SG79:
Andrew Everard:So how much of the current crisis is created by media-induced panic? Discuss...
I think much of the fear that exisits now is caused by the media no longer reporting news and speculating on a future that no-one really knows and then reporting this as news. Peston has quite a bit to answer for here but I agree with Gerrard that he has not been alone. His insight to the PM's decision making and the Chancellors actions meant he just never seemed to get it wrong and this has made him the most famous and I can't fault him or the beeb for cashing in on that - I sure would have!
The constant doomsaying has not helped an already fragile situation. It seems that no-one wants to report any good news these days. Has anyone listened to the BBC lately? Every news bulletin contains a reference to the economy, even on stories that are entirely unconnected to it. "in other news despite the rest of us suffering the credit crunch, so and so found some money/time/inclination to do X" it's so boring!!
So does this actually cause the crisis? probably not but it can worsen it, think of it this way......House prices will go to whatever they go to, however, if the media reports that they are going to go down another 20% then everyone holds off buying, meaning those that need to sell drop their price and it becomes a self fulfilling prophecy - crazy!
I can see some good coming of all this - if people stop relying on credit to buy everything then we will all be in a better place, its how it should be anyway! Anyway I digress, so back to point...
Many succesful business and sports people share one common trait - they truly believe that to be succesful you have to believe you will be. The power of the mind is amazing and if everyones mind is thinking negatively (beacuse of the media) then people will act accordingly. If everyone now decides to not spend less money and saves it all instead then the economy will shrink, companies will make less money and job cuts will be necessary to maintain profit levels, causing further bad news to be portrayed by the media which will cause more people to save more and spend less (can you see the vicious circle forming?)
Having said all that, are the media wrong in reporting all this? For me no, they did not invent the story of a downturn in the economy, its real and for what its worth I think real bad times are on the way, I think where we are now may just be the tip of the iceberg and I see a continued decline ahead. The last crash was revived by a new technology taking off (the internet) and this drove the dot com boom. The biggest crash ever was revived only by the threat of world war 2 - manufacturing was required and this stimulated the economy.
With this vicious circle already in place then how do we break out of it this time? I don't know but I don't think the media reporting 'all is well' would do it just as I don't think the media reporting 'the end is nigh' is responsible for the crisis.
your reference to the internet reminded me that no one, AFAIK, has mentione d that the net may be a factor in the crisis...i mean...Zavvi (people may dislike branson but when he gets out of a business - theres a reason, folks!)? Woolies? Both great examples of businesses out of step with the times, who's business had been pinched by online retailers. I'm not saying its the soul reason, but i think its a biggie. But everyone just wants to blame mysterious cycles or the last chancellor's carelessness.
I'm not, by the way, refering to folk in this thread, just the news n that.