Monday is shaping up as a very exciting day in the markets, albeit probably not a very positive one. It depends upon how things shake out over the next few hours. Lehman Brothers is still trying to sell itself, and with word that Barclays Bank has walked away from the bidding, it appears as though Lehman might not have any suitors. A bankruptcy filing is possible. Meanwhile, The Wall Street Journal is reporting that Merrill Lynch has just reached a deal to sell itself to Bank of America, for approximately $29.00 per share. While that's a solid premium over Merrill's Friday closing price of $17.05 per share, it's still a far cry from the stock's 52-week high of over $78.00.
I find it interesting that on several occasions since the current economic crisis began bubbling up in the summer of 2007, many people have felt that the worst was behind us, and that we had hit bottom...only to see the crisis deepen. Why have we all had such a hard time seeing the real depth of the problems here? Did we blindly ignore all of the continued warning signs? Are we just too optimistic by nature?
Actually, I think that there's a completely different answer. The financial media. Specifically, their choice of a moniker to describe the economic issues we were facing:
The Credit Crunch.
Therein lies the problem. Sure "credit crunch" has a nice, alliterative ring to it. But, it's a less-than-threatening name for a crisis. "Credit crunch" sounds like something an upscale restaurant would use as a coating on pan-seared Atlantic salmon. Better still, it reminds me of that magical crunch topping they serve at Carvel. That crunchy, chocolaty stuff they use in their ice cream cakes to separate the vanilla and chocolate ice cream layers. The lifeblood of Cookie Puss and Fudgie the Whale.
Now, I like to think of myself as a relatively sophisticated market observer. Yet, even I got caught up in this ridiculous name. Whenever I'd hear anyone discussing the credit crunch, all I could think of was "Mmmmmm, credit crunch...." I instantly became hungry, and had a hard time taking the whole situation seriously.
That got me wondering, perhaps this was done intentionally. I remember reading back around 1983 that the Soviet propaganda machine claimed that Michael Jackson was actually a U.S. government agent, whose job was to entertain the American public, keeping their minds off the crumbling U.S. economy and our doomed political system. This was back when about one in four households in this country owned his "Thriller" album. And, that doesn't count those who chose to simply copy someone else's copy of the album. Of course, it's not that I know anyone who actually did such a thing. After all, that would be a violation of copyright law. I'm just saying that it's possible.
So, maybe this "Credit crunch" name was our government's idea, to get us to underestimate the severity of the current economic crisis, and to keep us from panicking. Perhaps in 20 years from now, I'll go into Carvel, order some crunch topping and say, "Hey, I remember when this stuff used to be really good, but now it's just weird. And didn't it used to be chocolate-colored?"
Whatever the case, here's a message for our friends in the financial press. Next time you see a crisis brewing, try to come up with a scarier name for it.
In the meantime, I'll have a large order of chicken fingers with credit crunch topping, please. Oh, and make sure to throw in plenty of that economic malaise dipping sauce.
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