It's the economy stupid !

Dear reader,

don't start to worry I will not start to comment on the everlasting struggle for the White House between Democrats and Republicans.

The point i am referring to is that the current dramatic events on the financial markets in Europe expose a lack in understanding of the importance of the economy to our society. So due to lack of this understanding it might be explained why the possible default for Italy was not first topic on German TV on Nov 8th. In fact it was not topic at all that the yield of Italian bonds reached and surpassed 7%. After markets demanded the resignation of Mr. Berlusconi it was widely expected that things will start to ease for Italy after this „demand“ was met not only from the markets but also from some if not most of his European colleagues that were simply fed up with his empty promises.

So far so good and while Mr. Berlusconi was focus of attention also by news media while being the key word to the now famous exchange of grins of Mr. Sarkozy and Mrs. Merkel at the last summit supposedly successful in rescuing the future of Greece and the Euro zone it is now where simple market data are ruling the fate of Italy and of the whole Euro zone where those media abstain from proper reporting.

Immediately it shoots to my head what an economist said or better asked the last days on Twitter: Where did we (economists) fail. How could things deteriorate the way they did ? Well as with this expert on economics ONLY is it a bit with modern day journalism where

a.) most stories are based on reports delivered by news agencies such as Reuters, AP, DPA, ANP etc etc

b.) many journalists are used to report on political developments and perhaps those of „human interest“ but so far the economy was just for some specialists who had the opportunity to speak for a few moments on the days winner/losers on the stock market or got a similar column for the newspaper where they could fulfill the needs for the few who formed a group of special interest (e.g. business people, investors, „rich“)

So for years if not decades these journalists now failing to cover the most important story of the current time were used to fulfill their role being granted in the political theater to satisfy the needs of explaining and commenting on political developments and political only because they were the ones in charge. So perhaps there were or are in fact some differences in political preference ...so journalist a is more left leaning, B center and C is leaning more to the right, but it all relies on POLITICS assuming (so far rightly) that they were in charge of steering our societies towards the one or other direction. That's the past anyway and the way things usually work but now there have forces taken over which are totally under the radar of common journalists and they don't perceive the importance of the events dictated almost by the force of mathematics, numbers and sums of money. So to stick to the latest Italian developments the fact that not the government of Italy can decide on the amount of money needed for the budget but a percentage figure of the state bonds. Depending on the heights it reaches even making it impossible for the time being to pick up any additional money to the one it collects e.g over taxation. I think for many journalists haven't adapted to the new situation where not (political) left or right is important anymore but to handle (economic) things right or wrong. And to make things worse: wrong doesn't mean some new elections and instead of bla bla bla and marginally different political steering of a country either by left, center or right there will be one scenario looming which is total collapse of our currency, exchange rate mechanism, producing economy and all the nasty stuff the early 1930s stood for. So it is no option to play some of the „old games“ anymore. Be it in politics or in its attached armada of of journalists who either pray or condemn the government. In fact you could all condemn investors of having lost faith in the ability of political parties or the political system if you will to solve (self inflicted) situations and stop spinning exclusively around their way of lifelong income by producing mainly bla bla bla … Spinning for some part is done with thee help of journalists whose assigned task is to communicate the politicians message to the public.

Well at least that's the way things worked since the end of the war or at least since the creating of the Euro zone … Politicians take decisions and journalist sell them … This system obviously work so well that even when politicians lose that grip on the situation and are threatened to get washed away by events of global financial markets (may we pray that Russia and china have abolished communism (in economy at least) otherwise by now there was already „game over“ ) this game still goes on. Politicians refuse to give up power even when their whole country is only inches away from abyss or even worse when this personal failure will perhaps even take down other countries as well. If journalists fail to see those dangers and also keep on „selling“ politics instead of informing the citizens about the clear & present dangers they have failed their obligation. As always I want to see also the few exceptions in order not to condemn everyone. There is perhaps even more to be said but I'm tired for now (really because it's late) and that'll be it for now.

Concerning a.) I would like to comment that although it is perfectly alright to obtain news from news agencies and to rely on it for getting first indications of what is going on it would be good when this constant flow off information was also put into perspective by those who use it. Instead of just pumping out a constant stream of news it should also make the journalist THINK why some news is being offered to him/her and try to follow it up by own investigations in order to make the audience aware about possible reasons for the current facts being reported.

Sometimes it is worth to follow up just little sidelines of currently hot item which almost nobody takes notice of and dig out more than news agencies can. There are some interesting stories also to be found in the financial world where common ask themselves the question: “How could that happen” , “Why did politicians do such a stupid thing” etc.

Concerning the current crisis around the Euro ..(oh I forgot officially there is no crisis) or possible break up of the Euro zone I heard sporadic interviews with those people who were in charge of matters when the whole thing was put into work. So going back to the early 1990s the fact alone that leading economists dared to question the system which politicians were pursuing to put in place based on their visions of a future Europe. Also important to go back in time in order to work out what was the original idea the plan (past) and from a present perspective what worked and what didn't. Without such control of decisions made by politicians the press isn't fulfilling their self declared goal to be a watchdog of politics. Taking into consideration that earlier reporting on the economy wasn't the main priority of the journalistic profession the problems now lying at the doorstep of Europe are so huge that it might now by the time also to rethink that attitude in order to live up the self declared role in our societies. So maybe they can contribute thereby to a more focused political process in order to prevent future mistakes. One should never give up hope ;-) Always remember without a good working economy everything goes down the drain also the wishes of the left leaning part of society to give more from the rich to the poor. If this goes totally wrong there will be nothing left to transfer or redistribute.

One personal lesson out of the latest Greek and Italian developments though: Obligation to finish longer articles much quicker in order not to get bypassed by events ;-)

[Update Nov. 12th:]

Dutch economist and Twitter user @mathijsbouman brought the subject to my attention that on dutch TV a phenomena was sighted that a sudden switch from non reporting to using rather simplistic methods were used the last couple of days in order to demonstrate the most common viewer the complexity of a possible breakup  of the Euro zone. By putting some raw eggs into a pan an making some scrambled eggs and the resulting difficulty to "unscramble" them afterwards the very very basic problem of the single currency was indeed addressed but IMHO it is still possible to confront the common TV viewer also with some impressive graphics expressing the European and also worldwide tightly woven net of financial interconnections such as presented by the @NYTimes and others.
What is the use of highly modern and most expensive new virtual TV newsrooms costing millions of Euros with all their latest gimmicks in order to mix the TV anchor with highres graphics if nobody uses that ideal new tool to insert some impressive graphics of money flows, debt development, yield curves, spreads etc etc to form the fast to catch background for the explanations of the implications for the local economy , the risks the Euro zone as such and also the worldwide economy or monetary system or stock markets etc etc . Maybe accompanied by leading experts such of the economists capable of communicating also to common people who could answer also some questions (maybe in the form of a compilation such as @mathijsbouman did for dutch viewers/readers listing the pros and cons of abandoning the single currency)
2nd update:
On dutch public TV there was a similar discussion between a BNR business news radio maker and Prof. Ewald Engelen (@ewaldeng) concerning the importance of proper and adequate reporting on financial matters of all kind.  If you understand dutch you can find a podcast of the discussion here.
The author of this article very much approves of the increase of "media presence" of our finest brains on all kinds of financial matters even if it is said that in room with 3 economists you'll get 5 opinions. It is preferred very much so to get those 5 opinions out to the public and with some fundamental agreement on basics such as the importance of growth it's most certainly not a "contribution to confusion".
It is to be hailed that Europe's brightest people not only speak out on own blogs, contribute articles to newspapers, discuss on social media but also make their voices heard in the still most powerful of all media to date: good old Television. Along with some much better preparation of complicated figures, statistics etc in the way it was described above they (the Professors of many European Countries) can give us perhaps at least some possible alternatives of some ways out of the big mess the failing (<slow) politicians brought upon us all. At least then it can be argued that TINA ("there is no alternative") presented to us has a rival which even bears a title. Be it economist , doctor or professor of economics. Even when perhaps totally disagreeing to some views being voiced it is still important to hear those voice as we also better had listened to warnings Prof. Roubini issued some years ago instead of letting politicians ridiculing & insulting him.

The author here is grateful for every master willing not only to teach his students but also from time to time to engage with other specialist in a public discussion about not only the mistakes which have been made in the past but also about some viable solutions to overcome the mess. Perhaps with also the participation of major business leaders which might be able and willing to contribute additional funding to save us all (including themselves) from economic doom.

[/update]

If by any chance some members of Sky News happen to read this I wish to express my long kept hopes that for a better coverage of events taking place in German or from a German perspective that maybe they are finally willing to give the audience much better ways to keep in touch of events maybe without being part of the political system with putting more propaganda than news based on hard facts only. For a country of 82 million people and that economical importance you either have dogmatic news by public TV or gaga news by privately run TV stations. (ok exaggerated) Sometimes as a man blessed or cursed with knowledge of history I even dare to say that I feel remembered sometimes of the news presented by “Aktuelle Kamera” back when good old GDR TV was still on air.

There is no REAL 24h news coverage only from N-TV (with a CNN stake) and N24 but both putting on documentaries in times of less viewers present. Public TV just offers Phönix with coverage of live events (9am -5pm mostly) or some channels with constant replay of news in 60 seconds or maybe 5 minutes. No match for coverage of BBC News UK or Sky News UK. And perhaps it fits even into the takeover of Premiere pay TV being done by Sky in order to promote their acquired movie + sports channels.

nice link:
Short guide to lazy EU journalism