That Standard & Poor’s downgraded the U.S. from AAA to AA+ is a big story no doubt. But The Wall Street Journal on Monday went overboard, devoting almost all of the first seven pages of the paper and a good chunk of the Money & Investing section to the downgrade, which happened three days earlier.
Bannered across six columns atop A1: “Markets Brace for Downgrade’s Toll.”
On A3, the paper swipes at Obama’s “Political Perils”, despite the fact that the deficits were mostly created by Republicans. The caption on a photo of a downcast-looking president:
Republicans are blaming the S&P downgrade on President Obama, shown returning to the White House from Camp David on Sunday.
At the bottom of A3 we get a whole story about how the S&P downgrade was rumored on Friday and the rumor turned out to be true.
Turn the page and it’s a giant (and well done) story, “Obama and S&P Vie for Credibility.”
On A6, “Firms Look to Raise Cash as Volatility Rises” is pegged to the S&P downgrade despite the fact that the Journal reports it’s not expected to raise corporate borrowing costs, at least in the near term.
Below that, we get a speculation piece telling us “Collateral Damage Could Include Higher Mortgage Rates.”
Mortgage markets in the U.S., which remain on government life support, could be rattled by the downgrade of the U.S. credit rating, potentially raising borrowing costs for consumers.
Or they could potentially go down, and you guessed it: That’s what they did.
On page seven the big story is “China Takes Aim at U.S. ‘Debt Addiction.’”
You’d think the world was ending or something. Instead, investors disregarded S&P’s downgrade and poured into U.S. Treasury bonds on Monday, sending yields down to near record lows. Stocks took a pounding, but it’s hard to blame much of that on the downgrade when bond investors sent U.S. yields down (particularly when Europe and our biggest banks are teetering and the economy is tipping toward recession). It wasn’t exactly a shock that that happened, either.
But blame it on the downgrade the Journal did, doubling down yesterday with another six-column headline atop page one:
Downgrade Ignites a Global Selloff
Here’s the lede:
The downgrade of the U.S.’s credit rating sparked a global selloff on Monday, pushing the Dow Jones Industrial Average to its sharpest one-day decline since the financial crisis in 2008.
You have to wonder what sparked the 512-point decline on Thursday. Anticipation of a downgrade that would make it cheaper for the United States to borrow?
Investors have learned not to give undue attention to credit raters like S&P after seeing them utterly discredited in the housing crash. Why hasn’t the WSJ?
I don't think the WSJ had anything to do with the market mahem. I think that it's the result of the explosion of option plays being mimicked by the mom and pops who have been watching the option play show on television. The market is simply taking all that money off the table. The market never leaves any money on the table, you know.
#1 Posted by Chris Broe, CJR on Wed 10 Aug 2011 at 03:41 PM
Hi Ryan, I am reading the print Wall Street Journal every day, so your summary and objection add no value for me.
The American Journalism Review's "The Bloomberg Juggernaut," by Jodi Enda, was a good read this morning. So was "What S&P Debt Ratings Mean for the U.S. (and Its Citizen Shareholders)," By Sarah Gilbert, Published August 10, 2011 GetRichSlowly.org.
#2 Posted by Clayton Burns, CJR on Wed 10 Aug 2011 at 05:16 PM
Hyping the downgrade distracts from the real causes of the market decline, which began at the exact instant the debt deal passed. The debt crisis debacle made three things crystal clear to the market: (1) there are those in government (Tea Party types) who would not hesitate to let America default on it's obligations in order to make an ideological point, (2) the direction of government intervention is contractionary and will reduce economic activity, and (3) there is zero to no chance that congress will take any action to stimulate economic activity, or provide supportive intervention if the economy significantly deteriorates. It's no mystery why the market is falling - the economy is weakening, and there is no political will in Washington to do anything about it.
#3 Posted by Rick Sullivan, CJR on Thu 11 Aug 2011 at 07:32 AM
I would like to correct a false impression of Rick's, i.e. that Congress can do anything, without making matters worse. For a long time, there has been a foolish consensus that Congresspersons are smarter because they are more powerful than the rest of us, but, just as when the snow melts, the hidden truths come to the surface. They don't know what will improve things, they only THINK they know. If Rick knows what to do that won't make things worse, he should tell us. I would if I could.
#4 Posted by Sydney Carton, CJR on Thu 11 Aug 2011 at 10:32 AM
I would like to correct a false impression of Rick's, i.e. that Congress can do anything, without making matters worse. For a long time, there has been a foolish consensus that Congresspersons are smarter because they are more powerful than the rest of us, but, just as when the snow melts, the hidden truths come to the surface, they don't know what will improve things, they only THINK they know. If Rick knows what to do that won't make things worse, he should tell us. I would if I could.
#5 Posted by Sydney Carton, CJR on Thu 11 Aug 2011 at 10:35 AM
You guys are kidding, right?
The downgrade came because we didn't cut entitlement spending, and you wonder why the market is "hyping" it in the face of $15 TRILLION in debt and another year of the more than $1 TRILLION in deficits? Oh, and not to mention the more than 9 percent unemployment and the two million jobs lost during the "Obama Recovery", the crushing personal debts Americans have racked up to pay the bills during the "Recovery", the huge trade deficits, the worldwide economic contagion, and the couple of new wars Obama has started (in addition to expanding the old ones).
All hype!... Nothing to see here, people!... Move on!....
The Obama administration and its MSM lapdogs spent six months promising us that a downgrade wasn't possible, and now that it's happened, the commie/liberals are carrying Obama's water once again - trying to convince the electorate that the downgrade doesn't mean anything...
The Gravy Train has derailed, fellas..
You might as well leave the platform and look for alternative transportation.
Obama has failed you. How many new wars does he need to start before you guys question his sainthood? How long does Guantanamo need to stay open? How many secret czars and clandestine meetings? How may military tribunals instead of civil trials? How much more does he need to expand wiretapping and rendition programs? How many more times does he need to extend the "Bush" tax cuts?
What has the incompetent boob accomplished? Obamacare - a monstrosity of a government boondoggle that does nothing but convert T-bills to government waste, with the remaining bit going to Big Pharma profits. What else?
For two years, Obama had a supermajority in the Senate and a majority in the House - and what the frick did he accomplish? - Not a damned thing.
We haven't had a budget since the man took office! We've become a laughing stock to the world, as our President genuflects and apologizes his way around the globe. The dollar has become anethma. Crime is up. Productivity is down. The standard of living has declined. The net worth of the nation has declined in all of the financial markets. Gas prices are double what they were in 2009. Etc... Etc... Etc..
WHEN will you commie/liberal/progressive "professional journalists" give up the ghost?
#6 Posted by padikiller, CJR on Thu 11 Aug 2011 at 10:47 AM
...Maybe the reason the WSJ had such extensive coverage of the downgrade is that the Journal is BUSINESS PAPER and as such the downgrade was more relevant for its readers than it would be for, say, the Times.
#7 Posted by BJH, CJR on Thu 11 Aug 2011 at 01:07 PM
interesting take. The journal does seem to have developed a point of view over the past couple of years. I don't know enough to figure if it's editorial or just the journalists that have remained since News Corp aquired the paper. I do thinks its lost much of its heft since then.
Why does there have to be some ranting, factually challenged troll on every comments section? Would someone please develop a filter program so I don't have to page through the crazy ranters and read posts from people who have some social skills?
Keep up the good work.
#8 Posted by jh, CJR on Thu 11 Aug 2011 at 04:36 PM
The "troll" thing is par for the commie/liberal course...
But the "factually challenged" thing is unfair.
The truth hurts sometimes. Don't blame the messenger.
#9 Posted by padikiller, CJR on Thu 11 Aug 2011 at 07:11 PM