Stick and stones may break my bones, but words can never hurt me. So goes the tune we were all taught as 7-year-olds to make ourselves feel better after getting mercilessly teased by the school bully. But flash forward to 2008 and it seems like the pen has come back with a mighty vengeance.
With Congress failing to pass the $700 billion bailout Monday, media outlets across the country have been cautioned to carefully choose how to describe the financial crisis, so as not to create a general state of panic and fear. According to Newsweek columnist and former Cornell student Daniel Gross, conservative mediaownerRupert Murdoch has banished The Wall Street Journal from using words like pandemonium and crash to describe the financial crisis.
Along the same lines, Gross also reports that CNN correspondent Ali Velshi told The New York Times, We're very careful not to throw words around like 'meltdown' and 'free fall'."
Gross argues while these tactics of describing events in watered-down terms are certainly useful for assuaging peoples fears for a short time, ultimately, it does disservice to everyone when something terrible does happen and people clamor about its unexpectedness.
Under a market system, there are bound to be booms and busts in the business cycle. We have enjoyed an unprecedented amount of growth and prosperity in recent years and a market failure was inevitable. It was just a matter of how wide and how deep. Unfortunately, what makes this crisis so shocking is that people seem to have forgotten this notion and have let minor market hiccups accumulate over time, so now we basically need the equivalent of a gastric bypass procedure. Perhaps if we called things as they are, the surprise wouldnt be as shocking and efforts could have been taken to mitigate the effects earlier.
Though the Dow Jones index plunged 778 points causing an unprecedented $1.2 trillion loss of equity funds on Mondau,Tuesday's stocks ticked up by 4.5 percent, the largest percentage increase in over 6 years. MSNBC headlined this event as, Stunning day for Dow: Closes up more than 450. The second headline of the article reads: Previous days carnage attracts bargain hunters that bolster markets.
The significance of these headlines lies in the hunter terminology they use to describe the market. Generally, the markets are described as running on a bull when investor confidence is high. Markets are described as being on the bear when investor confidence is down. It is definitely a bear market right now, Elmer Fudd. But as has been repeated over the past few weeks, the markets need to be convinced that problems can be resolved in order to restore investor confidence and that it is okay to lend again. By describingthe uptick as bargain hunters who have beaten yesterdays carnage, this plays heavily into the psyche of investors that the stock market might be okay in the long run.
Similarly, some suggest that we need to label the bailout as something else in order to get more Congressional backing. "Bailout" is a loaded term that signifies to the main street Americans that they are bailing out the greedy investment bankers on Wall Street. Instead, another more successful way to push the bill would have been to label it as an economic stimulus package or something along those lines. There are no doubt flaws with the bill that was voted on yesterday but it seems like the House will have another go at it again this Wednesday. But for any bill to be successfully passed it will need to be retooled as a proposal that main street Americans can get behind.
One thing is sure though: When it comes down to it, talk aint cheap. These words are definitely going to hurt.