Since one of the most tumultuous weeks in the 216-year history of Wall Street when the most serious financial crisis exploded, till October 3, President George W. Bush signed the biggest government intervention in the financial markets after the Great Depression, the new media (especially blogs) has gone through the deeper discussion and controversy on the economic crises and the government responses over the past weeks.

The discussions were mainly concentrated on the reason of the economic crisis and the influence of the $700 billion bailout plan. While most bloggers noted that the Federal Reserve Bank’s long-time policy of bailing out wealthy financiers, combined with its refusal to regulate their behavior, had been leading to the causes of the crisis, the bailout plan raised the biggest controversy in the blogsphere since the broken of Wall Street Crisis that brought the pressure to the vote on September 29 and led to the proposal’s defeat in Congress more or less. Some bloggers criticized the deal as an unwarranted intervention in the free market, as well as others supported it on their blogs. What’s interesting is that some blogs also posted links to lawmakers’ telephone and fax numbers and urged citizens to oppose the plan as well as posting their comments and opinions.

In this discussion, the blogs of some financial experts and officials became prominent and played the roles as “opinion leaders”. Former Republican House Speaker Newt Gingrich publicly assailed the administration’s proposal in his Web site. He said in one of his post that this bill was not the best proposal for solving the housing crisis and was not even a good proposal for solving the crisis that inevitably would lead to “crony capitalism and the appearance of — if not the actual existence of – corruption.” (By New Gingrich, Sept. 29, 2008, from his official Web site, newt.org) Rep. Darrell Issa, one of the most outspoken Republican critics of the proposal, also said more than 2,000 constituents had contacted him about the proposal through his Website.

Oppositely, Barry Ritholtz the writer behind the popular economics blog “The Big Picture” said in his blog that the government might be too quick to come to the rescue and it might not even benefit the economy. His blog also attracted a lot of visitors and he will publish his book “Bailout Nation” on the base of his blogposts.

The mainstream media including the New Yorker Times, the Wall Street Journal, CNN and so on has also been feeling the pressure from bloggers and seems to quote the arguments from the blogsphere more often than before. Mike Shedlock, an investment adviser at SitkaPacific Capital Management said that his site had received 1.7 million page hits this month, which was half a million more than normal. (By Stephen Power and Gary Fields, Sept. 30, 2008, the Wall Street Journals)

While new media has been changing the way of seeking information for the public, more and more people began to believe in the power of the crowd in helping them get their message across. Internet has replaced the “one-to-many” model of traditional mass communication with the possibility of a “many-to-many” web of communication. As more mainstream media is blogging toaday, a trend of convergence companied with competition between the new media and MSM is inevitable. From this Wall Street crisis, it’s also obvious that the new media not only plays a role to afford the information to the public, but also fosters public discussion, debate and engagement, and stirring people toward action at the same time.

–posted by Hao Zhou

Originally posted October 5, 2008 at PolicyByBlog

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