Monday, August 08, 2011

Our Biggest Problem

It’s a little mental exercise I was running through this weekend; “The world’s financial system is falling apart. We have to finally makes some serious reforms. What is the one thing you would do to fix it?”

Our banks are “too big to fail”. America won’t be able straighten out its financial mess until we tackle the housing-market problem. I’m not sure I’ve ever mentioned high-frequency trading but that needs to stop. Today. It is madness.

”In high-frequency trading, programs analyze market data to capture trading opportunities that may open up for only a fraction of a second to several hours.”

US Navy 090526-N-6367N-042 Rear Adm. John Christenson, commander, Carrier Strike Group Twelve, and Lawrence Leibowitz, Group Executive Vice President, New York Stock Exchange Euronext, ring the bell to open the New York Stock E

If you’re trading stocks for a split second -- literally buying and then selling a stock in under a second, much less an hour -- then you are engaged in market manipulation and/or gambling. You are not an “investor” in any sense of the word.

All of those are big problems. But how do you fix them? What do you do first? And the point of this exercise is to make you focus on the core problems. As was demonstrated again during the debt ceiling debate, we can’t seem to focus on more than one thing at a time. So, what’s the “one thing” that we fix?

For me, it’s the Fairness Doctrine. Whabuddlebuddlewhacuddle-say what? You heard me. The Fairness Doctrine. First, a little background on the subject.

”The Fairness Doctrine was a policy of the United States Federal Communications Commission (FCC), introduced in 1949, that required the holders of broadcast licenses to both present controversial issues of public importance and to do so in a manner that was, in the Commission's view, honest, equitable and balanced. The doctrine was abolished in 1987.”


Those that can keep their dates straight already have some insight into the problem. The Fairness Doctrine was dropped during the Reagan Administration. But there is an even more compelling lesson -- an example -- as to the dangers of unrestrained propaganda. Rush Limbaugh.

”In 1984, Limbaugh returned to radio as a talk show host at KFBK in Sacramento, California, where he replaced Morton Downey, Jr. The repeal of the Fairness Doctrine—which had required that stations provide free air time for responses to any controversial opinions that were broadcast—by the FCC in 1987 meant stations could broadcast editorial commentary without having to present opposing views. Daniel Henninger wrote, in a Wall Street Journal editorial, "Ronald Reagan tore down this wall (the Fairness Doctrine) in 1987 ... and Rush Limbaugh was the first man to proclaim himself liberated from the East Germany of liberal media domination.”

This argument is nothing new. What is new is the mounting evidence of the damage being done. Reality and facts now have to compete with fantasy and fiction as equals. What is now becoming more evident than ever is the power that radio and television hold over people in comparison to print media. I can write something profound and it will be forgotten within a week because you are only going to read it once. But with radio and television, the people that run these media can make you remember -- if not believe -- almost anything.

“Tastes great! Less Filling!” “You deserve a break today.” “Can you hear me now?” “Fair & Balanced” “Obama was born in Kenya.”

There really isn’t any difference in those ideas. My generation was made to memorize the Gettysburg Address. “Four score and seven years ago”...something...something...something. Nobody made us memorize “Born to Be Wild”. But 40+ years later (that hurt didn’t it?) most of us still know the words while we couldn’t recite the Gettysburg Address is our lives depended upon it. (You can judge the relative value of those two on your own.) Repetition with the occasional reinforcement and the message gets across. And it sticks with you.

Obama was born in Kenya. Global warming is fake science. Lower taxes leads to more jobs.

Don’t get me wrong. I don’t want to shut Rush up. I don’t even want to shut Glenn Beck up. I just want someone responsible to come in behind them and point out that these guys are entertainers and they’re slightly nuts. Speaking of nuts, do any of y’all remember J.B. Stoner? I thought about putting the video up (there is one) but it’s so offensive I can’t stand to do it.

J.B Stoner -- as big a racist as you can imagine -- would show up on the TV down here in Georgia when he’d run for office. And somebody with a bucket, broom and shovel would come right in behind him to clean up the mess. This station does not condone nor endorse this viewpoint but under the Fairness Doctrine, he has a right to be heard. Or something along those lines. J.B. Stoner had a God-given right to speak his mind in a public venue. We didn’t have to censor him. We just had to air a rational viewpoint next to his and everything took care of itself.

We don’t have to bring back the Fairness Doctrine as it was last used. (After all, some things have changed.) We just need to enact something like it. I bet you can guess who will fight it.

Like so many things in this vein, I was too chicken to jump into this fight on my own. It will never “sell” in this environment. (I’m watching the ticker as I’m typing this. The DJI just went below 11,000.) But as I was double checking to make sure Krugman was still the voice of sanity in America (he is), I checked to see what Martin Wolf had to say about our economy. Instead, I found this from him:

Seize the chance for media reform

”Intimidated children rounding on the playground bully – that is the spectacle in the UK since the News of the World phone-hacking scandal exploded. As one who has long believed that the influence of Rupert Murdoch on UK public life was quite intolerable, I am delighted to see this reversal of fortune. But rage is not enough. The UK must seize this chance to reconsider the structure and regulation of its media.”

If you’re interested in the subject, give Mr. Wolf’s article a read. Trust me, he’s more eloquent on the subject than I’ll ever be.

Don Brown
August 8, 2011

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