Is the global slowdown really the fault of the media? This is a question that I have had to discuss with many printers over the past few weeks as there seems to be a growing tendency to blame the media for its negativity. Often the phrase “talking ourselves into a recession” has been used with the media apparently doing the talking.
Nice as it would be that if we could write positive stories, the problems would go away, this is not the case. Blaming the media for the current global slowdown and now inevitable recession is a smokescreen detracting from the real causes: poor economic management and exuberant greed.
How influential is the media when it comes to controlling consumer spending? Will, for example a consumer not buy a new pair of shoes on a Saturday afternoon because they have read that the libor rate remains stubbornly high and banks are unwilling to lend to each other freezing up the money markets? Or, will they not buy that luxury item because they cannot afford is as their mortgage rates have gone up? Same factor, different avenues of realisation.
In the same vein, house prices are falling because they became unfeasibly expensive. The media certainly did not cause the boom in house prices simply by writing that they were increasing and no one has suggested this is the case - they increasing because banks were lending money to people who lost sight of economic fundamentals and the buy-to-let boom was allowed to continue unchecked (in 2000 there were 120,300 BTL mortgates with a maximum loan to value ration of 78%, by 2007, there were just over 1m with an allowable LTV of 85%).
We are entering a recession because we have binged on debt without any curbs from banks or government. As an economy we have let greed rule supreme (Dresdner Kleinwort’s Fear and Greed index, explained here http://www.howwealthworks.com/forum/viewtopic.php?p=4348, last year hit an all time high) and we are now paying the price, not because of media influence.