Today I "taught" Mihaela Luţaş's third-year Englishline class in Regional Development. Only China and Oana from my classes were there. The others are finance majors or economics majors, so I was meeting them for the first time. This time I had a chance to prepare a bit, and though my primary role was to be a "native English speaker" and to answer questions about America, I did have a short lecture prepared on the "Subprime Loan Crisis" in America. I guessed that there might be a question about that, as its name is a confusing misnomer, and as it has been widely seen as the trigger that set off the current recession.
The class was wide-ranging. As is my tendency, I went off on tangents that included my family, Fulbright programs, motorcyles, manufacturing management, conglomerates, the Iliad, and God knows what-all else. At the end, we spent ten minutes on the current financial crisis. I expressed my belief that this crisis was exacerbated by the left-leaning press' desire to make things appear as bad as possible in order to ensure a Democrat's victory in the U.S. elections, and that the American consumers would regain confidence once Obama takes office, and the press starts cheering again. One of the students told me of a DeNiro movie ("Wag the Dog") on a similar theme. I plan to find it and view it during Christmas break.
I hope that Mihaela's students enjoyed their class today as much as I did.
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*From "Happy Thought," in R.L. Stevenson: A Child's Garden of Verses.
5 comments:
Dr McDougall,
I am surprised to learn that you attribute much of the fallout from the sub-prime crisis to a quasi-media conspiracy to tip the electoral scale to the left.
Certainly the media have an influence on the nation's outlook on economic matters, but are you comfortable pinning the correction of an obviously overheated housing market, the record number and soaring percentage of homeowners who are in some stage of default or upside down on their mortgages on media puffery?
I am disappointed that you, as a professor of business, taking up residence in a university economics department, would present to Romanian students the trite "left-wing media" charge in place of data and quantitative explanation.
Do you have evidence I have not seen that supports your claim?
Thank you for your comment. I accept your remarks at face value, and I understand your point. I am editing my post to change the words "largely caused" to "exacerbated."
I certainly did not mean to imply that there is not a real credit crunch, or that it was not caused by real mistakes and misdeeds on the part of businesses and government-backed institutions.
My blog is apolitical, and I have not reported on my own vote in this year's election. Suffice it to say that I have high hopes for the success of the Obama administration, and that I think very highly of my President-elect.
The comment on the role of the press that I made in class (and reported in the blog) was a personal observation of American media made before coming to Romania. I have lived many years, observed many elections, and weathered a number of recessions. On the basis of my experience, I made my observation.
Of course I defined and described the subprime mortgage crisis to the students. I cited it as the trigger of the current loss of confidence on the part of the American consumers and investors that has spiraled into the current world-wide financial downturn. So, before judging my remarks about the role of the press to be unfounded, please wait four months and see if my forecast of marked improvement in that confidence is incorrect.
Enjoying your blog. However I do disagree with your phrase, "that this crisis was exacerbated by the left-leaning press' desire to make things appear as bad as possible in order to ensure a Democrat's victory in the U.S. elections". Edit that out & you return to a position of being a neutral American "political" blogger from Romania. A position that I believe is correct.
Fair enough. Certainly I hope your prediction of a consumer confidence (CC) bounce back is correct. And I do agree that it is influenced (to what degree we could debate) by media.
As an economics teacher I discuss with my students the relevance of CC. After much discussion, they always conclude (rightly, I believe) that CC is both a leading and a trailing indicator: one the one hand it is self-fulfilling in that increased CC leads to increased consumption and therefor has a positive impact on GDP growth. On the other hand a decline in production leads to layoffs and stagnates income leading to decreased CC.
In both instances CC is simply nothing more than the public's "feeling" about the economy, and that feeling, or perception, is certainly influenced by the media. So, is it a worthwhile measure? Yes and no. No in that it is fairly abstract and based on personal perception. However, yes in that consumer demand is 70-some percent of GDP and if consumer demand is affected by consumer emotion then CC is a critical component.
Finally, my response to your post wasn't from a political position at all, rather a reaction to what I have witnessed all too much in recent years (perhaps decades): the over simplification of events, or worse, the selective simplification of events, to serve political needs. From both the left and the right in America there is too little attention being paid to all the facts of an issue. I'd hate to see those of us with specific training in economics or related fields get caught up in the politicization of these matters.
Keep up the blogging from Romania. I've been following along for many weeks! (I was just approved for a full-year Fulbright exchange for the 09-10 school year, so your adventures and experience are invaluable in my preparation!)
-Salaam
Congratulations on the Fulbright Award! Fulbright is an amazing program.
In response to one item in your recent comment, I admit that I am a man of legendary simplicity.
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