To those who follow the news fairly closely and look at underlying reports, CNN's email alerts are sometimes entertaining. Much less frequently are the accurate and informative.
Even though they tend not to realize it, those who don't follow the news closely and attempt to stay informed by relying on CNN's alerts are regularly deceived by the network that used to call itself "the most trusted name in news."
An example of such deception arrived in my e-mail box yesterday:
At several points in 2010 (just one example: at NewsBusters; at BizzyBlog; graphic), I pointed out that despite the federal government's continued insistence that its budget deficit for fiscal 2010 was on track to come in lower than fiscal 2009, the deficit based on real spending would be, and turned out to be, higher in fiscal 2010. That's important to know, as clever year-crossing accounting entries can't change the fact that Uncle Sam's financial situation continues to worsen at an accelerating rate. Don't expect the establishment press to acknowledge this; the illusion of improvement is important to getting their propped-up president another four years.
Similarly, it may be futile to expect that establishment media outlets, especially the Associated Press, will ever report that 2010 was the worst yearby far in new home construction since World War II. That this is indeed the case was shown last month (at NewsBusters; at BizzyBlog). This post will use December 2010 data, most of which is now in, to add an exclamation point.
Yesterday, the AP's Winston Smith-like headline writers tried to pass off 2010 as bad, but not as bad as 2009. As is the case with the government's annual budget deficit, the AP's persistent prevarication in the face of drop-dead obvious facts is an attempt to make readers, listeners and viewers believe that as bad as things are, they're at least improving (with implication, of course, that our poor, put-upon president is making progress cleaning up what was supposedly George Bush's mess). Things are not getting better, and Martin Crutsinger's narrative in the related article stops just short of saying so.
The folks in the establishment press are looking for any sign of upward movement in the housing market, especially in new home construction, that they can portray positively as the beginning of a general recovery.
That desperate search explains the content of the following e-mail alert from CNN which arrived in my inbox this morning:
In its reports about the U.S. homebuilding industry and new home sales, the Associated Press has gotten lazy and/or deliberately deceptive. In doing so, it is giving readers, listeners and viewers at its subscribing outlets a completely incorrect impression that the industry and market are getting off the mat after recently being in their worst shape, in their words, "in 47 years." After identifying offending examples, I will demonstrate that industry activity and sales during 2010 have been almost undoubtedly at their lowest levels since World War II.
The following items, all from Thursday, demonstrate AP's concerted attempt to limit the damage to "47 years" ago.
2010 will be by far the worst ever in the 48 years records of new home sales have been kept, and there is little if any reason to believe things will get better soon. The news on existing home sales has hardly been better, given the price reductions sellers have had to make to move their homes. Graphics will follow shortly indicating just how bad the market for new and existing homes has been this year.
These on-the-ground realities explains why one's jaw has to almost hit the ground when reading the headline and first few paragraphs of Julie Schmit's December 23 front-pager in USA Today's Money section:
Optimism for home sales adds up Demand for existing houses continues to rise
Leave it to the Associated Press, with the assistance of the "magic" of seasonal adjustments, to make the November housing market appear as if it was a bit better than the two months that preceded it. It wasn't.
Thursday, the wire service grabbed the single crumb that was available, namely the Census Bureau's report earlier that day that annualized, seasonally adjusted housing starts had increased by about 4% and turned it into a decidedly positive headline: "Home construction up after 2 months of declines."
AP Economics Writer Jeannine Aversa watered down the headline in her very first sentence, describing the "up" part of the headline as a "nudge."
That's nowhere near enough. The available evidence indicates that November may have been the worst month the homebuilding industry has had in 4-5 decades of related recordkeeping.
There are many annoying aspects of the sea change in media coverage of the economy since Barack Obama became president. At or near the top of the list is how the business press has downplayed the unprecedented housing industry disaster, while lowering the bar that will supposedly represent a real recovery to ridiculous levels.
According the the Census Bureau (12-page PDF), 23,000 new homes were sold nationwide in October. That figure ties August 2010 and December 1966 (when the population was 35% smaller) for is the lowest single month since records have been kept. More extensive evidence of how bad things are will come after the jump.
On Wednesday, the Associated Press's Martin Crutsinger provided as good an example as any of the press template for housing coverage -- acknowledge that, yes, things are really bad; give readers an absurdly low benchmark for what would represent real improvement and how long it should take to get there; locate some "expert" to say it's really not all that bad; and find some kind of anecdote somewhere, anywhere, that will leave the impression that things might somehow be getting better:
That's bad enough. But a Tuesday report covering the latest release of the Housing Market Index (HMI) by the National Association of Home Builders demonstrates how utterly determined the wire service is to put gobs of lipstick on a very ugly pig.
For context, I'll show readers the complete 25-year history of said index.
When a Democrat or leftist makes an ill-advised remark, it seems that there's a three-stage process at the Associated Press, and perhaps in most other establishment press outlets, for handling it. It goes roughly like this:
Stage 1 - Ignore it as long as you can. If there isn't much outcry, keep ignoring it.
Stage 2 - If there ends up being enough of an outcry from conservatives or Republicans to warrant coverage, make sure that the story is about the criticism at least as much as the remark.
Stage 3 - In the ensuing coverage, leave out what was originally said.
The Associated Press is currently and grudgingly at Stage 2 with Harry Reid's remark that "but for me, we'd be in a worldwide depression," as seen below (reproduced in full for fair use and discussion purposes):
In a report so riddled with errors, inconsistencies, incompleteness and sloppiness that it's really hard to know where to begin, Associated Press real estate writer Alan Zibel couldn't even keep his housing recovery benchmark remotely consistent with what it was only a month ago.
The Census Bureau's September release of information about August housing starts and building permits informed the country that those items came in at seasonally adjusted annual rates of 598,000 and 569,000, respectively (they were revised slightly upward in yesterday's reports covering September).
On September 21, after disclosing the housing starts number, but not the one for permits, Zibel quoted Paul Dales, U.S. economist with Capital Economics, who said:
"Homebuilding activity remains at an astoundingly weak level," Dales said, adding that construction has to be more than double current levels for the market to be considered healthy.
My math says that means that annualized starts have to reach more than 1.2 million before health returns.
A recurring theme from liberal media members as we approach the midterm elections is that Americans have to vote for Democrats in November so the nation doesn't go back to the way things were when Republicans ran everything.
A perfect example is New York Times columnist Paul Krugman who on Friday penned a piece called "Downhill With the G.O.P.":
Never mind the war on terror, the party's main concern seems to be the war on arithmetic. And this party has a better than even chance of retaking at least one house of Congress this November.
Banana republic, here we come.
In the midst of all this "Do you really want to go back to those days" talk is a staggering ignorance concerning how "those days" compare to now:
As NewsBusters has previously reported, liberal Internet publisher Arianna Huffington is breathtakingly ignorant when it comes to basic economic theory.
On Sunday, she proved it again by making an absolute fool of herself on ABC's "This Week."
With the "Roundtable" segment beginning on the subject of the economy, Huffington noted how the failure of the banking bailout to stimulate growth was "proof that the government does not work."
In a stunning display of both idiocy and hypocrisy, she moments later demanded more financial regulations, including a reinstatement of the Depression Era Glass-Steagall Act, to - wait for it! - stimulate the economy.
Adding insult to injury, George Will was available to really make clear what an absolute imbecile Huffington is (video follows with partial transcript and commentary):
National Review's Rich Lowry on Sunday had a classic debate with Washington Post columnist E.J. Dionne about whether or not the tax cuts implemented by former President George W. Bush should be allowed to expire.
Dionne agrees with President Obama that they should only be extended for folks making less than $250,000 a year; Lowry thinks that raising anyone's taxes right now could send the country back into recession.
With this in mind, NBC's David Gregory opened the panel segment of "Meet the Press" with a discussion about the current state of the economy and how this issue might impact the upcoming midterm elections.
As he tossed the baton to Lowry and Dionne, one got the feeling Gregory was intentionally lighting a fuse he knew would result in some entertaining fireworks (videos follow with transcripts and commentary):
It seems “banks are doing nearly twice as many modifications under their own foreclosure prevention initiatives than under the Obama administration's signature Home Affordable Modification Program, known as HAMP,” Luhbi wrote in her Aug. 30 article. Banks made 644,000 “proprietary permanent modifications” in the first half of 2010, almost twice the 332,000 under HAMP.
Loan modifications are an alternative to foreclosures, in which the debtors usually receive “interest rate and principal reductions.” The HAMP program, according to Luhby, “lowers monthly payments to 31% of pre-tax income.”
July's bad news in new home sales is even worse than it first appears.
The seasonally adjusted annual rate of 276,000 units is bad enough. That is an all-time low since records have been kept and 12% lower than June's annual rate. It's also lower than what analysts predicted by about the same percentage. The lazy business press is running with those figures.
But, as has been the case so many other times, it takes a trip to the raw (i.e., not seasonally adjusted) data, this time at the Census Bureau (large PDF), to fully comprehend the extent of the new-home market's collapse during this big, fat failed "Recovery Summer."
The raw data shows that 25,000 new homes were sold in the U.S. in July. That's not a typo, and it really is the figure for the entire country. Worse, that figure, the lowest July since records have been kept, is down by over one-third from July of last year, when the economy supposedly bottomed out, and by 42% from July 2008. I don't think you'll see those facts reported today.
Here is a graphic cap of a 10:07 a.m. report at Reuters carried at CNBC.com. It contains a jaw-dropper of a quote from an economist (red box is obviously mine):
Here's how the Associated Press's Martin Crutsinger and Daniel Wagner reported the housing portion of their Tuesday report on the day's economic news ("Factories aid bumpy recovery, housing still weak"):
Single-family home construction, which represented nearly 80 percent of the market, fell 4.2 percent. And requests for building permits, considered a good sign of future activity, slid 3.1 percent.
... The July increase in housing construction pushed total activity to a seasonally adjusted annual rate of 546,000 units. Building activity in June was weaker than first reported. It fell 8.7 percent to an annual rate of 537,000 units, the slowest pace since October of last year.
"The bad news is that activity is likely to remain depressed for several years," said Paul Ashworth, senior U.S. economist at Capital Economics. "The good news, however, is that housing is so depressed it is hard to see activity falling much further from such a severely depressed level."
Well, okay, but the situation is already closer to a zero-out than it is to the levels we were seeing just a few years ago--or any time in the 50-plus years such records have been kept. Looking at the raw data on a historical basis, one finds that July 2010 was the worst July on record for the both stats the AP pair cited:
Ed Schultz on Thursday blamed Republicans for all the unemployed people living in America today.
As he began the most recent installment of the "Ed Show" on MSNBC, the host said, "The Republican Party has been on a crusade against the middle class and the poor for the last 30 years. We're now seeing the wreckage of that race to the bottom line culture."
He disgracefully continued, "Today a government report showed weekly jobless claims at a five-month high. 484,000 new unemployment claims were filed in the week ending August 7th. And you know what folks, you can lay this right at the feet, right at the altar of the Republican Party."
Sadly, he wasn't close to done, claiming, "The people you see flooding the streets begging for help, begging for an opportunity are victims of the Republican agenda just to make sure that President Obama fails" (video follows with transcript and commentary):
Earlier today, NB's Lachlan Markey covered Bill O'Reilly's interview with the Fox Business Channel's Charles Gasparino.
In that interview, Gasparino confirmed what the New York Post reported in April of last year, namely that "GE Execs Encouraged CNBC Staff to Go Easy on Obama."
The suits at GE, including Chairman Jeff Inmelt, had a clear motivation for encouraging their reporters to lighten up, namely that "General Electric at the time was hoping to profit handsomely from policies that would benefit a few companies, including GE, at the expense of the majority of the economy"-- specifically cap and trade.
But speaking of motivation: What about former CNBCer Gasparino's?
The easy answer would be that sometime in the past two years he has seen the light and realizes his past reporting at CNBC was lacking in fairness and balance. Despite his move to Fox, there's reason to doubt that.
There are quite a few shaky assertions in Alan Zibel's Associated Press report yesterday about Freddie Mac's latest quarterly loss ($6 billion), its latest bailout installment request to the U.S. Treasury ($1.8 billion), and the cumulative taxpayer bailout amounts that have been paid out to Freddie Mac and big sister Fannie Mae thus far ($148.2 billion) -- too many to cover in a blog post.
So I'll concentrate on the howlers present in just a single paragraph near the end, wherein the AP reporter attempts to explain why the two formerly government-sponsored mortgage giants that are now government-bailout enterprises ran into the ditch. The verbiage pretty much states the meme that the establishment press seems to want the public to swallow about what went down, and who's to blame:
During the housing boom, Fannie and Freddie faced political pressure to expand homeownership and competitive pressure from Wall Street to back ever-riskier loans. When the market went bust, defaults and foreclosures piled up, and the government had to take them over.
As media predictably pound the table for Congress to allow the Bush tax cuts to expire, an interesting analysis by Washington Post contributor Robert J. Samuelson should raise a caution flag.
Higher taxes inhibit couples from having children which in other developed nations has led to longterm economic paralysis.
In a western civilization that got drunk on entitlement programs in the previous century, population growth is essential as all of these schemes have a Ponzi component to them: they only work if you continually have new people entering the system to pay for those collecting benefits.
As Samuelson outlined in the Post Monday, our federal income tax structure is quite at odds with our best interests as a nation:
Initial requests for jobless benefits rose last week to their highest level since April, a sign that hiring remains weak and some companies are still cutting workers.
The Labor Department said Thursday that new claims for unemployment insurance rose by 19,000 to a seasonally adjusted 479,000. Analysts had expected a small drop. Claims have risen twice in the past three weeks.
Thanks to Shirley Sherrod, Andrew Breitbart, and the NAACP, political journalists have supposedly discovered the importance of "context" (though they strangely seem to lost interest once fuller context items like this and this became known). It would be helpful if such an interest in full context would legitimately and consistently spread to business reporting.
Full context would include looking at the raw business and economic data before it gets seasonally adjusted and reporting it when it is significant. Given the information the press would then have to report in the current economy, I'm not holding my breath waiting for journalists to even look at it, let alone report it. (Update: See this comment below for another important contextual element.)
Take the housing market, particularly housing starts and new single-family home sales. During the past week, the Census Bureau released statistics on each of these important metrics. Let's look at an excerpt from reports about each.
George Will on Sunday accused Barack Obama of being an expert at selling snake oil.
As the Roundtable segment of ABC's "This Week" began, host Jake Tapper asked Will if the President's claim Republicans "are peddling that same snake oil that they've been peddling now for years" will resonate with voters this November.
Will marvelously responded, "No, because he is an expert on snake oil."
"This is the man who said, if we pass the $767 billion stimulus bill, which it turns out costs $862 billion, a $95 million oops, we would have unemployment at 8 percent and no higher, and it went higher," continued Will.
"This is the man who last week was out saying, 'I'm going to give $2 billion, about $2 billion, to two companies to create about 1,600 jobs.' That's $1.5 million per job. That is snake oil" (video follows with partial transcript and commentary:
On Friday's Rick's List, CNN's Rick Sanchez attacked conservative economic policy, singling out the right's support for lower tax rates, and complained that "we in America are so easily led to go against our own interests.... you would find that at least half...[are] pulling for the rich guy." Sanchez also belittled conservative talk show hosts: "Many...don't even have a college degree" [audio clips available here].
The anchor led the 3 pm Eastern hour with a rant against "these guys on talk radio, some of whom make hundreds of thousands of dollars, if not millions of dollars" and their defense of "the money guys...the super-rich, night in and night out- you know who I'm talking about- you will hear this and you have heard this consistent narrative. We're being held back by high taxes in this country, high tax rates- cut taxes on the wealthy and, zoom, there it goes. Our economy is going to be back with a vengeance. Get the government off our backs and all our problems in this country are going to be solved."
Sanchez then caricatured the conservative take on the present economic situation and, unsurprising, introduced race into the issue. He also targeted CNBC personality and Tea Party hero Rick Santelli:
Apparently, Fannie and Freddie are the new Batman and Robin.
At least they seemed more like heroes than villains in a July 6 ABC News story about the troubled housing market. Reporter Rich Blake gave the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac credit for "propping up" the flailing housing sector:
"As perplexing and disturbing as this economic brainteaser may seem, the housing sector would be in even worse shape if not for those twin government sponsored enterprises, Fannie Mae and Freddie Mac, both in government conservatorship and bleeding assets," Blake wrote.
But on June 21, Associated Press reported the mortgage assistance program is "falling flat."
The broadcast networks supported the mortgage modification and housing bailout when Obama launched it in 2009, after criticizing Treasury Secretary Henry Paulson's plan for not doing "enough" to fix the problem. ABC, CBS and NBC haven't mentioned the new figures since AP reported them.
The man who predicted the bursting of the housing bubble as well as 2008's economic collapse says that what happened in the markets around the world today is just the next stage in the financial crisis.
"The first stage was this massive re-leveraging of the private sector that led to the financial crisis and which has responded now with a massive re-leveraging of public sectors with budget deficits of the order of 10 percent," Nouriel Roubini aka Dr. Doom told CNBC's Maria Bartiromo.
"So I think that the markets are realizing that we have socialized a lot of the private losses with unsustainable fiscal deficits."
He believes the bond markets in parts of Europe seriously began realizing the depth of the problem today cautioning, "And soon enough they're going to wake up in the United States" (video follows with partial transcript and commentary):
Cramer told MSNBC's April 26 "Morning Joe" that Goldman really has no defense if, as the government alleges, Goldman misled investors when it established a mortgage-backed security in 2007 for a hedge fund client looking to bet against the housing market. And that's in addition to facing heat from shareholders for not revealing that it received a Wells Notice from the SEC.
In the past 20 months, liberal media members have routinely blamed 2008's financial crisis on George W. Bush, Republicans, Wall Street, and greed.
Someone that has hardly ever been accused of having a hand in what led to the tumult is former President Bill Clinton.
As NewsBusters has been reporting almost since the crash began, it was Clinton who signed into law two key bills -- the Financial Services Modernization Act of 1999 and the Commodity Futures Modernization Act of 2000 -- that ushered in the malfeasance that almost toppled the world economy.
On Saturday, a former editorial page editor for the Wall Street Journal, George Melloan, made the connection even stronger as he pointed a finger at someone most in the media have shamelessly given a pass for his involvement in this crisis (h/t @RLMcMahon):
The Pentagon rescinded the invitation of evangelist Franklin Graham to speak at its May 6 National Day of Prayer event because of complaints about his previous comments about Islam.
The Military Religious Freedom Foundation expressed its concern over Graham's involvement with the event in an April 19 letter sent to Secretary of Defense Robert Gates. MRFF's complaint about Graham, the son of Rev. Billy Graham, focused on remarks he made after 9/11 in which he called Islam "wicked" and "evil" and his lack of apology for those words.
Col. Tom Collins, an Army spokesman, told ABC News on April 22, "This Army honors all faiths and tries to inculcate our soldiers and work force with an appreciation of all faiths and his past comments just were not appropriate for this venue."