a bakery to a fashion house, by way of a car maker.
What's missing from all of it is a rational personal assessment of what is going to make me better off over the coming months and years. Realistically anyone who invests their own capital in a business that will produce them a 5% return is either extraordinarily lazy or not really in need of any particularly great increase in personal wealth in the first place. Personal wealth being the only real interest any of us have in economic growth as an objective.
I say this as someone who has achieved roughly 200% growth on my capital this year. A small amount in a relatively high risk venture, but never the less a very decent return borne of entrepreneurship rather than an inane fixation on the economic variables reported on the evening news.
The media is the product and the fodder of those who believe it, and it is an entirely social phenomenon. If you have the balls and the brains to put your ideas into practice then the level of the FSTE, the GBP/Dollar/Euro/Yen or aggregate house prices is almost entirely irrelevant.
Quite right. It is amazing the number of entrpeneurs who have founded massively successful businesses in recessionary times.
The media think that the sole measure of where business stands is the FTSE index. It is such a narrow measure of how sucessful business is doing as to be almost laughable - yet the whole economy is often judged on an upward or downward graph based on FTSE movements.
I have noticed of late that the Beeb seem to have stopped using their "Plunging Graph" motif for the state of the economy. Maybe they ran out of red ink.
The media think that the sole measure of where business stands is the FTSE index. It is such a narrow measure of how sucessful business is doing as to be almost laughable - yet the whole economy is often judged on an upward or downward graph based on FTSE movements.
I have noticed of late that the Beeb seem to have stopped using their "Plunging Graph" motif for the state of the economy. Maybe they ran out of red ink.
NDA said:
Eric Mc said:
.
I have noticed of late that the Beeb seem to have stopped using their "Plunging Graph" motif for the state of the economy. Maybe they ran out of red ink.
It's because most televisions are landscape. There's no more room at the bottom.I have noticed of late that the Beeb seem to have stopped using their "Plunging Graph" motif for the state of the economy. Maybe they ran out of red ink.
fid said:
Eric Mc said:
You may be correct - but just because the economy is depressed doesn't mean you have to be.
But should I be? Is a short, sharp period of depression what's needed? I think it is - just long enough to set everything to where it should be if we hadn't had a sustained period of low interest rates - re-adjust peoples' expectations.What will be, will be...despite the media.
A nice cheap house at other's expsnse.
NDA said:
Agree 100%.
How the masses 'feel' has undoubtedly led to fiscal drag, a reticence to spend. Whilst I agree that the recession was caused by over borrowing (typically from the flat screen telly brigade who didn't have the assets to back the borrowing) and from hollow financial instruments being almost fraudulently traded..... Sentiment plays a massive part in how resilient the economy is. The media play a large part in damaging this fragile sentiment.
So you think it would be better if everyone was still blindly borrowing and spending cos the papers say all is good?How the masses 'feel' has undoubtedly led to fiscal drag, a reticence to spend. Whilst I agree that the recession was caused by over borrowing (typically from the flat screen telly brigade who didn't have the assets to back the borrowing) and from hollow financial instruments being almost fraudulently traded..... Sentiment plays a massive part in how resilient the economy is. The media play a large part in damaging this fragile sentiment.
The money has run out, the party is over, and it's payback time. Not much the media can do for or against that situation.
I feel that the press played a huge part in the recession. Everyone was just offering 15-20% under asking on houses just because the papers said it was bad times. My dad was trying to sell his house at the time and he never got an offer that wasn't instantly way way under asking.
Had the media not reported so heavily on the problems I genuinely think everything would have been fine.
Had the media not reported so heavily on the problems I genuinely think everything would have been fine.
Ari said:
So you think it would be better if everyone was still blindly borrowing and spending cos the papers say all is good?
The money has run out, the party is over, and it's payback time. Not much the media can do for or against that situation.
No, I think that's being rather dramatic.The money has run out, the party is over, and it's payback time. Not much the media can do for or against that situation.
You've misunderstood my post which was saying that the media have contributed to the sense of unease. Sentiment, or the public mood, plays a part in economies. I admit it's a subtle point.
NDA said:
No, I think that's being rather dramatic.
You've misunderstood my post which was saying that the media have contributed to the sense of unease. Sentiment, or the public mood, plays a part in economies. I admit it's a subtle point.
Certainly subtle compared to entire banks falling over... You've misunderstood my post which was saying that the media have contributed to the sense of unease. Sentiment, or the public mood, plays a part in economies. I admit it's a subtle point.
Frankeh said:
I feel that the press played a huge part in the recession. Everyone was just offering 15-20% under asking on houses just because the papers said it was bad times. My dad was trying to sell his house at the time and he never got an offer that wasn't instantly way way under asking.
Had the media not reported so heavily on the problems I genuinely think everything would have been fine.
Just because??Had the media not reported so heavily on the problems I genuinely think everything would have been fine.
Nothing to do with banks tightening right up on their lax lending of late? Nothing to do with the credit crunch? Nothing to do with the job losses or the pay freezes or the huge indebtedness of our nation and others?
People were warning about recession and vastly over inflated house prices years before the financial tsunami hit, so what makes you think they all decided en mass to suddenly listen and offer your dad less?
This was Vince Cable on prime time TV in 2008 and, by his own admission, he'd been saying this for years.
http://www.youtube.com/watch?v=pn3T-6bkGtM
You honestly think that it's those nasty newspapers that are causing the property value downturn..?
NDA said:
No, I think that's being rather dramatic.
You've misunderstood my post which was saying that the media have contributed to the sense of unease. Sentiment, or the public mood, plays a part in economies. I admit it's a subtle point.
I think you're confusing the role of the media with the role of the propaganda ministry. It would be frankly sinister if, in a democracy, a free press were reporting the opposite of what is being said by economists, bankers and investors across the world. It is not the job of the free press to encourage Joe Punter to make bad investment decisions by concealing the facts from him.You've misunderstood my post which was saying that the media have contributed to the sense of unease. Sentiment, or the public mood, plays a part in economies. I admit it's a subtle point.
And if that makes it harder for you to sell your house, so be it.
Ari said:
Just because??
Nothing to do with banks tightening right up on their lax lending of late? Nothing to do with the credit crunch? Nothing to do with the job losses or the pay freezes or the huge indebtedness of our nation and others?
People were warning about recession and vastly over inflated house prices years before the financial tsunami hit, so what makes you think they all decided en mass to suddenly listen and offer your dad less?
This was Vince Cable on prime time TV in 2008 and, by his own admission, he'd been saying this for years.
http://www.youtube.com/watch?v=pn3T-6bkGtM
You honestly think that it's those nasty newspapers that are causing the property value downturn..?
The thread title is not saying that the media CAUSED the downturn. It is questionning the way in which it reports it.Nothing to do with banks tightening right up on their lax lending of late? Nothing to do with the credit crunch? Nothing to do with the job losses or the pay freezes or the huge indebtedness of our nation and others?
People were warning about recession and vastly over inflated house prices years before the financial tsunami hit, so what makes you think they all decided en mass to suddenly listen and offer your dad less?
This was Vince Cable on prime time TV in 2008 and, by his own admission, he'd been saying this for years.
http://www.youtube.com/watch?v=pn3T-6bkGtM
You honestly think that it's those nasty newspapers that are causing the property value downturn..?
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