Wednesday, November 26, 2008
Don’t believe it
It’s a recession! It’s a recession! It’s a recession!
Remember the Big Lie?
Here it is again.
The news media have been going on and on about the recession. Every day, there’s a new report about the direness of the worldwide economy, progressively worse every time. [image courtesy www.freeimages.co.uk]
Watch the news: stores are going out of business. They’re offering discounts on top of sales on top of specials. You can get stuff for next to nothing.
Except — I haven’t seen it.
In Canada at least, the malls are still so crowded you can’t find a parking spot. And the sales? Even CBC news couldn’t find bigger sales than 10 percent off at Birk’s Jewellers—the most overpriced purveyor of useless baubles in the country—or $75 for a plain white shirt at Harry Rosen, the most overpriced seller of boring men’s clothing in the country.
What’s the crisis? The owners of the toniest stores in Canada won’t be able to get that upgrade to their yacht?
Yes, auto workers are facing significant layoffs. But the financial sector isn’t hurting here, as it is in the States.
Yet, the media continues to stoke the fears of recession, even depression. Here’s a smattering of headlines:
‘Problem’ banks stoke fears over FDIC fund
More failures likely, warns chairman (Financial Times, November 25, 2008)
GM: Death of an American dream (Fortune, November, 2008)
15,000 auto jobs gone by the end of 2009: Economist (Toronto Star, November 26)
And yet, look at these more factually-based reports:
Bank of Montreal's fourth-quarter earnings rise to $560 million (CBC.ca, November 26)
Royal Bank says credit crunch will hit quarter's bottom line, still forecasts $1.1 billion profit (CBC.ca, November 26)
Retail sales soar past expectations (Report on Business.com, November 25)
The bandwagon effect, again
It’s the bandwagon effect. It’s happened repeatedly, and seems to be increasingly frequent. We saw it in the US election, when the media favoured Barack Obama over all his rivals.
And now the talking heads are competing to say “recession” more than anyone else, along with “economic crisis” and “credit crunch.”
The next question is, are these doomsayers contributing to the decline in the stock market and the credit crunch?