The Long View 2003-05-12: A Flowering of Frauds

I hadn't thought about Jayson Blair in a long time, which is probably for the best. Like Stephen Glass and Sabrina Rubin Erdely, the temptation to tell a story we think people want to hear is sometimes just a little too tempting.

John also commented on the stock market, that he felt that the US economy in 2003 wasn't big enough in reality to support a Dow Jones Industrial Average over 10,000. The Dow closed at 8,726.73 on May 12th, 2003. John correctly noted that any likely big jump in the stock market would probably be bubble-driven behavior, which had just happened with the dot-com boom and bust. This is exactly what happened with the housing bubble.

On October 16th, 2015, the Dow closed at 17,215.97, almost double what it was when John wrote. It doesn't seem like the US economy is twice as large now, but it might just be true that the output of the economy is disproportionately likely to accrue to those on the top.

A Flowering of Frauds
New York TimesTimesSunday
The New Republic
hereThe New RepublicWashington PostPostTimes
In any case, Glass is back in the news because he has just published a novel about a young journalist who makes things up. Thanks in part to the renewed interest in journalism fraud that has been generated by the Blair story, he has been repeatedly interviewed on television. A movie is in the works. You will find no links to those things here.
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Weekly Standard
May I point out that the last time the DOW was over 10,000 we were out of our collective mind? Pretty much everybody realizes that the dot-com boom was a morbid delusion. Doubtless the indices will again rise to their millennial levels, but we should hope for this only when the real economy has grown large enough to support numbers like that. The idea that you can fix the economy by deliberately blowing a securities bubble is not just crooked, it's anti-capitalist. Capitalism is a system under which prices are information. Arbitrary government manipulation of stock values is like trying to bring an aircraft out of a dive by altering the readings on the altimeter.
Credit Bubble Bulletin
This is the kind of thinking that could destroy the euro. The European economy is becoming like those illustrations of General Relativity as a taut rubber sheet in which depressions represent gravitational force. There are places in that sheet, such as Germany, that are becoming so depressed that the material threatens to rupture, creating a singularity. That is what runaway deflation would mean. Like a singularity, there would be no way out.
Copyright © 2003 by John J. Reilly

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