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Paul Sakuma  /  AP file
Hype or hope? There is considerable data to suggest housing hasn't hit the bottom yet.
By John W. Schoen Senior producer
msnbc.com
updated 7/29/2008 11:54:22 AM ET 2008-07-29T15:54:22

Our story last week on the cloudy outlook for housing prices drew heavy reader response with a theme that has become a common thread lately. "If you guys just stop reporting bad news," the theory goes, "wouldn’t that help the economy and housing market get back on its feet?"

I believe that there has been enough hype about the housing crisis. I humbly request that you and your colleagues please stop fueling panic and chase a different story. ... Our economy is based on people spending money, and they are not going to do it if the media keeps hyping the economic downturn.
T.J. E. San Diego

Has the media ever thought about not just reporting about the doom and gloom of the average house market that does nothing but scares the average Joe and his wife from buying or selling? … If the media would report for just ONE WEEK how good and strong the market is bouncing back, I'll bet the market would see a jump in the right direction.
— Eric M., Address withheld

If you really want things to get better, shouldn't you quit writing stories that feed on the paranoia that is helping create this downward spiral? … You know sometimes all we have is a hope for a better tomorrow because our reality today is not so good. I hope you choose to foster hope, not fear, in the future.
— Joe M., Address withheld

There’s no question that the news these days has put American consumers in a gloomy mood.

Consumer confidence perked up a bit this month from 28-year lows after the government mailed out over $100 billion in rebate checks, but spending is expected to remain tight into next year.

Answer Desk readers aren’t the only ones who blame the media for putting consumers in a bad mood. In his recent remarks about America becoming a “nation of whiners,” former senator (and now former McCain economic adviser) Phil Gramm described the current economy as a “mental recession."

“'Misery sells newspapers,'” he told the Washington Times. "'Thank God the economy is not as bad as you read in the newspaper every day.'"

Based on our mail, msnbc.com readers seem content to make up their own minds based on what they read. There’s a fairly wide variety of opinion about the way the media, this site and this column cover the economy.

For every complaint about “too much bad news” we hear from another reader who wants to know why we’re not reporting the "obvious" financial Armageddon that is so clearly upon us.

According to these readers, those of us in the mainstream media are dodging the “real story” when we report that the official government data show the gross domestic product still advancing (though at a crawl), consumer inflation relatively tame by historical standards (though rising) and the reason why the economy is not “officially” in a recession .

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(By the way, could someone shoot us that list of of who just who is and isn't officially part of the MSM? We can't seem to find it.)

Those are the facts. You can check them out at for yourself at several government Web sites, including www.bls.gov. We’ll leave for another day the debate over whether the government is secretly massaging the numbers to make things look better than they really are.

In any case, whether media coverage of the economy is too rosy, too gloomy or just right is beside the point. If a family is having trouble paying the bills because food and energy prices are rising faster than their paycheck, they’re going to have trouble paying the bills no matter what they read on the Web or see on TV.

If you lose your jobs and can’t pay the mortgage, a story about how things are finally getting better isn’t going to change your financial situation. If we stopped reporting that banks are losing tens of billions of dollars, it wouldn’t make it any easier for you to get a loan. Consumers and businesses experience economic conditions first-hand, not through media coverage.

If the economy has hit a bad patch, trying to turn things around with stories about how great things are would only make matters worse. For one thing, if news sites announced that they had handing out rose-colored glasses to the staff, how would you be able to make rational decisions about spending and investing?

Worse, whether you believe the current economy is in recession or just crawling along slowly, the only way to get things back on track is to find solutions to the problems that are weighing on the housing market, the financial system and the broader economy. And the only way to find those solutions is with a clear-eyed, level-headed look at those problems.

Can the U.S. sell its (oil) stockpiles for half-price and cause the oil market to drop the price of oil?
— Troy M., Richmond, Ky.

Yes, it could. But the impact wouldn’t last very long — except for those buyers lucky enough to get in on the half-price sale.

Last week, Democrats in the House, lead by Speaker Nancy Pelosi, tried to pass a bill to force the White House to sell 70 million barrels of oil from the Strategic Petroleum Reserve or about 10 percent of the crude held in the national stockpile.

"The fastest way to help the consumer is to release the oil from the Strategic Petroleum Reserve," she said Thursday.

The White House, which had threatened to veto the measure, has been pushing Congress to open up more areas to oil drilling that are now off limits. Neither move would have any immediate impact on the price at the pump.

Drilling for more oil is a great idea, but even if oil companies got started drilling new fields today (and found oil there), it would be years before that oil came to market. And trying to flood the global oil market with oil from U.S. reserves tomorrow would only show up as a tiny blip on the market’s radar screen. A drawdown of 70 million barrels sounds like a lot of oil. But with global demand running at about 86 million barrels every day, that oil would be consumed in about 19 and a half hours.

Marking those barrels down to half-price might cut market prices for a few hours, but once it became clear the oil involved was a drop in the barrel, traders would bid prices back up again.

Moreover, giving a few lucky oil buyers a break wouldn’t guarantee that those savings would flow through to the pump. To do that, you’d have to limit how much the refiner could charge for gasoline made from that “cheap” oil, how much the wholesaler could charge the retailer, and how much the retailer could charge at the pump. And since those limits would apply only  to a tiny fraction of the gasoline as it moves through the pipeline, the impact on the gasoline market would be limited to the few lucky souls who pulled up to just in time to see that SPR special gas flow through the pump.

While Congress is debating “solutions” to higher pump prices, the market is enforcing its own solutions. High prices have forced consumers to cut back, which has taken some of the demand pressure off tight supplies. That has helped bring prices back down fairly significantly .

Prices at the pump have fallen to just over $4 a gallon on average and could be headed lower if drivers keep figuring out how to go further on less gas. With less demand for gas, there’s also less demand for oil, and crude prices have backed off as well. Last week, oil prices sank to $123 a barrel, the lowest point in weeks and 16 percent from the recent peak above $147 a barrel.

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