It’s time for President Bush to resign.
Alan Greenspan, too.
Why? Because neither of them can fix our economy. Or, at least, what too many people – especially journalists – seem to be defining as “our economy”: the stock market.
Is it unfair to expect these men to rescue a sinking market? Not according to a powerful U.S. Senator. Joe Lieberman, Democrat of Connecticut, who warned on ABC’s “This Week” on July 14 that the President needs to release all information about a stock deal that happened more than a decade ago. Otherwise, Lieberman said Bush might soon lose, “his presidential authority to lead the critical effort to restore confidence in the market.”
And not according to CBS News anchor Dan Rather: “President Bush couldn't do it so today (July 16) the chairman of the Federal Reserve tried to calm nervous investors and stop the slide on Wall Street.”
Rather was referring to Bush’s July 15 speech when he insisted that the U.S. economy remains sound. But as the President was speaking, the stock market was tumbling -- fast. At one point, the Dow was down more than 430 points, and the NASDAQ touched its lowest point in more than five years. In spite of a giant climb at the end of the trading day, the major indices still closed lower.
The next day it was Greenspan’s turn, and he fared only somewhat better. Before he spoke to senators, stocks plunged again. By mid-afternoon, the Dow was down some 100 points, and was on its way to its seventh straight losing session. The swoon was front page news, and, as Howard Kurtz of the Washington Post wrote July 17, “the markets and the economy are now the number one story, top of the evening news, even if not much is happening”.
Statistics suggest the U.S. economy is on the upswing. Unemployment has dropped in the last year. The Fed predicts the economy will grow at least 3.5% this year. And the central bank expects GDP will rise at least 3.5% in 2003.
But none of that good news gets as much coverage as the stock market does when it’s on the way down. Or when it rebounds and is on the way up. Why is that?
Columnist Robert Samuelson says it’s part of a cycle. In the July 1 Newsweek, Samuelson wrote, “Stage one is Revelation. The scribbling and chattering class proclaims some seismic economic change, say, the Internet revolution. Next comes a Heroes phase that names—and worships—the architects of the wondrous upheaval. The end, of course, is Recrimination. Utopian visions vanish. Time to round up the usual suspects.”
Thus, Samuelson is concerned that “pack journalism may distort the market on the way down, just as it did on the way up.” He wonders, “will the press worsen the loss of confidence that it implicitly claims to be combating? Will the market, as a result, be unduly depressed?” Only time will tell.
Another factor is that it’s much easier to cover the market than to cover the economy as a whole. Most economic trends take so long to develop that it’s impossible to spot them before they’re gone. For example, by the time that most economists agreed that the U.S. was in a recession, that recession was -- at least on paper -- ending.
That’s why, for many journalists, the stock market has became a game. Trading begins at the same time every day and ends at the same time. There are rules that all observers understand and agree on. Business reporters announce “winners” and “losers” at the end of each trading day. They discuss what made a particular stock go up or down, the same way a baseball commentator might talk about why a batter was able to hit a homerun on a 3-2 pitch. It all sounds very logical.
But in the end, markets aren’t logical. They’re made up of millions of investors, and those investors are human. And thus, unpredictable.
So, should the President and the Fed Chairman really step down? I think not. Their successors would probably have just as difficult a time as have Bush and Greenspan. Plus, to use some industry jargon, markets would probably sink on news of the resignations.
Instead, let’s let Bush and Greenspan focus on the fundamentals of the overall economy and not get hysterical as the markets do what they’ve always done: move up and down.