NPR’s John Ydstie has been NPR’s “roving national correspondent,” but he covered the economy for a couple of decades. Maybe he can make sense of this mess and also answer some questions about the challenges of covering the economy without contributing to its collapse.
He’s on with Gary Eichten on MPR’s Midday and I’m live blogging the conversation. By the way, he’s a Minneapolis native.
11:09 – The Dow is up 53.21 as Gary and John start their discussion. Let’s see if the market is listening to the lads.
11:11 a.m. - John says he’s flying back to Washington to cover the president’s speech tonight. Obama, by the way, previewed his speech. In a sound bite during the 11 a.m. NPR news, he said he would be honest and convey the enormity of the problem. Ugh. Raise your hand if you don’t understand how bad the economy is.
11:12 a.m. Ydstie says he thinks the experts “know what they’re doing.” As he’s speaking, Fed Chair Ben Bernanke is speaking to a Senate committee. He said if the stimulus stabilizes things, the recession could end this year. The market jumped, but now it’s lost all of those gains.
QUESTIONS AND ANSWERS
Q: “There’s so much negativity from the Republicans,” a caller says. Says the country is in “an economic war with each other.”
A: What you’re witnessing is the Republicans trying to figure out how to come back after November’s election. They’re going back to “core values.” It’s fraught with political risk. A new poll shows people back Obama. Meanwhile, consumer confidence is at record low levels.(This would be the part where I bring up the media’s role in this. Are people reacting to the economy? Or are they reacting to the media’s coverage of the economy? Are the two the same?)
11:26 a.m. Back to business.
Q: Should banks be nationalized?
A: “I’m not sure it’s a good description. We’ve nationalized many banks over the years. They clean it up and sell it off back to the private sector.” It might take longer to deal with a bank like Citi or Bank of America, but it’s not impossible. There’s nobody who thinks the government should take over the banks and run them forever. It’s a tough political sell.
Aside — Chicago Tribune: Nationalizing banks poses risk but other options look worse.
“If the banks don’t start lending again, the stimulus will go to waste. Whatever it takes, is my view,” he said.
Q: What if banks fail the “stress test.”
A: Unless the feds find a bank is insolvent, not much will happen. If U.S. stock in Citi is converted to common stock, the government will own 80 percent. If banks fail the stress test, they’ll try to convert some of that stock. “We can’t afford to have zombie banks that aren’t lending that the government is propping up.”
Q: We’re ignoring people who deal with behavior, that the emotional part of this is bigger than the qualitative part of this. Why aren’t we hearing from psychologists?
A: Behavioral economists are gaining status as a result of this crisis. It’s easier to quantify numbers than quantify emotions and the tendency is to crunch the numbers.
Q: Given the steady drumbeat of bad news. Is there a point when MPR and other media outlets overcover this?
A: John says he had the same question at a breakfast this morning. It’s difficult because as a reporter you report what happens and if the market falls because investors don’t have confidence, you have to do that. Maybe we should have a bank holiday and a media holiday.
(Bob aside: Look, this is the problem with answers like this. Nobody is suggesting the media not cover this. But the answer suggests that everything the media covers is in context and it simply isn’t. Editors and reporters are not asking the question of what every economic story serves before throwing it on the air. If a company announces it’s laying off 25 people, it gets on the air simply because every layoff story gets on the air. But consider the placement a few weeks ago of Traveler’s financial results and its investment in schools. Hint: It wasn’t on the front page.
So Ydstie answered the question, ignoring why behavioral economists are getting a bigger voice today. The media is dismissing the emotional part of the economy and prefers instead to just crunch the numbers. And he unwittingly, perhaps, answered this caller’s question in the previous answer: “It’s easier to crunch the numbers.” That’s true. But that’s simply not good enough. I was similarly disappointed that the new Star Tribune columnist also dismissed the validity of the point.)
11:40 a.m. – Pledge break (here, kitty!)
11:44 a.m. – Tangent time: MPR’s Tom Weber sends this link to a CNN.com on Minneapolis people handling the economy.
Q: Should the government buy out CEOs and banks and put someone in there who can run things properly?
A; Some people think so. The pool of people to run large financial institutions has gotten quite thin. A lot of people have already been dismissed and finding people — untainted — is difficult.
Q: Can Obama marshall elected representatives to work on Social Security and Medicare for real?
A: With 401Ks cut in half, people will depend more on Social Security. He’ll try but it’ll be like Nixon to China. It’ll be easier for a Democrat than a Republican. But SS and Medicare are very different. Cost of health care is rising rapidly and those costs need to be controlled. There is a demographic issue with Social Security but there are multiple ways of solving that problem. The size of the Social Security problem is about 1 percent of GDP. The ability to solve it is much easier than for Medicare.
11:51 a.m. – Pledge break. Back after the top of the hour.
12:07 p.m. – We’re back. Down in the comments section, join the “what should the media have known and when should they have known it” thread.
Q: What has to happen before people see a light at the end of the tunnel?
A: Getting the banking system stabilized. Ydstie says he thinks the Obama administration will come up with a plan soon because then the markets will grow as businesses think they can make some profit again (Tangent: Target’s profit dropped a lot, but it made a ton of money.) Says if 401k’s started to come back, that would help.
Q: Do you see a moratorium on the use of IRA funds without a penalty?
A: No.There is some help for college students in the economic stimulus package (Bob notes: You might want to read how that’s getting neutered here.)
Q: What if the stimulus doesn’t work?
A: They’ll do another one. Until consumers and businesses start spending.
12:19 p.m. – Pledge break. Hearing that Gary Eichten was Ydstie’s first editor when he worked at KCCM in Moorhead. Kate Smith is noting the number of people who’ve come through MPR’s doors, “and then gone on to great broadcasting careers” somewhere else. Hmmmmm….
In another thread, Tom Sweeney writes:
1. People are drowning in econ crisis coverage but little (none?) of the information is actionable. What would John have me do in reaction to the reports? I was laid off last March 4 and am still looking.
2. Is the crisis likely to boost US productivity and global competitiveness by enabling companies to pay people way less and by causing employees to work way harder for the good fortune of having a paycheck? I’m a certifiable workaholic with sweet references and 25 years in publishing but have yet to land after declining a transfer to NYC.
>> I don’t know if Gary will take either one of those questions. But #1 sounds familiar.
Q: People are framing “economic recovery” in the context of where we are a couple of years ago. That’s the problem. We got away from real values, to speculative values.
A: “You make an interesting point. Scott Simon interviewed a demographer on Saturday and compared the situation to the Great Depression. When he looked at them, they were a ‘reset’ to the economy. We were living in a fantasy world. He suggested that instead of thinking of them as recessions/depressions, they are resets. The problem is unless you get the economy moving along again, you’re going to have people losing their jobs and losing their homes. We can have a theoretical discussion about what the economy and values ought to be, but if you’re about to lose your job or your home, you need something fast. You need a program that tries to keep you employed. The poison that got us into this is the medicine that will get us off our backs, and then we need to have a conversation about consuming less or saving more. The problem is that everyone is saving now.”
Q: Why don’t you correlate market action to government action? The market knows wasteful spending.
A: It’s more about the banking system.
Q: Were banks forced to make bad loans?
A: No. We all think home ownership — along with motherhood and apple pie — is a good thing. But it’s not a good thing if you can’t afford the payment.
12:38 p.m. – Pledge break. None of the people joining/renewing appear to be listing News Cut as a reason. What’s the matter with you people? There’s a guy trying to eat here!
Q: Any relief for large student loans?
A: You’re unlucky because your parents made more money and you had to take out the loan. If you had a home and had an “exotic loan,” you may be able to get help under the housing plan. But for people who are “highly leveraged,” you probably just want to take the $10 a week tax cut and put it toward debt retirement.
12:51 p.m. They’re close to wrapping it up. the Dow is up 164.15. What does this mean? It means the Dow went up 110 points while Ydstie and Eichten were talking, and went down 30 when Federal Reserve Chairman Ben Bernanke was speaking earlier today. Perhaps we’ve unwittingly identified our way out of this mess.