This intervention is what Vince Reinhart means by controlling the narrative, and it was downright brilliant:
WSJ (4/18 ’09): Volcker: ‘We’re in a Great Recession’
… while the current downturn isn’t like the Great Depression of the 1930s, “we’re in a Great Recession for sure.”
In fact our situation is much, much worse than in the 1930s, but it’s going to take considerable mental work to figure this out for ourselves.
Say at Year 0 an index stands at 100, then at Year 1 it stands at 1 and at Year 2 it stands at 2. How will the MSM report this? Year 1 saw a 99 percent decline, while Year 2 saw a 100 percent resurgence. Recovery has been achieved.
Don’t laugh. The trend line of, for example, investment in commercial real estate came pretty close to that pattern and happy stories abounded. Now at Year 3 the MSM is breathlessly hoping for 2.1 and worrying about 1.9. That is, the recovery is “fragile,” but nobody doubts the reality of something called the recovery. I can confidently assert that we’re stuck with that “recovery” for the next twenty-two years or so. Therefore I think it’s a good idea to just give up and re-brand the quarter century of long depression that must follow on from the Panic of 2008 as the “Great Recovery” 😉
For much of yesterday Google’s top biz story was …
Reuters (2/27): Warren Buffett’s enthusiasm for U.S. could boost markets
“The prophets of doom have overlooked the all-important factor that is certain: Human potential is far from exhausted, and the American system for unleashing that potential … remains alive and effective.” / He also forecast a recovery in the housing market “within a year or so” and that “America’s best days lie ahead.”
This factitious honey-nut pabulum was headed by a (rather dated) super sized head shot of the ORACLE looking especially sincere and avuncular. It’s a picture perfect example of the communications principle that if you can win the heart, you own the ontology. This goes back to Keats’ identifying beauty (or a reasonable facsimile thereof) with truth; or equivalently, in the context of America’s positive thinking tradition, to Rhonda Byrne’s Law of Attraction. A less noticed piece from Wednesday provides an interesting contrast …
CNBC (2/23): Warnings Aplenty From the ‘Father’ of Securitization
This article didn’t have any particular narrative, just a series of disjointed concerns the interviewee would like policy-makers to consider. Few people know the name Lew Ranieri as compared to Warren Buffet, and his most significant point was buried deep in the video embed, not even making it to the text. That was Ranieri’s opinion that the US housing market is very close to losing its image as an investment vehicle. He foresees significant further declines in house prices if residential real estate were to become “just housing.” Now for those of us who realize that there’s enormous amounts of agencies being held by banks as Basel III Tier 2 capital, we can see that he’s warning of the real possibility that the load on the 10 ton truck could well shift going around the next curve.
Where the CNBC interview provoked thought, the Reuters puff imposed feelings. It’s instructive to note how appeals to emotion migrate to the front pages and the top of Google pages over appeals to the brain, even in the business section.