Recession

Here are the key numbers (in red) in Uncle Sam's November Personal Income and Outlays report (the July :

Common sense says that the chart's results after adjusting for inflation are more important (identified as "Chained [2000] dollars") than those in current dollars. Consmers' disposable income went up 1.0% in real (after-inflation) terms in November after a 0.7% increase in October.

It took a month for real consumer spending ("Personal consumption expenditures") to catch up to the increased disposable income, but it did so in a big way in November. The 0.6% real increase is the highest in over three years. Both improvements are objectively good news, and are largely due to sharply declining gas prices.

This is pretty fundamental Econ 101 stuff, isn't it? As you can see from the headlines and the treatment of the real spending increase that follow, the business press mostly flunked, and badly:

The roundtable on Monday night's Special Report with Brit Hume on FNC was not kind to the New York Times's hit piece on Sunday's front page that blamed President Bush and only Bush for the mortgage meltdown, ignoring the Democrats in Congress who protected the irresponsible push for more "affordable housing" by Fannie Mae and Freddie Mac (as Times Watch noted yesterday).

Nina Easton, Washington bureau chief of Fortune magazine, pronounced herself "flabbergasted when I read this story, flabbergasted....You cannot write a story about affordable housing policies and blame it on George Bush instead of the Democrats. I mean, it’s just, it’s outrageous."

From the Monday night Special Report with Brit Hume:

 This is a timely op-ed from Dan Gainor of BMI.

Christmastime is the time of giving. So we can thank Bernie Madoff for giving Americans some special gifts this holiday season.

Yes, I said thank him. OK, maybe not a lot. But the one-time financial wizard's downfall is a morality tale that provides so many lessons it's almost impossible to know where to start.

If you've been living under a rock, the former chairman of the Nasdaq has been charged with securities fraud. Not just ordinary securities fraud, either. Reportedly, Madoff's sons turned in their father, and who could blame them. He had allegedly confessed to them "that his investment business was a giant Ponzi scheme' that cost clients $50 billion, a lawyer for the brothers" told Bloomberg.

UPDATE AT END OF POST: White House issues statement concerning "Irresponsible Reporting by New York Times."

It's official: the housing and financial crisis gripping the nation is President George W. Bush's fault.

So said the New York Times Sunday in a 4900-word, front page hit piece entitled "The Reckoning - Bush's Philosophy Stoked Mortgage Bonfire."

And what was this heinous, catastrophic philosophy that caused all our nation's problems? "Americans do best when they own their own home."

Oh the humanity.

Sadly, much as the Times and its liberal colleagues conveniently forgot and/or ignored all American history prior to March 2003 in order to blame the nation's problems on Bush and the invasion of Iraq, the authors of this disgrace omitted and/or skirted over virtually all the relevant pieces of legislation and issues that led to our current financial crisis  -- as well as articles on the subject published by their very paper!!! -- instead focusing readers' attention on the following (emphasis added throughout, photo courtesy NYT):

On CBS’s Sunday Morning, correspondent Chip Reid compared Obama’s economic plan to that of Franklin Roosevelt and the New Deal: "During the Great Depression, Franklin Delano Roosevelt started the Works Progress Administration, the WPA. It would put 8.5 million to work...Now a new American president-elect is vowing to put the country back to work. This Sunday Morning, we'll take a look back at the WPA. And the lessons it may hold for him and for the nation." Reid later played a clip of Obama addressing the economic crisis and then observed: "In 1933, another new president faced a collapsing economy and rallied the nation with similar words...75 years ago, Franklin Delano Roosevelt began the New Deal."

In a segment that was a glowing tribute to FDR and the New Deal, Reid described Obama’s economic plan as a triumphant return of big government: "And now, President- elect Obama is talking about his own jobs program, that could cost half a trillion dollars. Economic analyst Jeff Madrick believes Mr. Obama is also sending a very clear message." Madrick observed: "Well, I think the government is back and we're all the better for it. In fact, the government's been away at least since Ronald Reagan." Reid touted Madrick’s latest book: "Madrick recently published 'The Case for Big Government.' He says today, as in the Depression, only government action can stop an economic dive to an unknown bottom." Reid did wonder: "So who's going to pay for big government?" Madrick replied: "I think down the road higher taxes, even on the middle class -- and I know this is anathema right now -- will be necessary to pay for the social programs we need."

Full disclosure, you can take the day off.

CBS's "The Early Show" included a statement in its Dec. 18 report on the Big 3 bailout from "auto industry analyst," Dan McGinn. Letting the massive car companies fail "would be like 10 Katrinas hitting America at the same time," McGinn asserted. "The American public understands that."

What the report didn't say is that McGinn is also an adviser to General Motors. Furthermore, TMG Strategies the public relations firm McGinn heads, lists GM as a client. McGinn has been making the case for an auto bailout in many news stories and issuing some compelling statements on behalf of his client.

On MSNBC's "Hardball with Chris Matthews," McGinn was labeled as an "auto industry consultant," Dec. 4. There was no mention of his link to GM.

No, it's a not a story from the Onion. It's AFP reporting on the actions of Associated Press photographers and journalists:

US news agency staff stage 'byline strike'

Journalists and photographers at the US news agency the Associated Press (AP) are withholding their bylines to protest management's stance in contract talks, their union said.

"Staffers recognize the tough times, but they also understand that quality journalism at AP means attracting and retaining the best employees," Tony Winton, president of the News Media Guild, said in a statement on Tuesday.

The Guild said AP reporters and photographers were withholding bylines and personal equipment "in protest over the news agency's proposals that would threaten job security, dramatically raise medical costs, and freeze wages." 

Yeah, that'll show em.

Orphan. The very word conjures images of dirty and destitute children living on the streets Oliver Twist-style, or in the abusive hands of Miss Hannigan in "Annie."

It certainly doesn't bring to mind a cute, clean toddler whose mother stays at home with her while her father works.

Yet that is exactly what CNN "Newsroom" meant on Dec. 15 as "Recession ‘Orphans'" was plastered to the screen.

Last week the Business & Media Institute released its annual Top 10 list of the worst economic myths the media spread in 2008. The list was broad, ranging from “killer tomatoes,” to the collapse of Fannie Mae and Freddie Mac, to the death of capitalism.

But it was myth number 2 “Welcome to 1929: Great Depression II” that touched a nerve with Cliff Mason, senior writer for Mad Money, because of its criticism of CNBC’s Jim Cramer. By the way, Mason is also Cramer’s nephew according to the disclosure at the end of his bio. 

On Dec. 12, Mason wrote:

Superhero economist and top-notch investor John Maynard Keynes famously told one of his critics, "When the facts change, I change my mind. What do you do, sir?"

On Mad Money we happen to share that same philosophy. And unfortunately, it's still something of a radical position.

On Thursday, the Business and Media Institute released its list of "The Media's Top 10 Worst Economic Myths of 2008." Jim is mentioned in three of them, but it's myth number 2, "the news media drew hundreds of parallels to the Depression, despite economic data that is not even close," that reminded me of that Keynes quotation.

The first two paragraphs of a recent Salon Magazine piece by Michael Lind on Obama's plans for America's future are striking for the utter lack of any relationship whatsoever between them. The lack of cognitive dissonance between them is amazing but easily proves that liberals don't have the first idea what an economy is.

This Salon piece is proof once again of the stark difference between reality and the liberal mindset of slavish reliance on the concept of a Keynesian style of big government. If we could spend our way out of economic hard times, as Lind praises Obama for advocating, then why are we now having such hard times? The government already spends far, far more than it takes in, yet here we are talking about recession, even depression. If all we had to do was initiate wild spending projects to solve our problems, then we simply would not be in hard times. Yet, here is Salon and Lind praising Obama for announcing absurd, pork laden spending projects as if that will solve everything. It didn't work for the U.S.S.R. and it won't work for us (and, no, it didn't work for us in the past either. Look at FDR's utter failure to fix the Great Depression. We only came out of that when WWII came along).

Take a look at the aforementioned graphs:

President-elect Barack Obama named Carol Browner the "czar" of climate and energy policy for the White House, but CNBC's Joe Kernen was wary of her appointment.

"You can see that even in Europe, some of the climate concerns, given this, this once in a lifetime recession, John - to put someone that, an advocate of such strong measures," Kernen said on "Squawk Box" Dec. 11. "Really I've seen her called Brownies or Brownistas. Um. That's a little scary with what's happening right now."

Earlier Kernen was discussing cabinet appoints with CNBC Washington correspondent John Harwood and pointed to new regulations Browner could institute:

On Friday, Newsweek.com's Conventional Wisdom gave an approving up-arrow to Congress for brow-beating Detroit auto executives. The magazine lauded the Democratic Congress for having "rediscovered what oversight means."

But what a difference four days make. The December 9 Conventional Wisdom lambasts the notion of a federal auto industry "czar":

Car Czar The only thing less comforting than the management of Detroit's Big Three is the thought of having Congress in the driver's seat.

If print is becoming journalism's dying backwater, Paul Krugman isn't showing it.

In a Dec. 6 interview in Stockholm, Sweden, the Nobel Prize-winning New York Times columnist told the ironically named Adam Smith, editor-in-chief of Nobelprize.org, that he found himself more effective in his role at the Times lately He said he was more influential in shaping policy as a journalist than he would be in a high-ranking position on the Obama economic team.

"I like to think I'm a good analyst," Krugman said. "But, I don't think I'm a good bureaucrat of any kind. I might think differently if I wasn't at the Times, but as it is I have a mouthpiece, people are listening. I probably can have as much influence, as say on the shape of this upcoming economic stimulus package from where I am as I could if I were, you know, the third-ranking member of the Obama economics team - something like that, so I think it's probably as good of position as any."

The failure of American media to properly vet the political beliefs of Barack Obama during the just concluded presidential campaign was on full display Sunday when the president-elect made clear just how much of a socialist he really is, and did so with nary a challenge from "Meet the Press" moderator Tom Brokaw.

Makes you wonder what the results might have been on November 4 if the press had done its job in exposing Obama's radical economic beliefs rather than attacking Joe the Plumber for suggesting he had them, and how much differently his appearance on "Meet the Press" would have gone Sunday if the moderator wasn't completely on board with these left-leaning philosophies.

Such is important when considering Obama's comments previously reported by NewsBusters here and here as well as a truly telling statement by the president-elect that working for your own financial benefit is "not good for anybody" (video available here):

In today's coverage of Uncle Sam's Employment Situation Report, the Associated Press's Jeannine Aversa showed no real curiosity as to why November's seasonally adjusted job loss was so much higher than September's or October's. There's a reason for that. 

I have noted for quite a while (previous NB-posted examples are here, here, and here) that the business press, led by AP, has repeatedly and erroneously reported seasonally adjusted job gain or loss figures from the government as if they reflect what actually occurred on the ground. 

That has usually given reporters like Aversa and other free rein to pretend that real jobs were "slashed" and "vanished" -- even in months where there have been actual but less-than-satisfactory job gains.

Seasonally adjusting the numbers smooths them out, and is a perfectly defensible statistical technique. But anyone who understands what is going on would have to know that since today's seasonally adjusted 533,000-job loss for November was much worse than October's loss of 320,000, something very ugly must have occurred during the most recent month.

You will see that this is indeed the case. But first, let's to go to portions of Aversa's 12:41 p.m. take (saved here for when AP's dynamic link changes) on today's employment report:

When Federal Reserve Chairman Ben Bernanke speaks, Wall Street listens - and investors should beware. The Dow Jones Industrial Average (DJIA) has lost over 2,500 points on days he has spoken, including three of the worst point losses ever.

Today's drop in the Dow of 215 points is the 14th time out of the last 20 times the Dow has lost ground on a Bernanke has spoken over the past six months. Bernanke gave a speech at the Federal Reserve System Conference on Housing and Mortgage Markets in Washington today, where he continued to hammer the message the economy is in bad shape.

"The U.S. financial system has been in turmoil during the past 16 months," Bernanke said. "Credit conditions have tightened and asset values have declined, contributing substantially, in turn, to the weakening of economic activity."

"Talk about too big to fail," said managing editor of Time Richard Stengel on MSNBC's "Morning Joe" Dec. 4, who was on the program promoting the latest cover story for the magazine entitled, "The Case for Saving Detroit." Stengel:

"I find the fact that so many Americans are unsympathetic to Detroit to be kind of amazing," Stengel said:

We make the case that in fact the, you know, the Big Three have adapted in a lot of ways ... They haven't managed things well, they have too much capacity, but I mean, talk about being too big to fail in a way, right?

The fact is Americans don't understand what collateralized debt obligations are, yet they sort of said, ‘Okay, let's bailout all of these banks and AIG' and yet people feel like, ‘Hmm what about the big car manufacturers?

Do as I say, not as I do.

That appears to be Jim Cramer's philosophy. The CNBC "Mad Monday" host told NBC "Today" show viewers Dec. 2 that comparisons between the current economy and the Great Depression were inappropriate.

 "[T]hat's got to be taken off the table," Cramer told "Today" host Meredith Vieira. "There have been enough things done by this government to absolutely preclude that. I, myself, do not want to use that term ever again on the ‘Today' show even to compare it. Things are very different. We do need help from Europe; we need help from China. But take the Great Depression talk off the table. That is scare tactics."

 "I'm reluctant to start talking like that," Cramer said of describing the current recession as "the longest since World War II," as Vieira did. "I've adopted a ‘just the facts, ma'am,' approach, kind of a little bit more of a ‘Dragnet' approach, so to speak. Because when we give those characterizations what happens is we can affect things."

He was right. Comparisons to the Great Depression are way off the mark - Cramer makes them enough, he ought to know.

On Sunday’s Chris Matthews Show, host Matthews led the panel in a discussion over whether conservatives would choose to cooperate with the Obama administration in making "historic changes" to repair the economy, rather than stand in opposition to his programs. The premise of the discussion seemed to be that times are too serious for conservatives to dare dissent from Obama’s plans. At one point, David Ignatius of the Washington Post suggested that "thoughtful" Republicans will work with Obama as he referred to John McCain’s concession speech. Ignatius: "I thought that John McCain set the tone for thoughtful Republicans in his concession speech election night, where he reached out to Obama. He was remarkably generous. One of the best speeches he's ever made, in my book."

As he teased the show, Matthews seemed to wonder if Republicans would try to stand in the way of Obama accomplishing "great things," or if they would see the light and cooperate. Matthews: "Will the mountain of crises our country faces make Barack Obama do great things? And with all the crises, will even Republicans see historic steps are required?"

New York Times economics reporter Peter Goodman certainly can't be accused of dry writing. Goodman constantly draws attention to his economics stories (often well-positioned by editors) with sharp criticism of capitalism, and he reached a new level of leftist abstraction in his Sunday Week in Review piece on the early-morning shopping stampede at a Long Island Wal-Mart that resulted in the trampling death of an employee, "A Shopping Guernica Captures the Moment."

From the high-brow yet histrionic headline (here's some background on the German bombing of the Spanish city of Guernica) to the inflated prose, it's good, chewy bias in Goodman's favored Marxist professor mode (as prominently displayed in his December 2007 story headlined "The Free Market: A False Idol After All?").

Goodman is eager to paint the Wal-Mart rampagers as some species of victim -- if not of capitalism directly, then the marketing that is selling capitalism to the people in this time of crisis.

From the Great Depression, we remember the bread lines. From the oil shocks of the 1970s, we recall lines of cars snaking from gas stations. And from our current moment, we may come to remember scenes like the one at a Long Island Wal-Mart in the dawn after Thanksgiving, when 2,000 frantic shoppers trampled to death an employee who stood between them and the bargains within.

If you had any questions about how differently the economy will be covered with Barack Obama in the White House they were answered by George Stephanopoulos on Sunday when he credited the president-elect with causing the recent stock market rally as well as better than expected sales the day after Thanksgiving.

I kid you not.

During the panel discussion of the most recent installment of "This Week," Stephanopoulos said (video available here, relevant section at 11:05):

At this time of year, columns like Derrick Z. Jackson's of today condemning the materialism of the Christmas shopping season are as traditional as Budweiser's Clydesdale-drawn sleigh commercial.  And part of me is sympathetic with Jackson's call for people to spurn the malls and curtail their gift-giving budgets.  

But this of all years, did the Boston Globe columnist consider the disastrous consequences for the economy and the lives of millions of Americans if people were actually to heed his advice?  Apparently not. Jackson's radical suggestion [emphasis added]:

I have a suggestion for these holidays. The average American, according to the government, consumes six times more energy than the world average. Take whatever you spent on gifts last year, slash 5/6ths of it, and see what you can do with the rest - unless of course you make a charitable donation. You're broke anyway, right, so what's the harm?

Neil Cavuto and Ben Stein had quite an argument about bailouts on FNC's "Cavuto on Business" Saturday morning that nicely covered the issues people on both sides of this contentious debate will likely be discussing around dinner tables this Thanksgiving, though hopefully with less screaming:

Though given a perfect opportunity to do so, Tom Brokaw on Sunday chose not to discuss the similarities between Franklin D. Roosevelt's refusal to work with President Herbert Hoover on solving the Depression before he was inaugurated in March 1933 and president-elect Barack Obama doing the same thing today with George W. Bush.

For those not familiar with the historical reference, the financial crisis at the time of the 1932 elections was so bad that banks were failing on almost a daily basis. As a result, Hoover felt the country couldn't wait until March when inaugurations used to take place to hear what Roosevelt's plan was to solve these problems, and wanted FDR and his economic team to come to the White House in order to work some things out together.

Sadly, Roosevelt refused, and although he claimed it was so that his hands wouldn't be tied once he officially became president, some historians feel FDR's delay was designed to allow the crisis to deepen so that it would become easier for him to get his policy proposals passed.

On Sunday's "Meet the Press," the fact that President Bush wants to work with Obama and his team concerning the financial crisis surfaced in discussion with former Reagan treasury secretary James Baker and former Clinton commerce secretary Bill Daley. Unfortunately, Brokaw chose not to address this seemingly-important historical comparison and precedent (video embedded below the fold, relevant section begins at 6:15, file photo):

Remember the years of media flak President George W. Bush received for his alleged use for political gain of first the terrorist attacks of September 11, 2001 and then the related Afghanistan and Iraq Wars?

Will the press be as vociferous now? Incoming Obama Administration Chief of Staff Rahm Emanuel, speaking on Wednesday on and to the Wall Street Journal Digital Network, stated outright his desire to make political hay with the ongoing travails of the U.S. and global economy:

"You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things you think you could not do before."

Wonder why President-elect Obama resigned from the Senate so early (while Vice President-elect Joe Biden remains an active member) and is hanging back, not wading into the debate over bailouts etc, and naming candidates for nearly every Cabinet post save Treasury (the man or woman who will have $350 billion to dispense when he/she walks through the door)?

Pulitzer-Prize winning author and professor of history at Stanford University David M. Kennedy told Bloomberg radio Nov. 18 that the current financial crisis bears no comparison to the Great Depression.

"Well, we're not yet in anything remotely resembling the crisis, the scale of crisis of the Great Depression." When Franklin Roosevelt took office in 1933, 13 million Americans were unemployed. "That was 25 percent of the work force," Kennedy told Bloomberg host Tom Keene.

The professor laid out exactly what has changed since the troubled 1930s:

Barney Frank favors bailing out the Detroit automakers over letting them go into bankruptcy.  Chief among his concerns is that bankruptcy might "bust" the unions. You know, those organizations whose contract demands have put Detroit on the brink of extinction.

The Massachusetts Dem, chairman of the House Financial Services Committee, was interviewed by Maggie Rodriguez on today's Early Show. He appeared alongside Sen. Richard Shelby (R-Al.), ranking Republican on the Senate Banking Committee, who favors letting the automakers reorganize under Chapter 11.

Repent, all ye owners of Suburbans, thou drivers of Explorers.  Mend thy ways, ye Escalade-loving louts!  Take heed of the warning the prophet Mika has vouchsafed unto you: greedy thou art; verily, destroyers of the environment be thee!

Oy.  Mika Brzezinski was on quite a roll this morning.  On the one hand, free-marketers would find much to agree with in Mika's arguments.  As noted here yesterday, whereas Joe Scarborough has been vigorously advocating a federal rescue of Detroit, Brzezinski favors bankruptcy over bailout. But Mika couldn't help muddling her message, delivering a jeremiad against Detroit for producing larger vehicles and Americans for buying them, actually condemning the latter as "greedy."

View video here.

In today's "You've Got to be Kidding Me" moment, the San Francisco Chronicle advocated that folks who owe more on their mortgages than their homes are worth should stop making payments so they can qualify for a government bailout.

I'm not kidding.

Disgustingly titled "Are You an Idiot to Keep Paying Your Mortgage," the article actually instructed readers upside-down in their real estate the ins and outs of how they can transfer responsibility for their own investment mistakes to others (emphasis added throughout, picture courtesy The Economist):