Let’s Not Foment Panic and Confusion, Either

By October 2, 2008Economy, Taxation

Spotted a line in the AP story, “Furious lobbying for much-maligned bailout bill

The fierce lobbying came as the head of the Federal Deposit Insurance Corporation, urged people to remain calm.

“I think overall the banking system remains very sound so that’s why I think it’s so important for everybody to keep their head,” commission Chairman Sheila Bair said.

But the drumbeat of bad news rattled on. A government report said that orders to U.S. factories plunged by the largest amount in nearly two years as the credit strains smashed manufacturers with hurricane-like force.

The drumbeat of hurricane-force news, eh? How smashing. Unfortunately, in this news climate a tropical low can be turned into a Category 5 hurricane far too easily. And from the AP’s description, you’d think this government report was documenting the effects of the September financial storms.

Not so. The Census Bureau report is, “Highlights from the Preliminary Report on Manufacturers’ Shipments, Inventories, and Orders.” For August.

Can we agree that, preliminary signs notwithstanding, the real financial meltdown started with Treasury’s announcement on September 6th that it was taking over Fannie Mae and Freddie Mac? Bank of America’s acquisition of Merrill Lynch and Lehman Brothers’ bankruptcy followed a week later.

So the August drop in factory orders cannot be attributed to the current financial crisis, as one would think from reading the AP account. (And those who follow these reports fully anticipated today’s announcement, since there was a release of preliminary data last week.)

Now it’s just one line and just one story, and maybe we’re overreacting. But these are serious enough times that everyone covering events should prefer caution to hype, double-checking for accuracy along the way.  

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