This is my first visit to your blog and I have already started liking it, you are doing a superb blog work, I am totally impressed! Bookmarked you now, will sure be back again.

I remember hearing the phrase "too big to fail" for the first time while listening to NPR. The owners of the big monopoly styled businesses are really upset about losing money. So they say "pay up or we'll take our money away and shut down the economy." Of course, the corollary is "borrow money from us and nobody gets hurt."

Thanks for the great blog, Dean!

I started off really impressed by the Planet Money podcast, but after the first few weeks of coverage, it quickly degenerated. Now, the framing narration around interviews contains almost as many bizarre assertions hidden in the verbiage as the Libertarians that they continue to promote as maverick truthtellers do.

How easy it is to blame the homeowners who have seen decreasing wages, stolen pensions, obscene health insurance prices and scams and who turned to home equity because there is absolutely no union or political recourse to alter the decline in wages. Well, we now reap what was sown.

NPR, wake up, you are behind the curve.

While I agree with you, Dean, that the immediate cause is the deviation from the norm in housing prices, and, of course, the concommitant denial of the deviation. Peggy, though, seems to have put her finger on the larger issue, that we (well, not I, but a large portion of the nation), bought into the Republican agenda. Galbraith identified this in "The Culture of Contentment". I recommend that your audience read this now somewhat old book (buy it used! support your local bookstore! save a tree!).

After being shaken in his libertarian faith when he started this, produced the show "A Giant Pool" of money for this American Life, Adam Davidson is drifting back. The last economist they quote of course neglects to mention that median incomes stagnated the last 9 years, that almost all the economic growth went to the top 1%, and that all this debt was intensively marketed by the banks and other financial institutions.

Thanks for the great blog, Mr. Baker. I also enjoyed your bloggingheadsTV debate with Megan McArdle. Following up on that and your calling out the housing bubble, how exactly should the housing bubble had been pricked? Should the Fed have just raised interest rates, or is was there some other way? What should responsible economic leaders have done? Thanks and keep up the fight!

I have been thinking about the too big to fail argument that persists. So once things get a little more normal, how about we bring out the anti trust regulators and break up some of these financial behemoths?

Another great post, keep up the good work Dean.

As an economic novice, I appreciate Planet Money's podcasts and layman's explanations, even though I'm not always into the format, humor or viewpoint.

My question (and I think this relates to Planet Money's success) is this: Is there any alternative out there? Another economics show that explains the latest economic developments to the layman?

"Is there any alternative out there?"

Good luck finding anything on commercial or even "public" media which is contrary to the interests of big business and big finance. I don't know about the finances of NPR specifically, but the commercial sponsorship of public TV is becoming ever more obvious - the length of the once mini-commercials seems to increase monthly.

The commercial media are after all financed "publicly", and without actual government support or strict regulations on "donors" NPR and PBS will tend to look the same.

I didn't get the sense that the reporters were inserting their personal view when they interviewed the guy with the chart about personal debt. They seemed to say that the consensus is that the taxpayers were on the hook for a couple trillion dollars in bailouts/loss absorption through nationalization and stimulus to substitute for private consumption and investment lost due to the collapsing bubble. Since the shareholders have less equity than the losses from the collapsing bubble that leaves taxpayers. I get that reporting doesn't make the point that everybody missed the housing bubble until it was too late anymore, but does every story about the bail out/recapitalization/immanent nationalization need to have that context or can we assume at some point that consumers realize that there was a massive housing bubble.

I would agree that if they have someone blaming personal debt on they should state whether or not this 'expert' realized that there was a housing bubble.

I think you are being way too harsh on Planet Money. This is one of the few news outlets that even addresses these issues, much less gets them out to the average person.

Also, I think there has to be personal responsibility. Of course the housing bubble was the main catalyst and still is the major problem behind the financial crisis, but that isn't the whole story. This doesn't address the thousands of Americans who grabbed up mortgages they couldn't afford, racking up credit card debt to buy iPods and giant televisions, and in general showed poor financial responsibility. The media and the government are not the final word on your personal financial decisions. It is the individual's job to do the research. I remember covers of magazines, people on CNBC, and even on NPR talking about the housing bubble far before the crisis happened. People saw what they wanted to see.

Perhaps it is finally time for someone to tell us about the systemic problem Americans have on every level. We buy too much on credit and save too little. That's just the way it is.

"This is one of the few news outlets that even addresses these issues, much less gets them out to the average person."

See? This is my point. How is Planet Money a good show aside from the fact that they have no competition? I really want to understand what is happening in the economic world in real time, so I guess this is all I have?

June 3, 2005 on NPR
Yale Professor Predicts Housing 'Bubble' Will Burst
"Shiller calls the housing market a "bubble" -- meaning prices are out of touch with economic reality"

Can't always agree with the reporting on NPR or their guests but they do cover various opinions on all the topics they cover.

While I appreciate your point of view, I think you give the media too much credit in being able to influence society. Most of the people that took mortgages they could not afford had some idea it was more house than they could pay off. They knew the debt load would be unsustainable. I doubt it was all the media's influence. The influence of the bankers played a much larger role.

Additionally, NPR's Planet Money has done a great job of providing economist interviews from many different points of view. They do a fabulous job of explaining market conditions and jargon for the lay person.

We have a huge economic challenge. Are you going to go around bashing people over the head, or help us figure out a solution?

Your argument mostly refutes your own point. It's wrong to say that we borrowed excessively, then you say that the borrowing was excessive. If you make a mistake don't blame it on NPR or the Prospect. The only point of your piece is to blast NPR. Sure, they make mistakes, but you obviously didn't bother to listen long enough to find one. Write about something you know, if you do know anything.

"See? This is my point. How is Planet Money a good show aside from the fact that they have no competition? I really want to understand what is happening in the economic world in real time, so I guess this is all I have?"

So your reaction to the lack of good economic news is to bash one of the few outlets of economic news? This seems like a circular and defeatist argument.

so let me get this right, this mess we are in is again the media's fault? WOW!

I personally love Planet Money they do an excellent job reporting. I don't think they are trying to convince people that its OK to hand over their money to save the banks.

The problem was, and is, in fact "us." We are opportunists. We do not consult with economists before we make our borrowing decisions. We see something going well for others and jump on the bandwagon.

Why do you think the economy cycles? Why do you think we keep having recessions that are atributable to this cause or that effect? It's because "we", the American or British or German or Indonesian or whatever, consumers chase the money.

Don't try to lay all this on NPR or the experts they either do or do not feature on their programs. PlanetMoney didn't even debut until after this whole thing started. The actual problem is pundits like yourself that like to tell people it's not their fault.

It is the fault of the world consumers. Plain and simple. The companies provide what the people buy. Basic Econ 101 stuff.

Are you blaming the media generally, and calling NPR in particular because of Planet Money? That's a problem because Planet Money did not exist during the bubble.

Can you explain NPR was especially responsible for this? Or even how they were responsible at all? I mean, was their coverage of housing pricing typical of the media, less critical or more critical? Were they a leader in ignoring the bubble?

(Of course, I am asking about NPR itself, not PRI or local public radio programming.)

I feel compelled to put in a good word for NPR here. Fresh Air has provided almost eerily predictive and substantive coverage of the economic situation numerous times via different expert guests for almost 2 years prior to the crash, most notably from repeat guest Elizabeth Warren, the Harvard economist who Obama brought in to investigate what the heck happened with the TARP bailout money.

As for Planet Money, my complaint about them is that they are a negativity echo chamber. To the extent that they don't provide balanced reporting, it is because they never present an optimistic view of any aspect of this crisis from anyone - but perhaps that's simply the reality.

As for their reporting in general, though, I think they have done a very conscientious job of presenting all sides, and providing a widely distributed forum for people like Simon Johnson. Perhaps instead of complaining about them, you should approach them for some air time. You might be surprised.

The problem is that landowners collect land rents.

Yes..Dean, I like my economics reporting to include:

"we spoke with Mindy Miles, of Topeka, Kansas, last June, regarding her adjustable rate mortgage, which is set to re-set about the same time her daughter, Ginger, leaves for Camp Soccer this summer, to find out what is wrong with ARM-type lending." (Sound of wind chimes and dog barking in the background) "We are in Mindy's backyard, where Mindy's garden is beginning to sprout, corn, okra, and yellow squash. You re-financed in October 2007, Mindy, to your adjustable rate......"

NPR is offering audio-buffet to older, incapacitated, DONORS, not news to listeners.

If you are going to go after NPR, you will get hostile reactions, because you are attacking the content of therapy, not that of reporting.

Not to worry. They are being creatively destroyed by good reporting on the internet.

Correction: From "Stanley," not Anon.

Yes..Dean, I like my economics reporting to include:

"we spoke with Mindy Miles, of Topeka, Kansas, last June, regarding her adjustable rate mortgage, which is set to re-set about the same time her daughter, Ginger, leaves for Camp Soccer this summer, to find out what is wrong with ARM-type lending." (Sound of wind chimes and dog barking in the background) "We are in Mindy's backyard, where Mindy's garden is beginning to sprout, corn, okra, and yellow squash. You re-financed in October 2007, Mindy, to your adjustable rate......"

NPR is offering audio-buffet to older, incapacitated, DONORS, not news to listeners.

If you are going to go after NPR, you will get hostile reactions, because you are attacking the content of therapy, not that of reporting.

Not to worry. NPR is being creatively destroyed by good reporting on the internet.

I remember my local newspaper interviewing "financial consultants" who advocated "managing your assets" by taking money out of houses that had increased in value (I live in bubble territory) to put into other "investments." These "investments" could include the stock market, kid's education, granite countertops etc. No one who would suggest that this was hooey and that there was no way a two-bedroom, one-bath house in Sacramento was really worth $300K was ever interviewed. Not once.

The real estate reporter later took a job with the real estate industry.

I am old enough to remember when it was the common wisdom that one should purchase a house whose mortgage was a bit of a stretch on the assumption that one's income, along with one's family size, would grow with time.

Things changed, and the home value, not the income, rose. It became the common wisdom that one must generate income and financial security through home ownership.

I would like to see some statistics showing what people did with withdrawn equity. I bet tv's and ipods would be far behind home maintenance, college tuitions, health care, job loss, etc.

Folks,

to say that we borrowed too much without mentioning the housing bubble is like calling New Orleans a mess in September of 2005 and not mentioning Katrina.

The housing bubble was not small -- it was the biggest thing in the economy by a factor of about 500. It's great that they devoted a segment to Robert Shiller. They should have devoted 1000 to Shiller and others who were talking about the bubble.

Competent economic analysts saw the bubble. Incompetent ones denied it. NPR relied almost exclusively on the latter, and it still does.

Peggy, you make an excellent point. I was not at all suggesting that there aren't responsible and financially viable reasons to take equity and invest it in legitimate interests, especially those in regards to education and family.

I am however pointing out that a consumer culture has sprung up in this country, tempting people into making unwise financial decisions.

As for the media, there is no doubt that there is as much as corruption and incompetence within it as any other large institution, but you still must handle your own personal finances.

Instead of attacking NPR for suggesting that the consumers bear part of the blame, why don't you attack those who did knowingly and greedily rape our financial system for benefit. Attack Fannie Mae/Freddie Mac, legislators and regulators, and criminal hedge fund managers.

Sorry, I just now noticed Stanley's post.

Now you are attacking NPR listeners personally. I do not listen to NPR to listen to "audio-buffet" and I am not older (24, here!), incapacitated, or a donor. Anyone who has listened to NPR lately has been bludgeoned with terrifying economic tidings so calling it "therapy" is grossly unfair.

Legitimate criticism of a news network based on their reporting or sources is worthy of discussion, small minded attacks on those who listen is not.

We are all struggling here...please review this argument:

"Personal responsibility"...Well, do you defend cigarette-pack prices under $5 dollars, in states like Georgia?

I didn't see many teenagers getting addicted to $20 cigars, or $45 bottles of rum while I was in Georgia?

Are you suggesting, by your logic, that teenagers should be held responsible for getting addicted to cigarettes in the State of Georgia, where a pack can be bought for $3.50,..and they are targeted by advertisers?

More to the point, are you suggesting, again by your logic, that the consumer is responsible that banks incentivize their employees based on "sales,.." or do you not know what the word "sales" means?

"Sales" means that I get to spend the money that was yours, while you die.

I know. It is a challenge for me, too, to understand and to seek, my own interest and my defense.

Deans point, to me, is that we need to come to our own rescue, in the case of NPR and the housing bubble, because the reporters-reporting-the-crisis fallout-reporting is as dangerous as blaming teenagers for their own smoking addictions and believing that they only need one more lecture from us on "personal responsibility" to come out of their crisis.

If you don't get Dean's point then, simply, you are a "Conservative," that is, your mental conditioning denies from you your own self-representation and defense (and may explain why you may hate lawyers).

Now, where am I wrong?

Dr. Baker wrote: Folks,

to say that we borrowed too much without mentioning the housing bubble is like calling New Orleans a mess in September of 2005 and not mentioning Katrina.

The housing bubble was not small -- it was the biggest thing in the economy by a factor of about 500.

But yet, how many of them explain why the "housing" bubble happened in the first place? Land is fixed in supply. When demand increases, prices increase. When prices increase, landowners grow rich, and speculators enter the market. "Housing" experiences a tremendous run-up in price until the point is reached where the market cannot sustain the debt. Then the bubble pops, releasing destruction on the entire economy.

That's how we got here. Until we realize this and adjust our tax policy accordingly, we will be doomed to repeat this cycle over and over.

Prey tell, what tax policy are you suggesting?

Stanley, you are wrong in a lot of ways.

First, no one in the history of the world has every called me a conservative. I am a raging liberal. That being said, conservatives have a right to their opinions and that doesn't make them mentally defective. Your response just shows your own conditioning.

Second, you clearly haven't read my argument. I have no idea why you feel the need to bring up cigarettes, but I think I understand the point you are making. I blame very much the banks and financial advisers that pushed false housing prices and sub-prime mortgages on consumers. At best, they were irresponsible. At worst, criminally incompetent. I'm just saying that IN ADDITION to the many systemic problems that make it easy for consumers to fall into this trap, there is ALSO personal responsibility. We need both.

As to the rest of your post, I'm sorry but I have no idea what you are talking about or what point you are making. I reread the thread several times and I just don't know to what you are referring.

Stanley,

Removing taxation from production and placing the burden on land rents (ie, taxing land values).

I just listened to a podcast of Warren Olney's "To the Point" from PRI discussing bank nationalization. His guests included a WP reporter with the unlikely name of Binyamin Applebaum, Naked Capitalism's Yves Smith, Prof. Thomas Ferguson of U Mass, who writes for The Nation, and Gerald O'Driscoll of the Cato Institute (spelling of names approximate). All had valuable ideas to contribute, even if, in the case of the WP reporter, it was just the current state of conventional wisdom. Good public radio is out there, but you have to look for it and it is not to be found on NPR. Freeing the airwaves from domination by the usual suspects would go a long way towards muting the voices of bad financial advisors.

Yes, we do need both.

The part of my discussion that doesn't read well is my partial explanation of the phenomena documented in Thomas Frank's book, "What is the Matter with Kansas."

Yes, it is vague and my treatment does reflect my own experience and conditioning.

I love the Bloomberg podcasts.
Especially "Bloomberg News" and "On the Economy" with Tom Keene.

http://www.bloomberg.com/tvradio/podcast/

After listening to Bloomberg for awhile, and learning a lot, I began to see just how disappointing NPR is on its coverage of the economy.

OK, so NPR is selling the lie that taxpayers are to blame. So...to whom are they selling it? According to Vivian Schiller, the new president and chief executive of NPR, "we have over 25 million people tuning in every week..." (Source: http://www.marketwatch.com/news/story/god-save-national-public-radio/story.aspx?guid=%7B0987CC0F-3523-489F-A66E-B835F1D6CA07%7D) Unless that is a different 25 million each week, the most liberal estimate would make it one-in-four (Source: http://quickfacts.census.gov/qfd/states/00000.html) households receiving their poisonous brand of mendacious bile. This assumes that only one person per household listens to NPR (unlike my own home where both my wife and I listen to NPR).

The real question is who are these influential people NPR is successfully targeting. Have they captured the enviable "town crier" demographic? Perhaps their demonic radio waves are embedding a "reality" which we are completely unaware of...until it's too late!

Should the media, especially public media, try to get at the truth, and/or take an adversarial attitude towards authority, or should they do "balanced" coverage and take the he-said-she-said approach? I am not an expert on public media, but my impression is that usually they try to do the latter, and often are biased toward big business. They have some programs which take an anti-establishment approach, such as Bill Moyers, but then there are (were) others, such as Louis Rukeyser which essentially give the Wall Street point of view.

As for commercial media, most are strongly biased toward big business - they either are big business or they get most of their advertising revenue from big business.

Has Bloomberg explained why their bond ratings were so ridiculously bad? One can learn things from such programs, but these things do not include the things the finance industry does not want you to know. If Planet Money has explained the matter of the bond ratings it would be a point in their favor. There is not much point in their trying to compete directly with Bloomberg. Generally the public media are supposed to give you the things which commercial media do not.

Please correct your post to spell "sheer" correctly. You would be more credible if you would spell properly. If you really meant "shear frivolity," though, please explain the phrase. Also, your credentials say you're a "frequent guest" on NPR. On which topics have you spoken on NPR?

Elena said, “I personally love Planet Money they do an excellent job reporting. I don't think they are trying to convince people that it’s OK to hand over their money to save the banks.”

Actually, they are doing exactly this when ever they say “but things would have been far worse if we had not acted?” and things like “they are too big to be allowed to fail.”

Actually, I have been hearing language like this since the 90s. The banks probably knew the housing market was going to implode, and were counting on argument like these to scare congress and the public into bailing them out. This is the quintessential black mail.

Hey everyone: The reason NPR's reporting deserves scorn is because the issues with the economy WERE NOT CREATED BY YOU AND I. They were created solely by the very people receiving trillions of our tax dollars for free. Why should the rich be taxed back at the Eisenhower levels of 70%? Because THEY are the ones to blame for this crisis.

Planet Money is a crock because they do not discuss the big-picture issues such as corporate debt-to-GDP percentages, AIG's sketchy relationship with Chinese pensions, CDS contracts outstanding, and so forth.

If it makes any of you feel better to believe your $15,000 in annual taxes actually matters, go right ahead and keep listening to NPR. However, if you want to understand why the entire worldwide financial system is best viewed as a Ponzi scheme that has collapsed.. you'll have to look elsewhere.

I heard part of that broadcast and was aghast. (My first thought was, I hope Dean is on this.) There was something you didn't mention: their conclusion that the banks need to hoard, not lend, money, and that the push for banks to lend is "exactly wrong". The argument here was that the "average borrower" is in no shape to take on debt. So, I guess, a business looking to expand and add payroll is the same as an underwater homeowner. I couldn't even understand the motivation for this argument.

maybe we should pay reporters more so we can get good people to be journalists?