Why Did the Market Tank?

This week the stock market experienced the largest decline in equity prices in four years.

A Tuesday selloff dropped the Dow Jones Average 416 points, and a dismal week ended with the Dow losing 3.3 percent, the S&P 500 4.4 percent and the Nasdaq 5.9 percent. It even cost me money. AP

So, what really caused this hideous and dramatic market downturn?

US News’ senior writer James Pethokoukis thinks he knows.

The observant Mr Pethokoukis identifies the cause as none other than the Blogosphere’s own Matt Drudge, who on Tuesday February 27th, just about the time the stock market’s ship hit the rocks, posted the following headline:

01:28:35 Greenspan Warns of Likely Recession… *

linking to an AP article featuring the same, basically misleading, headline.

As Pethokoukis ruefully notes:

the Maestro was hardly so definitive as Drudge made him out to be. Here is what Greenspan said, according to AP:

“When you get this far away from a recession invariably forces build up for the next recession, and indeed we are beginning to see that sign. For example in the U.S., profit margins … have begun to stabilize, which is an early sign we are in the later stages of a cycle. While, yes, it is possible we can get a recession in the latter months of 2007, most forecasters are not making that judgment and indeed are projecting forward into 2008 … with some slowdown.”

Frankly, Greenspan’s remarks were hardly any more revealing than the opaque testimony he used to give to Congress.

Michael S. Malone, at ABC, read the Pethokoukis article, and agrees. He philosophizes about how we all read news these days, and how markedly the Internet is making the paleomedia obsolete, concluding on the subject of that rascal Drudge tanking the stock market for us:

That’s what Matt Drudge did, and now it seems he can move the entire world economy. When was the last time a New York Times headline did that?

All I can say is: Do us a favor, Matt, please say something positive next week.