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   Home Blog The Media's Top 10 Economic Myths of 2008 (No.5)

The Media's Top 10 Economic Myths of 2008 (No.5)

   Written by Julia A. Seymour & Paul Detrick | Saturday 27 December 2008

5. The economy has a fever and the only prescription is more bailouts.

   Media myth: From the economic stimulus early in 2008 to the call for a
   Big Three auto bailout in December the media couldn't find a bailout it
   disliked.

   Originally published by the Business & Media Institute

   Bear Stearns, AIG, Fannie Mae and Freddie Mac. 2008 was the year of the
   government bailout and the news media supported such interventions time
   and time again.

   One particularly vocal advocate for bailouts was CNBC's Jim Cramer who
   warned that without a financial bailout the U.S. could face a second
   Great Depression. He said the same thing months later about an auto
   industry rescue. Before AIG was given a loan package from the Federal
   Reserve, Cramer warned that the company absolutely "cannot fail."

   When public opinion was turned against the $700-billion bailout CNN
   correspondent Carol Costello admitted that the network's experts were
   confused. Costello said, "I talked to our own polling experts and they
   are perplexed by the numbers" which showed a majority against the
   bailout.

   The $25 billion housing bailout of Fannie Mae and Freddie Mac was also
   embraced by the media. "CBS Evening News" called the bill a "lifeline"
   for the government-sponsored enterprises, but correspondent Jim Axelrod
   didn't explain that the "unlimited capital from the government" would
   come from taxpayers.

   But Jerry Bowyer, the chief economist for the Benchmark Financial
   Network, criticized the Fannie/Freddie bailout: "It's bad in the short
   run, unless you are either a highly paid Fannie executive or currently
   a staffer for any Democratic member of a Congressional Banking
   Oversight Committee, in other words, a future highly paid Fannie
   execute [sic]," Bowyer wrote. "In the long run, this will be a huge
   transfer of wealth to a corrupt bureaucratic and inefficient
   bureaucracy from the rest of us tax payers."

   Bowyer and other free-market economists have criticized the many
   bailouts, but their perspective was rarely included in bailout stories.
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   Julia A. Seymour & Paul Detrick

Other posts by this author

     * The Media's Top 10 Economic Myths of 2008 (No.1)
     * The Media's Top 10 Economic Myths of 2008 (No.2)
     * The Media's Top 10 Economic Myths of 2008 (No.3)
     * The Media's Top 10 Economic Myths of 2008 (No.4)
     * The Media's Top 10 Economic Myths of 2008 (No.6)
     * The Media's Top 10 Economic Myths of 2008 (No.7)

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