I can predict headlines. In fact, I do not read the front page of the newspaper anymore. I know what the headlines are. They have been the same for the past eight months. So now I make bets to myself about what the daily headline will be.Will it be record layoffs? Another major corporation will announce they are millions of dollars in the red, or maybe Detroit’s automakers are asking for a few billion dollars more to play with? Any of these could be likely.
Yet these stories are all true, happening right now, and affecting us all. While the media has saturated us with news about the latest financial mishap occurring in our country, some have cried foul – too much doom and gloom they say.
Those crying doom and gloom say media coverage is only making the economy worse. I say the media is doing its job, and, unfortunately for some, it is making them uncomfortable. They are uncomfortable because the media is causing them to look long and hard at themselves, causing them to realize they might have to change their ways. They are realizing their ride on cloud nine might be over.
The media is doing what they have been doing since their creation, providing information – good or bad. They are not fabricating stories about record layoffs, bankruptcies or, elaborate as they sound, Ponzi schemes. The media is reporting these stories because they are happening right now and affecting thousands people, with the hopes these stories will affect the decision making process of their readers.
Dirk DeYoung, editor of the Minneapolis St. Paul Business Journal, told Minneapolis’ WCCO, “[the media] presents a steady drumbeat of bad news because there IS a steady drumbeat of bad news.”
So, yes, doom and gloom reports have prevailed in the media recently, but only because doom and gloom occurs so frequently. As DeYoung bluntly put it, “times are tough, and it's not the media's job to put lipstick on a pig.”
Now the media is causing us really to examine how we got into this mess. Economists have told us debt is good and the only way to keep the economy growing. According to Reuters, American households are $14 trillion in debt, an amount equal to the country’s entire economic output. This is a ratio the country has not seen since the infamous year of 1929.
As we hungered for more, we stuffed ourselves with debt. People accumulated more wealth by drawing on the value of their home, and were told their homes would increase in value base on projections of past performance. We were wrong.
We raised the standard of living in the US, most of it done on borrowed money. David Beim, professor at Columbia Business School, explained it National Public Radio’s “This American Life.”
“The problem is us. The problem is not the banks, greedy though they may be, overpaid though they may be. The problem is us. We have over borrowed. We've been living very high on the hog,” he said.
We’ve all been a little reckless with our finances and the media is revealing the consequences by bombarding us with reports of the economy that we cannot ignore and should not ignore. Because without the media we would not know what the economy has in store for us.
The wise consumer is taking this information and is making better decisions. They are saving more, investing wisely, and maybe deciding to keep their car another year. The media is telling consumers what to expect and making it easier to handle.
Yet there is still hope for recovery. We are not in the next Great Depression. Job losses during the Great Depression were at triple the rate of 2008-09. Unemployment rates were at 25 percent. Currently the country is at 7.6 percent. Auto production during the Great Depression was down 90 percent. Currently auto production is down 25 percent.
Maybe this is a wake up call for all of us. Maybe we should all live within our means a little more. When you think about it, people lived without banks, mortgages, cars, and credit for thousands of years. They did not have all the luxuries we have now. Nevertheless, they still survived. They did have one thing thousands of years ago that we still have today– family, friends, and laughter. Maybe that is all we need.
