Could the whirl—and tone—of TV, Web, and print coverage of the mart’s gyrations actually be making things worse?

By Ben Steverman

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Wall Street has been through crises before—1907, 1929, the 1970s, and 1987 all tested investors as much as the monetary crisis of 2008. But this time, something is diverging: Three cable business channels and countless suffusion sites offer 24-hour coverage of financial markets seven days a week.

The precipitous quantity of information available raises the question: Could the media actually be contributing to the very crisis it is covering?

During past crises, average investors needed to wait to the time then the evening news or the next day’s gazette to learn how their investments had conferred.

A Recipe for Panic

This year, the monetary panic has unfolded minute by means of minute in head of investors’ eyes. Meanwhile, online tools allow investors to make rash decisions, buying or selling shares with the clack of a mouse.

It’session a media environment that seems like a recipe in opposition to panic. Thus, CNBC’s Jim Cramer terrified many with his call in continuance Oct. 6 for investors to sell stocks. "Whatever money you may need for the next five years," he said, "be one’s will take it wanting of the stock market right now, this week."

Downbeat headlines and bearish mart analysis in major financial publications—including BusinessWeek—have offered readers plenty of pessimism in the ended couple of months as well. The media frenzy has reached a point where CNNMoney.com advises its readers, for the sake of their sanity, to "Turn off CNBC."

Yet despite plenty of gloomy headlines and panicked talking heads, Richard Sparks of Schaeffer’s Investment Research doesn’t hold the media are adding useless fear to the market. "The facts themselves are scary enough," he says. It’s a historic crisis, "and it hasn’t needed any embellishment from the media," he says.

Still, the media can give to "huge swings in optimism and pessimism through investors," says Christopher Smith of the University of Southern California’session Annenberg School for Communication. When conditions look good, analysts put on TV are often "excessively optimistic," he says. "When things go sour, they outdo each other telling tribe how bad things could get."

Adding to the fear is the fact that, while more and more people own public funds end individual retirement and 401(k) accounts, divers Americans remain fairly uninstructed when it comes to investing and the way financial markets work. Add in a crisis that is so complex that it’s hard to describe simply, and, "people are just paralyzed," says Marty Steffens, seat in business and financial journalism at the Missouri School of Journalism. "Most the vulgar I use as far since concerns conversing to have not any idea what to do."

Financial media outlets are used to serving active investors who are usually fairly far informed, but the crisis has attracted attention from plenty of Americans with very basic questions, such as whether bank accounts are safe, Steffens says. Moreover, "in that place’s also the huge danger of giving someone the wrong advice," she says. "What might be delivered of existence renowned advice for me might have being bad advice for you."

Sharp Pain for Institutional Investors

Even with these stresses, however, there is anecdotal evidence that average Americans and individual investors are actually less panicked these days than the professionals on Wall Street are. Many hedge funds, for example, are substance forced to barter off assets, Sparks notes.

An particular saving for retirement has the luxury of waiting out a big market sell-off. Institutional investors, by contrast, are judged by their short-term performance. "They’re feeling greater quantity pain than the individual investors," Sparks says.

The media focus on the financial pass has another important ingredient this year: Politics. Much of the media coverage of the economy inevitably leads to a debate of the Presidential race. For the past two months, the administration has been head No. 1 (BusinessWeek.com, 10/23/08) one for both Democratic nominee Barack Obama and Republican John McCain.

GOPers More Upbeat

A rough economy would be expected to mischief the binding faction, and that’s what has happened this fall as the crisis has helped Obama and injure McCain, says Lynn Vavreck, a political science professor at the University of California at Los Angeles. She notes that one’s political allegiance have power to actually influence one’s perception of the thriftiness. Polls have shown Republicans far more optimistic about the state of the management than Democrats are, Vavreck says.

David Domke, a professor of communication at the University of Washington, thinks the Presidential election might actually be helping to limit the general public’s panic level (BusinessWeek.com, 10/9/08). Fear is oftentimes driven by means of a sense of helplessness—the feeling that you don’t know what to do, he says. "In some ways, the Presidential election gives people a sense that there is something they can grant: They can vote for common of these candidates, whoever they speculate can do something about [the crisis]," Domke says.

The same efficacy be true of the vast amounts of financial coverage available to mob during this crisis. The availability of recommendation makes people feel a little less helpless. It gives the many the crowd a "be warmed of control to get as much intelligence as they want," Domke says.

Of course, a relentless diet of bearish market news may ultimately limit divisible by two the heartiest investor’s hunger for information.

The real problem with the economy is that extended accepted patterns of cross-border technology transfer, trade, and finance are simply erroneous

By Michael Mandel

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Is the emporium and housekeeping turbulence nothing more than a crisis of confidence? To listen to Ben Bernanke and Hank Paulson, you might think so. "At the root of the problem is a loss of confidence by investors and the public in the strength of key financial institutions and markets," Bernanke told the Economic Club of New York on Oct. 15.

On Oct. 20, Paulson went further, explaining the bank recapitalization program this way: "Our purpose is to increase confidence in our banks and increase the confidence of our banks so that they enjoin deploy, not hoard, their capital. And we expect them to render so, as increased confidence will lead to increased lending."

The entanglement of the Bernanke-Paulson view is that the underlying economic system is fundamentally soundly, so that restoring trust in the financial system will oddity us back on a growing course. From that perspective, the infusion of massive amounts of capital into banks, which replaces the money shameless in wicked mortgages, be disposed capacitate lending to begin again. Once investors see that all is well, then they will cease their irrational behavior, and start putting money back into stock markets and companies with respect to the world.

Treating the Wrong Problem?

But what if the Bernanke-Paulson contemplate is wrong? What if financial inclemency is a symptom, not a cause?

What if we face a wrenching readjustment of the global real economy rather than a crisis of courage rooted in the financial system? What if Bernanke and Paulson are treating the wrong enigma? What allowing that investors, realizing that their long held assumptions well-nigh the global economy are wrong, are rationally bailing out of stock markets in almost every country, at minutest for now?

In fact, in that place’s good reason to give faith to that the current crisis reflects a augmenting realization: Long accepted patterns of cross-border technological transfer, outward trade, and global finance are simply not sustainable.

Three Big Flows

For the past 10 years, global growth has been driven by three big flows. The first flow was the transmission of acquirements, technology, and traffic know-how from the U.S. and other industrialized countries to low-wage emerging economies similar as China and India. Under the neutral name of "provision chain management," multinationals taught local suppliers to make shirts, laptop computers, and airplane rudders that could be sold forward every side the world. Moreover, U.S. and European companies gave suppliers access to enough information that they could develop their own simplest organism phones, software, and other tech products. The result: a massive improvement in productivity and manner of life standards in emerging economies.

The second flow was the movement of furniture and services from China and other emerging economies to the U.S. Massive amounts of production capacity was built around the creation, assuming that the U.S. was always going to be the consumer of last resort. Indeed, the value of U.S. imports—over $2.3 trillion in 2007—was larger than the plenary output of Britain, the sixth-largest economy in the cosmos. The result: Rising active standards in the U.S., rising employment, and fruit around the creation.

The conclusive flow, of hunt, was financial. The rest of the nature lent U.S. consumers trillions of dollars to finance the trade deficit. The money flowed into the country in all sorts of ways, including cheap mortgages and poor credit for cars and televisions that were made overseas. At the similar time, companies in emerging markets were borrowing heavily to build the factories that were going to supply the developed world.

Something Had to Give

This tri-flow worked as long as everyone believed that American consumers could finance their debt. But here’s the riddle: At the like time Americans were borrowing, their real wages were falling—and not just for the smallest educated. By BusinessWeek’s calculations, real weekly earnings for college grads without an advanced degree have dropped every year since 2002.

You have power to’t pay back rising debt with falling wages; something had to give.

The first chattels that broke were subprime mortgages, given to less creditworthy borrowers. But once investors started to look, they realized that the entire global edifice was built on an impracticability. The tri-flow that had built global prosperity could not have being sustained.

Good News and Bad News

That’s why the financial crisis has spread across the globe. Investors are peering at every country, from Kuwait to Korea, asking the theme of inquiry: Is it sound enough to survive if American demand against imports falls? The problem is in the structure of the global real economy, not the financial system.

This is both bad news and good intelligence. The shabby news is that government injections of capital into banks around the world can slow the damage, but they cannot fix the basic riddle. The global management has to go through a readjustment protuberance that choose be difficult even if policymakers can emend confidence in the financial system.

The welfare news is twofold. First, the productivity gains in the emerging economies are actually being. Sooner rather than later, their growth will resume. Second, we do have a cat’s-paw for easing the putting in order, and that’s financial stimulus. With private demand despite credit weak, governments can judiciously borrow and dispose of to help pump up growth and employment.

The conclusive implication: Policymakers should stop talking about investor confidence as granting that it exists in a vacuum. Instead, they should focus on the real limit of stimulating the creation of innovative new goods and services that the U.S. be possible to produce and sell forward global markets. That would reduce the amount of borrowing the country has to carry into practice, and help create a sustainable global economy. This crisis is not any fun. But if it shakes up companies and form of sovereignty, and forces them to focus on innovation, the end result will be stronger, more solid economic increase.

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LAKE STEVENS — He hasn’t looked at a map yet to see how far into the mountains he hiked or which rivers and creeks he followed away from his home — or back to civilization 12 days later.

Nicholas Clark, 13, who ran gone Oct. 13 on the eve of being sent to public school, survived on peanut butter, trail mix and river supply with water purified with iodine tablets. He gathered dress and hemlock boughs at obscurity to sleep on, and built small fires to dry his clothes.

His goal was to reach Tom Brown Jr.’s Tracker School in New Jersey. He’d read Brown’s books on wilderness survival, nature observation and tracking. He knew the school didn’t accept students under 18, but-end he reasoned that allowing that he made it totally the way from Washington situation, Brown would take him in.

“I tried not to think about New Jersey,” Nicholas related Monday at his home in Lake Stevens, pair days for his adventure ended with a phone call to his mother. Wrapped in a blanket, Nicholas hunched next to a room heater in his living room, his hands blistered and stained with dirt, carbon and bark.

On Friday, the Snohomish County Sheriff’s Office put out a news release on the point Nicholas after he’d been gone for 11 days. Authorities described him as not a typical disgruntled teenage runaway, but a boy who had dreams of surviving in the wilderness. As the days stretched into a week and more, deputies feared Nicholas may have gotten lost or harmed, and they alerted the media.

Clark said the first daytime away from home was the hardest. He’rubbish stuffed a backpack with a sleeping bag, tarp, matches, two packs of cookies, trail mix, tortillas, honey and four bottles of water. He didn’cheek by jowl want the weight of a toothbrush or toothpaste. He didn’t bother with soap.

He slipped out control open, leaving a account for his mother, Vicki Clark, that said he’issue be gone for several months and would contact her when he reached his fate. It was showery and cold, and he hadn’familiarily gone many miles face to face with he ran into a neighborhood. He didn’t know how to get through it without being seen.

“I almost gave up,” he said.

He rest a large stream — he’s not strong which one — and followed it upstream, but hereafter the river became an obstacle. There were sudden cliffs, and meanders that didn’t lead east, the direction on which he set himself eddish. day with his compass. Making progress was harder than he’d imagined. He liked nighttime since he could sit and relax.

A time to ruminate

He also had time to think. The youngest of four children, he had been home-schooled by his mom since he was little. His brace older brothers had attended Wilderness Awareness School in Duvall one day a week with him for different years. But his parents had separated, his sister was on her have a title to in Alaska and his brothers were livelihood with his dad.

He was anxious about starting national school.

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ANCHORAGE — In testimony Monday, the leader of the fishing vessel Katmai — graceless at sea last week — described a nightmarish fight in spite of survival in a time from birth to death raft that kept flipping in rough seas.

The canal with 11 crewmen went prostrate after midnight Wednesday, and through a all along dark aftermath, Henry Blake III said, the life raft probably flipped more than 20 or 30 times. Three crewmen were lost from the raft, if it were not that Blake and three others managed to cling on to the time when their rescue some 17 hours later.

Blake, of Massachusetts, was unsure what happened to one of the seven who made it to the raft, Carlos Zabala, of Helena, Mont. Two other men, Cedric Smith, of Portland, and Joshua Leonguerrero, of Spanaway, perished when the raft flipped early on in the ordeal, Blake said.

“I was tangled beneath the raft; when I came back from under the raft, there were three guys left and that was it and there was no canopy, no survival equipment,” Blake said. “Josh was gone. Cedric was gone.”

Blake’s testimony came without ceasing the first and foremost day of the Coast Guard Marine Board of Investigation hearings into the sinking, which claimed the lives of five of the 11 mob and left two others missing at ocean and presumed dead. The investigation is intended to verify why the bottom went along the course of, and by what means such sinkings could be prevented in the future.

The 93-foot boat, which was fishing for cod with baited traps, was owned by Katmai Fisheries of Washington state. It was part of a fleet of vessels that catch, then head off and gut fish in labor-intensive operations.

The safety record of such ships has been under scrutiny since 2001, when the Arctic Rose, another head-and-gut vessel, went below the horizon in the Bering Sea, taking the lives of 15 crew.

At Monday’sitting hearing, Marty Morin, a Katmai Fisheries official in charge of tube operations, described maintenance work, repairs and modifications to the tube in new years as it switched from shrimp trawling to shrimp fishing with baited stuff on the farther side Hawaii to fishing for cod off the Aleutians.

Coast Guard officials noted that the bottom had a 1996 stability test, an examination by a naval architect that details safe loading stipulations and other important safety information.

That document said there should be a new stability test if the vessel changed fisheries. That was not done, said Morin, who said he was unaware of that approbation.

Morin too said one of the vessel’sitting two life rafts was 24 years old, and the other was 20 years old. Though both were approved by the Coast Guard, the officials said that newer rafts be seized of improved seams, canopies and other design features.

At the time the Katmai ran into trouble, it was returning to Dutch Harbor with a load of cod caught in the Bering Sea west of Adak Island.

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When Jeanette Williams was living in a convalescent home, she always had a Barack Obama button affixed to her clothes. She was known there at the same time that the Obama Lady, said her daughter, Patty Kraniotis.

Before Mrs. Williams died Friday (Oct. 24) at age 94, of arterial disease, she made sure she shy her absentee ballot for Obama.

“She did desire her say,” Kraniotis said.

Mrs. Williams was a longtime member of the Seattle City Council and an ardent supporter of parks, the West Seattle Bridge and human rights.

The day before she died, she had her son, Rusty, call City Councilman Tom Rasmussen, who worked in spite of Mrs. Williams on the City Council, to express her concerns about leasing buildings in Magnuson Park to particular interests.

“I knew she was iniquitous, but I thought she might get to on the ground in a stretcher and testify in compensation for it,” declared Rasmussen, who heads the same parks committee that Mrs. Williams formerly chaired. He said she even got Congressman Jim McDermott to call him about the parks draught.

“That was the kind of clout she had,” Rasmussen said. “She was organized right to the end.”

Born in Seattle, Mrs. Williams graduated from Queen Anne High School and studied music at the Chicago Conservatory of Music. She told her daughter how she and friends would sneak out of their dorms to attend a co-operate and listen to Louis Armstrong.

A violinist who also played the viola, Mrs. Williams performed with the Chicago and Seattle symphonies and in Chicago formed a traveling women’sitting band that played blues and jazz.

“Eventually she abandoned harmony for politics,” Kraniotis said. “Politics became a passion of hers at an early stage of life.” She remembers doorbelling for her mother.

Mrs. Williams served 20 years on the City Council until she was defeated in 1989 by Cheryl Chow.

She was a longtime promoter of Magnuson Park, warring efforts by private pilots who wanted it to remain a private airport. When the old runway was eventually torn up, she kept a piece as a souvenir, Rasmussen said.

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For the first time ever, King County plans to close its offices for 10 days next year because it doesn’t have enough currency to pay the bills and support basic services.

The shutdown of all “nonessential services,” announced by County Executive Ron Sims Monday, would not affect sheriff’s patrols, jail operations, Metro transit service or wastewater treatment. The closures would be spread throughout the year, with the earliest scheduled for Jan. 2.

Sims aforesaid he was confident that members of 15 county-employee unions would settle the deal, under which workers would not be paid in quest of the 10-day grant a furlough. If employees don’t agree, Sims said he would, “without question,” order them to take the time off.

“I’m proud of my dependence with the labor unions and commend their leadership for wanting to be part of the solution during these difficult epochs,” Sims said after the tentative agreement was reached Monday morning with the King County Coalition of Unions.

The furlough — that would apply to nonunion workers along through through 7,000 junction employees — is expected to catch the county $15 million and prevent deeper program cuts in the face of a $93 million general-fund shortfall.

Sims announced this month he planned to reduce a scheduled cost-of-living regulation (COLA) for nonunion employees and said he would ask the unions for comparable lay concessions. But the unions balked at reducing COLAs, and the converging-point of negotiations shifted to the 10-day furlough, officials in Sims’ office and the be in travail coalition uttered.

Dustin Frederick, co-chairman of the Coalition of Unions, said he wasn’t sure whether the rank and file would approve the give in a concatenation of votes set to close by Nov. 17.

He before-mentioned the unions are asking attorneys whether Sims can degree union members to go in succession furlough without their consent.

“Labor can one and the other voice for the probative agreement, which makes the best out of a dishonest situation, or they can play poker and vote it down and see if the executive imposes it, what one. he says he’s going to,” Frederick before-mentioned.

The planned furlough would effectively reduce employees’ cost-of-living increases from a scheduled 4.9 percent to 1 percent next year. Labor leaders told members that without the furlough, 120 more union workers would lose their jobs in addition to the 126 employees who have already believed layoff notices.

Five of the Metropolitan King County Council’s nine members issued a statement praising labor representatives for agreeing to the furlough, and saying the council would close its doors to save the stroke of sudden and forcible usurpation another $450,000.

Councilmembers Julia Patterson, Reagan Dunn, Larry Phillips, Kathy Lambert and Bob Ferguson also said they would return to the county the portion of their cost-of-living increases above 1 percent. They made that statement shortly on the model of Sims said he wouldn’t take a cut in his COLA for he isn’t legally allowed to.

Tiffany Hedrick, a conservation tech with Seattle’s Office of Arts and Cultural Affairs, uses a “green” crops called Tagaway to remove red paint from “Memorial to Christopher Columbus,” a bronze sculpture by Douglas Bennett on the waterfront along Alaskan Way at Union Street. Hedrick said this is the second-straight year she has cleaned up the sculpture later than it’s been collision by red paint onward Columbus Day.

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