Media Pit 'Main Street' Against Wall Street
After the Federal Reserve engineered JPMorgan Chaseâs (NYSE:JPM) takeover of beleaguered investment bank Bear Stearns (NYSE:BSC), some media outlets portrayed the act as the government bailing out Wall Street while ignoring the problems on Main Street.
âWall Street investors couldnât applaud enough last week when the Federal Reserve rode in and rescued investment bank Bear Stearns from bankruptcy,â Scott Mayerowitz wrote for ABC News in a March 25 story headlined âBear Gets Billions, But What About You?â âBut now, Main Street wants to know what justifies a taxpayer-backed bailout of the investment bank, especially with no congressional oversight. And, skeptics wonder, why undertake such a plan when it doesn't help the mom-and-pop store struggling down the road or the thousands of Americans who might lose their homes?â
âMain Streetâ and Wall Street are competing entities, according to the media. Whatâs good for one might even be bad for the other. Itâs a theme that echoes throughout the Democratic presidential campaign. Sen. Barack Obama (D-Ill.) made the comparison five times in his March 27 speech on the economy in New York City.
The idea that the two âStreetsâ are dueling for attention â most recently, government attention â pervades media coverage.
On the heels of the Fedâs actions, CBS correspondent Maggie Rodriguez asked Treasury Secretary Henry Paulson why something couldnât be orchestrated for some homeowners â suggesting the government bailed out Bear Stearns.
âYesterday you mentioned the importance of things that can be done quickly to ease the housing crisis, but you didnât give a deadline,â Rodriguez said on the March 18 âThe Early Show.â âWouldnât it be worth it, given the gravity of the situation, to sit down with the agencies involved and have a cram session, like you did this weekend to bail out Bear Stearns? Isnât it just as important to bail out homeowners in trouble as it is to bail out an investment giant in trouble?â
Rodriguezâs question suggested individuals on Main Street were ignored by the government when the Fed stepped in to help a Wall Street firm.
Despite the mediaâs insistence that Wall Street and âMain Streetâ work in opposition to each other, those who understand economics disagree. John M. Berry, who served as the former national economic correspondent for Time magazine and later as the Washington bureau manager for Forbes, explained that the countryâs financial interest isnât divided.
âWhat isnât appropriate is continuing to play populist politics by pretending that the interests of Main Street and Wall Street arenât aligned when the stability of the financial system is at stake,â Berry wrote in a March 31 column for Bloomberg.
Thatâs exactly what the mainstream media have been doing for years.
One America, Two Streets?
The media donât see the two âStreetsâ as interdependent. One of the ways Wall Street/Main Street relationship is often characterized is that whatâs good for Wall Street hurts people on Main Street.
After a solid day for stocks on Wall Street, Oct. 31, 2007, âNBC Nightly Newsâ anchor Brian Williams treated the news as not being necessarily positive for âMain Street.â
âNow to Wall Street, which, as you know, doesnât always like what Main Street likes, and by the end of the trading day, it was up,â Williams said.
But what is Wall Street, anyway?
âThe truth is, so-called Wall Street is nothing less than Americaâs financial faith in the future economy â pensions, college funds, venture capital, business loans, mortgages and much more,â said Pete Sepp, vice president of the National Taxpayers Union.
But for journalists, Wall Street is a different world â one where very few people, supposedly, reside.
Even CNBC âMad Moneyâ anchor Jim Cramer, who made a fortune as a hedge-fund manager for Goldman Sachs, drew a dividing line in an interview with NBC âTodayâ co-anchor on August 10, 2007.
âOkay, letâs also understand that there are two worlds right now,â Cramer said. âI donât care about Wall Street pain. I worked on Wall Street. Everybodyâs pretty rich. They can, if theyâre unhappy, handle themselves. Itâs their own fault. Itâs more of the 14 million people who bought homes between 2005 and 2007. They are walking away from those homes in unprecedented numbers, other than the 1930s. The Federal Reserve can change that. The Federal Reserve's done nothing. The Federal Reserve doesn't seem to care right now.â
How can Wall Street investors possibly get fair treatment when one of their own speaks out so emphatically against them?
The media also play a role in advancing class warfare by employing the Wall Street/Main Street metaphor.
âI mean, the Wall Street bonuses are up an average 14 percent this year, but for the rest of us, for Main Street, pretty hard to come by,â CNBCâs Vera Gibbons said on NBCâs December 26 âToday.â
But, a healthy Wall Street benefits Americans who invest, as well as others who gain from added jobs and economic growth. Back in July 2007, when the Dow Jones Industrial Average (DJIA) was hovering above 13,000, everyone was benefiting, not just âWall Street tycoons.â
âBut while the rich are getting richer, you may be too,â CNBC âStreet Signsâ host Erin Burnett explain on NBCâs July 17, 2007, âToday.â âHereâs why â more than half of Americans are invested in the market, whether through a 401(k) plan or buying stocks or mutual funds and many of those investments are surging. The Dow Jones Industrial Average is up 12 percent so far this year and if your retirement plan invested in oil, that alone is up 21 percent. Itâs also worth noting that while politicians talk about âtwo Americas,â virtually all Americans are seeing wages rise and unemployment is at an historic low.â
And Main Street America sees tangible results from investment.
âWall Street provides the financing to allow people to take risk,â said Dr. Gary Wolfram, an economics professor at Hillsdale College and a BMI adviser. âIt allows for the financing for people to start a new business, to be innovative. I mean, if you didnât have Wall Street, you wouldnât have a computer sitting on your desk.â
In addition to innovation, investment grows the economy and creates jobs, he explained.
âWhat does Wall Street do?â Wolfram continued. âIt is actually the place that takes everybodyâs little amounts of money and combines it to get it out to people who are starting businesses, to people who have existing business, to people expanding businesses, creating innovation. A healthy Wall Street makes it so that you have food on your table. I mean if there were no Wall Street, you wouldnât have ConAgra. You probably wouldnât have half the products that you have today if you didnât have Wall Street.â
New Candidates, Same Old Rhetoric
What probably wonât come as much of a surprise to many is that politicians are picking up on these voices in media who have repeatedly played the class-envy card.
A usual knee-jerk reaction heard from voices in the media is a plea for some type of government action.
â[T]he Dow at 13,000 â Wall Streetâs up, but what about Main Street?â Chris Matthews asked on the April 29, 2007 âThe Chris Matthews Show.â âWill the Democrats do something about the skyrocketing gap between the super-rich and everyone else?â
With the economy now the issue du jour, both Democratic presidential candidates have tried to answer the question Matthews asked. Sens. Barack Obama (Ill.) and Hillary Clinton (N.Y.) have incorporated the âMain Street/Wall Streetâ phraseology into their campaign speeches.
In a speech at Wake Technical Community College in Raleigh, N.C. on March 27, Clinton portrayed tax cuts as âwrong-headed government policy,â since she said they sometimes benefit Wall Street at the expense of Main Street. Clinton used a comparison of Americans âovercomingâ these policies to the Wright Brothersâ inventing the airplane in North Carolina to illustrate her class warfare talking point.
â[T]he lesson of the Wright Brothers is that Americans can overcome any obstacle including wrong-headed government policies,â Clinton said. âLike, for example, tax breaks for oil companies already reaping record-setting profits, giveaways for drug companies who donât have to negotiate with Medicare for lower prices, incentives in our tax code for companies to ship jobs overseas, no-bid contracts for companies like Halliburton, tax cuts for billionaires, free rides for predatory lenders and a blind eye for firms on Wall Street at the expense of homeowners on Main Street.â
However, demonizing tax cuts for Wall Street firms doesnât equate to bettering the American people, as taxpayer advocate Pete Sepp explained.
âWall Street and Main Street are no longer on opposite sides of town, if they ever were in the first place,â said Sepp, Vice President for Communications for the National Taxpayers Union. âMutual funds, IRAs, 401(k)s, and other products from âWall Streetâ give more than 50 million American households a shot at the âAmerican Dreamâ â a number that is growing every day, thanks in part to the 2003 tax cuts on capital gains and dividends.â
Sepp also pointed out that itâs the United Statesâ high corporate taxes that discourage companies from keeping jobs here.
âPoliticians complain about âtax breaks for oil companiesâ when what they really want to do is deny a tax credit to oil that most other industries can take,â Sepp continued. âThey whine about tax code provisions that âmove jobs overseas,â saying nothing about the fact that America has the second-highest corporate tax rate in the industrialized world.â
Obama pitted the interests of Wall Street and Main Street against one another in a March 27 speech at Cooper Union in New York â spouting a populist line that anything that âfavorsâ Wall Street hurts people on Main Street. He even referred to these policies causing the Great Depression.
â[W]e let the special interests put their thumbs on the economic scales,â Obama said. âThe results have been a distorted market that creates bubbles instead of steady, sustainable growth â a market that favors Wall Street over Main Street, but ends up hurting both. Nor is this trend new. The concentrations of economic power and the failures of political system to protect the American economy and American consumers from its worst excesses have been a staple of our past, most famously in the 1920s when such excesses ultimately plunged the country into the Great Depression.â
The populist âMain Streetâ message can backfire, according to CNBCâs Larry Kudlow. Kudlow showed how candidates with an anti-business, anti-Wall Street message wind up losing in elections.
âAnti-business class warfare doesnât work in the United States. John Kerry tried this tack in 2004,â Kudlow wrote on the National Review Onlineâs âThe Cornerâ on February 19. âHe lost. Ditto for Al Gore in 2000. Ditto for Michael Dukakis in â88, Walter Mondale in â84, and Jimmy Carter in â80. It looks like Hill-Bama [Hillary Clinton and Barack Obama] is making the same mistake all over again in 2008.â
According to Kudlow, what is lost by the two candidates with the tone of their campaign is the importance of businesses to the American voter.
âThere are a lot of reasons why the anti-business message doesnât work,â Kudlow wrote. âOne important reason is that 138 million Americans work for these corporations. Their livelihoods depend on businesses. 138 million is a big number. Think of it.â