April 21, 2007

Greenspan’s Recant Last Week: Coverage Plays Up the R-Word, Even Though He Didn’t Say It

In late February and early March, Alan Greenspan’s musing and odds-making on whether the US economy would go into a recession later this year was all the rage in the Formerly Mainstream Media.

Here’s how Craig Torres of Bloomberg News started out his March 7 report carried in the Washington Post:

‘One-Third Probability’ in ’07, Former Fed Chief Says

Former Federal Reserve Chairman Alan Greenspan said yesterday that there is a “one-third probability” of a U.S. recession this year and that the current economic expansion won’t have the staying power of its decade-long predecessor.

“We are in the sixth year of a recovery; imbalances can emerge as a result,” Greenspan said in an interview at his District office. “The historically normal business cycle is much shorter” than a decade and is likely to be this time, he said.

Greenspan’s outlook contrasts with the prediction of his successor, Ben S. Bernanke, who told Congress last week that the economy might strengthen this year. Bernanke’s upbeat assessment helped steady stock markets on Feb. 28 after a plunge the day before that some traders attributed partly to Greenspan’s musing that a recession could not be ruled out.

What a difference about 40 days makes.

Early last week in Tokyo, Greenspan effectively recanted. As with the post earlier today about the state of Maryland abandoning its effort to mandate health benefits at Wal-Mart, one could argue that the rush of other events this week might have crowded Greenspan out.

But what coverage Greenspan’s remarks received, what he said was distorted. For example, CNN/Money’s headline writer couldn’t resist using the word “recession,” and the article’s writer (as did most) emphasized that same “R word” — even though in the body of the report, it’s obvious that the former Fed Chairman did not:

Greenspan plays down recession fear comments
Former Fed softened his stance on earlier comments about possible U.S. recession, saying that global growth is boosting demand for U.S. goods and services.
April 16 2007: 6:13 AM EDT

TOKYO (Reuters) — Former Federal Reserve Chairman Alan Greenspan was quoted as having played down his earlier concern about a possible U.S. recession, saying the world economy would provide a cushion, Bloomberg reported on Monday.

Greenspan was speaking via satellite link from Washington to a financial forum in Tokyo and his comments were quoted by a few of the participants, Bloomberg said.

Greenspan said growth in the rest of the world is creating demand for services from firms such as Microsoft (Charts), according to Vaseehar Hassan Abdul Razack, chairman of Kuala Lumpur-based RHB Islamic Bank, who attended the meeting and whose remarks were cited by Bloomberg.

Greenspan didn’t mention recession on Monday, according to Anne Okko, who works in funding administration at the Nordic Investment Bank, Bloomberg said.

Okko quoted Greenspan as saying the world economy is on a positive trend, Bloomberg said.

Mr. Greenspan wasn’t “playing down” recession fears; by not even mentioning the word, he was saying that the fears aren’t justified.

Old Media just can’t seem to stop rooting for economy to hit a rough patch, and won’t even let go of the possibility long enough to ensure that it accurately covers what a former Fed chairman says.

Cross-posted at NewsBusters.org.

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