November 26, 2008

Peter Schiff as Cassandra

A couple blogs I read have commented about the Youtube video (below) of financial commentator Peter Schiff's predictions from 2006 and 2007 about the current financial crisis. Crooks & Liars has given a very simplistic response: "Peter Schiff was right." Yeah, of course; so? Angry Bear thinks the real problem is that the various shows Schiff has appeared on (primarily Faux News, CNBC, and Bloomberg) deal in economic propaganda:

If we do not learn to understand "crap" reporting, if we do not learn to understand story telling for selfish purpose, if we do not learn to understand that propagandizing is not solely a political tool, but more importantly an economic tool, we will not solve our's and the worlds current economic condition.

That's true, but I'm not completely convinced that the problem is that the financial news shows and networks are really propagandizing. To me, propagandizing involves deceit, either through lying by omission, providing a loaded message or, as in the case of the Bush misadministration, just plain lying. I'm not sure that the financial news shows and networks are necessarily lying per se (even Faux News, although they do so blatantly on political news); instead, these people are "religious" fanatics. They have become true believers in the Gordon Gecko mantra "Greed is good." With the American economy jimmied through debt instruments (such as bonds), not even significant economic problems in the past (e.g., the Crash of 1987, the S&L crisis of the late 80s-early 90s, or the recessions of 1990-91 or 2001-02) have caused any doubt in their minds that the system is broken. Schiff, to me, is like the woman from Greek mythology, Cassandra.

Cassandra, the daughter of King Priam of Troy, was loved by Apollo, who gave her the gift of prophecy; however, because she would not return his love, he cursed her to correctly predict the future yet never be believed:

In more modern literature, Cassandra has often served as a model for tragedy and Romance, and has given rise to the archetypal character of someone whose prophetic insight is obscured by insanity, turning their revelations into riddles or disjointed statements that are not fully comprehended until after the fact. (Wikipedia)

Schiff correctly predicted the future several years ago, beginning to warn of the structural problems in the economy (that have not been addressed yet, despite all these billions of dollars being spent in bailouts), yet, at that time, Schiff's message was largely ignored if not publicly derided. (Has Laffer ever paid Schiff the one cent bet and written a letter of apology?) The paradigm, that "Greed is good" and the idea that the American economy can survive on debt and a service economy while hollowing out the manufacturing sector, needs to be broken. Now if that paradigm is "propaganda," then I'll agree with that too.

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