Comments for NPR Flunks Causal Relations 101 on S&P Downgrade and the U.S. Stock Market at http://www.cepr.net , comment 1 to 6 out of 6 comments http://www.cepr.net Wed, 19 Jun 2013 03:58:16 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/blogs/beat-the-press/npr-flunks-causal-relations-101-on-sap-downgrade-and-the-us-stock-market#comment-17930 Anybody see that stupid piece by Andrew Hacker in the NYTs "Week in Review?" I usually like Hacker's NYRB pieces (and have used them in my econometrics class to teach how to use stats-based arguments), but this was just plain stupidity masking as NYTs hipster "cleverness." Hacker's retired from CUNY-QC, and, as a test of his article's hypothesis, I'd like him to solve for the embedded yield he needs on his savings to live for the next 30 years on say, oh, $100/K per year WITHOUT algebra. OK, so I digress. Maybe if the folks at NPR knew some basic bond math - and even a little calculus - they'd have made the more insightful point that bond price risks are a lot higher when yields are 3% vs. 13% (not that they'll be heading to 13% any time soon). I'm going to play that NPR clip to my class so they can learn - once again - not to believe everything on the radio. No wonder our students are so confused. - TVeblen Fri, 03 Aug 2012 16:58:57 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/npr-flunks-causal-relations-101-on-sap-downgrade-and-the-us-stock-market#comment-17924 Actually, the markets did pay attention to the significance of the S&P announcement. The market reaction is completely consistent. Markets assumed (quite accurately) that this announcement would lead to more austerity on the part of the government (to win back our stellar rating). Obviously that would lead to lower economic growth - consequence lower stock prices and higher bond prices. In this case, the markets did get it right. - Vara Fri, 03 Aug 2012 09:43:38 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/npr-flunks-causal-relations-101-on-sap-downgrade-and-the-us-stock-market#comment-17921 Seems like a case of they have to say something to get you to listen. NPR does not need to sell ads but they do need listeners. - Floccina Fri, 03 Aug 2012 09:01:09 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/npr-flunks-causal-relations-101-on-sap-downgrade-and-the-us-stock-market#comment-17915 I'll admit I haven't read the article but from the quote you posted it looks like they are saying the debt ceiling showdown caused the S&P downgrade AND the debt showdown caused the stock market's plunging. That's English 101... - Shawn Fri, 03 Aug 2012 03:08:32 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/npr-flunks-causal-relations-101-on-sap-downgrade-and-the-us-stock-market#comment-17913 I'd also add that the day of the S&P downgrade was the same day that the GDP report (with revisions) came out, showing that the economy grew at a stall speed in Q2. This was when the whole double-dip nonsense started to flare up. It would make sense that if there was a real fear of a double dip, then the stock market would plunge. - JSeydl Fri, 03 Aug 2012 02:13:45 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/npr-flunks-causal-relations-101-on-sap-downgrade-and-the-us-stock-market#comment-17912 Next on NPR, What's the difference between debt and equity? Here to tell us more on this complicated subject is David Wessel who just wrote a book on addition and subtraction, [i]Red Ink[/i]. - Last Mover Fri, 03 Aug 2012 01:07:22 +0100