Publicist Moti Sharf, who is employed among other things as a consultant for the Treasury, claims that the mainstream news media are significantly aggravating the economic crisis by dint of negative reporting. "The media are fanning the flames of economic crisis," he told Yediot Aharonot. "Just as in time of war the media know how to take responsibility, so they need to do now." Sharf's comments echoed the words of economics Nobel Prize laureate Yisrael Aumann, who said: "When customers, and also fund managers, read the [alarmist] headlines, they think that if there are such headlines there must be a crisis, and they begin to sell. In this way a crisis is formed." I think that these accusations are unfounded, but they have a germ of truth that is worth examining. The parallel to war that Sharf draws has a certain validity. The need for "responsibility" in times of war is justified due to the special role of knowledge and morale in wartime. There is a difference between alarmist reporting about readiness for war and alarmist reporting about readiness for an earthquake. Announcing that the country is unprepared (militarily or psychologically) for war can make war more likely by emboldening attackers, but reporting that the country is unprepared for an earthquake doesn't hasten the earthquake. In theory, economic crisis can resemble war in that respect. When I teach macroeconomics, I illustrate the role of expectations by this exact device. Imagine, I say, that a reputable newspaper prints a banner headline: "Depression on the way!" Consumers who were about to buy cars, refrigerators or vacations suddenly take pause: Perhaps I will lose my job in the depression and I won't be able to make my payments, they think. So they cut back on purchases. Producers who were about to hire workers suddenly take pause: Evidently demand will drop and no more workers will be needed, they think. So they cut back on hiring, or even let workers go. In the end, the prediction of depression can be self-fulfilling. Is the current stock market crash a self-fulfilling prophecy, as Aumann and Sharf suggest? It could be. Low stock prices mean reduced consumer assets for purchases and signal market participants that lower profits are expected, meaning less business activity and less investment. This can lead to additional declines. It is too early to tell if the current crash is a panic, the mirror image of the bursting bubble of "irrational exuberance," or merely a well-deserved hangover following a years-long binge. But even if in hindsight we decide it was a panic, it is misplaced to blame the media. Any panic is due to the content of the news, not the way it is presented. Bear Stearns and Lehman Brothers didn't go under because of an artificial bank run of panicked deposit holders, as happened in the panic of 1907, which was ultimately stemmed by intervention. They went under because they made leveraged investments in bad assets. The fear that major financial institutions might be unable to make payments didn't spread among naive small depositors but rather among sophisticated financial-market participants. Sharf complained: "There is not a single newspaper which has said in responsible fashion, 'Don't withdraw your money' from investment funds." But is that itself really a responsible statement? First of all, it's not the job of the newspapers to tell people what to do with their money. Even in wartime we don't expect newspapers to say, "Defeat is impossible." Their job is to report news, perhaps without any potentially damaging alarmist bias. But let's limit ourselves to the content. Is it true that only irresponsible reporting would suggest that cash is king right now? If the amateurish, sensationalist journalists are irresponsible, who is responsible? Economist Nouriel Roubini, who predicted the exact trajectory of the current crisis years ago? Roubini's current most-likely scenario predicts further double-digit drops in stock prices. Greg Mankiw, author of the most popular economics textbook? Mankiw is remaining agnostic right now; his bearish hand penned a recent New York Times piece opining that economists can't say with confidence that there won't be another Great Depression. Even allowing, for the sake of argument, that media reporting is somewhat alarmist, it's hard to believe that people are relying on it for existential decisions like their financial futures. It is possible to bewail the generally low esteem in which the news media are held in Israel. A 2005 survey showed that only about half of Israelis have a reasonable amount of faith in the media. But the upside is that you can be pretty sure they won't believe the media when they shouldn't. I don't think it's the job of the news media to play cheerleader for the economy, and I don't find any evidence that they have been doing the opposite and encouraging doom and gloom beyond what the facts support. Certainly I don't think that the average citizen is fooled by slanted reporting into thinking that things are worse than they are. Keeping up with the rushing torrent of highly technical economic news and making sense of it for the layman is certainly a challenge for journalists, and the quality of the reporting has no doubt been uneven. But the news media are not to blame for making the economic crisis worse than it should be. firstname.lastname@example.org Asher Meir is research director at the Business Ethics Center of Jerusalem (www.besr.org), an independent institute in the Jerusalem Institute of Technology.