FALLS CHURCH NEWS-PRESS | FCNP.COM
NATIONAL
The Harder They Fall
As many skeptics predicted, the moment the stock market began to wobble out of concern for a pull back of the Federal Reserve’s massive stimulus policy, the Fed’s new chief Janet Yellen jumped into a chair in front of a congressional committee Tuesday to assure everyone that she’s not going to deviate from the policies of Ben Bernanke, her predecessor. Lo and behold (and yes, fairy tale language is appropriate here!), the U.S. stock market leaped up over a full percent while she was speaking before the House Financial Services Committee. It is yet another indicator that the stock market has become completely disassociated from the real economy, and is responsive only to the moves by the Fed to keep the floodgates of liquidity open to the biggest financial Falls Church news-press institutions, banks and related investors. As commentator Mike Whitney wrote in an article entitled “Prelude to a Crash” in last week’s online Information Clearing House, “Investors have shrugged off dismal earnings reports, abnormally-high unemployment, flagging demand, droopy incomes, stagnant wages and swollen P/E ratios, and loaded up on stocks confident that the Fed’s infusions of liquidity will keep prices going higher.” He added, “It’s only a matter of time before they see the mistake they’ve made.” The Fed’s current stimulus policy has led to an excess of risk taking, the practice of incurring massive short-term debt to buy into the Fed’s gravy-day policies. It’s a massive growth of a debt bubble that is collateralized against only itself, but nothing grounded in the real economy. On a global scale, the picture is even more dire, even as Wall Street investors, big banks, the Fed and Capital Hill policy makers continue to whistle in the dark. As Morgan Stanley’s Ruchir Sharma wrote recently in the Financial Times, the biggest threat to the stability of the global monetary system is the debt bubble that has built up in China. China, yes China, as Sharma underscored in an interview on Fareed Zakaria’s weekly show on CNN, now contributes more to global growth than the U.S. Whereas its share in global growth was 10 percent in 1999, compared to 33 percent for the U.S., it has swollen to 36 percent in 2013, while the U.S. share has shrunk to 19 percent. Accomplished through incredible seven-to-eight percent annual growth in their gross domestic product (GDP) in recent years, China’s debt as percentage of GDP has grown from 135 percent in 2000 to 231 percent in 2013. Another way of seeing the problem is this: from 2002-2008, it took $1.4 in debt for China to produce $1 in growth, but in the 2009-2013 time frame, it has cost China $3.4 in debt to generate $1 in growth. Therefore, China’s zeal to continue seven or eight percent annual GDP growth is running up against a very troubling reality. If the country were forced to slow down to even four or five percent annual GDP growth, the consequences for the rest of the world, with its increasing dependency on China, would be “seismic.” The inefficient growth of debt is at the heart of the impending crises for both the U.S. and China. It’s the same scenario that led to the crash of 2008. We are looking down the barrel of a massive repeat, orders of magnitude bigger, than 2008. The problem has been the political and policy disconnect between the accumulation of debt to buy into stimulus programs – either in the U.S. or in China – and the pressing needs of the real economy to have access to that capital. All the data shows that little or nothing of the Fed stimulus is “trickling down” to strengthen the middle class, improve a crumbling national infrastructure or provide for a sustainable job-creating industrial-grounded economy. On the contrary, mega-banks like Wells Fargo, who are feeding at the trough of the Fed stimulus, are not only reticent to lend to small businesses, but are using their Fed-backed muscle to ravage them, as I have witnessed first hand. Buoyed by the Feds, Wells Fargo in the Washington, D.C. area, for example, has decided to call in small business loans for no other reason than because it can.
February 13 – 19, 2014 | PAGE 13
Nicholas F. Benton
Nicholas Benton may be emailed at nfbenton@fcnp.com.
Still Mad as Hell I often wonder what Paddy would think. I wish I could have a pastrami on wry with the late writer and satirist at the Carnegie Deli and get an exhilarating blast of truth about “the atomic, subatomic and galactic structure of things today.” What would Paddy Chayefsky make of Kim Kardashian? What would he think of Diane Sawyer showing cat videos on the ABC evening news? What would he say about Brian Williams broadcasting on the HuntleyBrinkley network a video of a pig saving a baby goat while admitting he had no idea if it was phony? (It was.) What would Paddy rant about the viral, often venomous world of the Internet, Twitter and cable news, where fake rage is all the rage all the time, bleeding over into a Congress that chooses antagonism over accomplishment, no over yes? What would he think of ominous corporate “synergy” run amok, where “news” seamlessly blends into promotion, where it’s frighteningly easy for corporate commercial interests to dictate editorial content? What would Paddy say about the Murdochization of the NEW YORK TIMES NEWS SERVICE news, where a network slants its perspective because it sells and sells big? What would he make of former Time Inc. Editor-inChief Norman Pearlstine returning in a new position as Time Inc.’s chief content officer, breaking the firewall between editorial and business as he works “with business and edit teams to drive the development of new content experiences and products throughout our portfolio that will fuel future revenue growth,” as CEO Joe Ripp put it? What would Paddy think of American corporations skipping out on taxes by earning nearly half of their profits in tax-haven countries? What would he think of the unholy alliance between Internet giants like Google and Facebook and the U.S. national security apparatus? Chayefsky’s dazzling satire “Network,” with its unforgettable mad prophet of the airwaves, Howard Beale, blossomed from the writer’s curdled feelings about TV. What wouldn’t the network suits do for ratings, he would ask lunch companions like Mel Brooks and Bob Fosse at the Carnegie Deli. But now America runs on clicks. Chayefsky’s nightmare has been multiplied many times over, with the total media-ization and monetization of everything, the supremacy of ratings and market share, the commercialization of all editorial decisions. Now that they’re armed with big data and science, corporate bosses are able to figure out how
Maureen Dowd
many people are watching which minute of which segment. An analytics service called Chartbeat gives webmasters instantaneous access to those on the other side of the screen by providing real-time data on their mouse clicks, time spent reading or watching and even their location. In his fun upcoming book Mad as Hell: The Making of Network and the Fateful Vision of the Angriest Man in Movies, Dave Itzkoff, a culture reporter at The Times, offers a vivid portrait of the charming and depressed curmudgeon. Itzkoff has great anecdotes about Faye Dunaway’s prima donna paranoia about the most brilliant lovework sex scene in movie history. And he dishes up fun factoids, like how Howard Beale got his name from the mother-daughter duo, “Big Edie” and “Little Edie” Beale, and how Peter Finch flubbed and added an extra “as” to one of the most famous lines in movie history, which Chayefsky wrote this way: “I’m mad as hell and I’m not going to take it any more.” The Bronx-born writer, who died of cancer in 1981, was bedraggled and “built like an office safe,” as the director Joshua Logan put it. He did exhaustive research into networks in New York but then had to film the movie at a Toronto TV station once the American networks realized the piece was a Strangelovey dirge. Chayefsky said his 1976 masterpiece was “a rage against the dehumanization of people” addicted to “boredom-killing” devices – a dehumanization that has gone to warp speed as we have entered the cloud. He said it was about “how to protect ourselves” from “the illusion we sell as truth.” That illusion is ever more pervasive as people believe and spread wacky viral content like snow-covered Pyramids, a half-toilet in Sochi and a story about Samsung paying Apple a billion-dollar fine in nickels. Chayefsky warned against “comicalizing the news,” noting, “To make a gag out of the news is disreputable and extremely destructive.” But real news became so diminished that young people turned to Jon Stewart and Stephen Colbert to learn about what was going on in the world. Colbert told Itzkoff that “Network” is his favorite movie. Although Howard Beale is not an inspiration for his bombastic TV alter ego, Colbert said that the Beale character anticipated an attitude those types of broadcasters share, which is “I will tell you what to think.” Beale’s approach, the comic said, was more “quasi-benevolent,” as in “I’m going to remind you that you’re being anesthetized right now.” If Paddy, who used to say “truth is truth,” could see how far beyond “Network” we’ve gone, he would not only be mad as hell. He’d be scared as hell.