"Save us, Oh FED"
I was on an anniversary vacation (27 years) in lovely Sedona Arizona yesterday, named after Sedona Schnebly whose hospitality and kindness was renowned in the early 1900s, when I noticed the headline on the USA Today weekend edition praising the FED for saving the stock markets. (ZH has noticed too with a different angle on the headline) I had to stop and read. Two things jumped out at me from the image below: 1) that the images and quotes are lying to the American people, 2) that we have come to expect the Fed to save us!
But wait just a minute... this "correction" started a lot higher! As I look at that newspaper image, it would appear that stocks are now stronger than before the pullback began. A look at the full chart, glancing back five more days, shows that indeed we have only recovered a portion of the losses. Is someone trying to deceive me?
Let’s say I am an investing novice, (“Jerome is an investing novice…”) with my money in a TIAA-CREF mutual fund, and I have been watching the economic headlines, like a diligent mutual fund investor always does, wondering if I should cash out for a while. Then I see this headline. “Wow” I think, “Looks all clear to me. I’m stayin’ in.” Then I look a little deeper at the front page and see that it’s a 709 point gain in two days—best since 2008. “Damn,” I say, “That’s when all the recession began. It really is over. And look at that graph, stocks are going up!” Then I read a bit more. “Wow. This expert says the correction in over.”
And I pay for my mocha latte at the store, go out to the car and continue with my vacation.
But I would miss what anyone who actually watched markets would notice. First, the downturn started with the Dow at 17,986, and fell 1018 points. A 709 rise still leaves us 309 short of a full recovery. So how is this “mini-correction” over, as David Kotok* says? The seasoned investor, might be optimistic, but still wants to see a higher high before saying it’s over. A reader might think that indeed the graph looks encouraging, but we are still 309 points below the highs!
Why did the newspaper select just that range? Was it simply to deceive me, the novice, into thinking markets have moved higher?
USA Today has deceived the careless reader with its graphing practices. (I might add that they regularly, break the charting rules to get a certain look, then add artistic flourishes to the graphs & charts for eye appeal.)
- Somebody chose to select only the boxed in range, hiding the extent of the pullback.
- Somebody chose to quote David Kotok rather than another more cautious, chart-watching economist.
And in making these choices, USA Today has continued to promote the grand narrative of “Recovery,” with just a bit of deception here that they could likely weasel out of if put to the question. But they, and all the other mainstream news outlets, cheat their headlines and graphs consistently in favor of the recovery story.
And the hell of it is that in our world, a lie is as good as the truth if people believe it. And the propagandists have figured out that you just have to keep repeating lies to increase the belief level. The wrong stories simply do not get past the editors, who may have a list in hand of what will and what will not be published. We have all seen a story slip through that does not support the recovery narrative, only to see it pulled of the internet before the day is over. We have seen frustrated journalists resign because their investigative work was canned. Edit out the wrong news, Highlight the desired news. Ignore and Augment.
Moreover, they have added in the idea that the FED is supposed to come to our rescue
“Get to work Mr. Chairman.” Now that expectation is becoming the norm. But isn’t this central planning? The Fed is not supposed to let the markets fall? But meanwhile they are simply steering return-conscious investors into a single asset category.
Yes, the news is controlled. Yes, the economic stories fudge, cheat, and flat out lie about what is going on in the economic world. The organizational system is in place to ensure that the majority of news outlets are controlled. The journalists are so absorbed in narrow ranges of writing, that few see the bigger picture. But I am preaching to the choir here, most likely. It just burns me to see news manipulation in action while I am trying to relax.
They didn’t actually change the numbers, they were just selective in how they showed them.
But in this world, that is all it takes to perpetuate the “right” story.
* Sorry for misspelling your last name in that image, David.