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By Jason Stipp | 07-14-2011 05:05 PM

Five PR Problems

Morningstar markets editor Jeremy Glaser on spin control issues at News Corp, Netflix, and the Federal Reserve, among others.

Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to the Friday Five.

A lot of recent decisions and issues in the market have created a host of PR problems for companies and government agencies alike. Here with me to offer the rundown is Morningstar markets editor Jeremy Glaser.

Jeremy, thanks for joining me.

Jeremy Glaser: You're welcome, Jason.

Stipp: So, what do you have for the Friday Five this week?

Glaser: Well, this week we're going to take a look at the debt-ceiling talks, at News Corp, at J.P. Morgan, Netflix, and finally, are we ready for QE3.

Stipp: Well, we'll find out.

For the first one, though, Jeremy, we can't escape the headlines on the debt-ceiling talks. It seems like they are making progress and then it's stalled. They are making progress, and then it's stalled. It's created quite a problem as far as communicating what's going on in Washington. What is the issue there? Have you untangled any of it?

Glaser: The United States does have a pretty big PR problem on their hands right now. This week Moody's came out with a warning that they would downgrade United States debt from its from AAA, gold-plated status if the debt ceiling wasn't raised. This didn't come as a huge surprise. S&P gave a similar warning in April, but it really underscores just how important these negotiations are.

We saw a couple of glimmers of hope this week that the debt ceiling will, in fact, be raised no matter what. Mitch McConnell, who is the Republican Minority leader in the Senate, really came up with a solution that would allow the president to raise the debt ceiling without actually voting out some of the underlying spending issues that they are trying to negotiate right now.

But there is still lot of heated discussions, and it's not a 100% clear that the Democrats will go along with McConnell's plan and that we really will be able to raise this ceiling before the United States gets into big trouble.

Right now the Treasury is still saying that early August is when they need to have the debt ceiling raised by before they run into the really big problems, but the credit markets could freak out at any point between now and that actual default day. So, it's something that we're obviously watching very closely. The United States, again, has to spin pretty well to convince creditors across the globe that they are going to make good on these debts. And I think that so far they do believe that, but who knows when that PR spin is going to run out?

Stipp: I am not a fortune teller, but I would predict that you are going to be talking about this in the weeks to come, Jeremy.

Glaser: I think it's a good bet.

Stipp: In corporate news, a scandal at a News Corp property actually was followed then by a real operational issue that they reported this week. What's the story there and why did it become a PR problem?

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