During a story suggesting that Angelo Mozilo, the former CEO of the mortgage company Countrywide, is unworthy of his millions of dollars and perhaps enjoys too much time lying in the sun, ABC's Dan Harris, possibly not picking up on the former CEO's Italian ethnicity which could be the source of his skin's dark complexion, remarked that Mozilo's "deeply tanned face" could become the "face of the mortgage mess." The story ran on Friday's World News with Charles Gibson, substitute hosted by George Stephanopoulos, with Harris beginning his report: "This may well become the deeply tanned face of the mortgage mess. The face belongs to Angelo Mozilo, the once-celebrated CEO of Countrywide, now facing allegations of predatory lending and rapacious greed." Harris also ended the report seeming to lament that Mozilo is not facing foreclosure on any of his homes: "If the sale [of Countrywide] goes through, Mozilo will walk away with about $40 million. And with not one of his homes in foreclosure." (Transcript follows)
On Wednesday, Associated Press Business Writer J.W. Elphinstone used a curious definition of "narrow" to emphasize the importance of a home-price measurement index that only looks at the country's largest metro areas, while minimizing the significance of one that catalogs virtually the entire USA -- all apparently done to create an overwrought portrayal of home values as being "in freefall."
No end in sight: Housing in freefall until credit loosens and supply recedes, experts say
House prices may still have a long way to fall.
Across much of the nation, home values are dropping -- even those backed by solid mortgages -- and banks are repossessing more every day. Most experts say the dive won't hit bottom for another year and only after excess inventory is sharply reduced and credit markets improve.
For years, NewsBusters and the Business and Media Institute have informed readers about how the press, since George W. Bush was first elected, have tried to create a self-fulfilling prophecy by misrepresenting economic data in as negative a way as possible.
This is likely the cause of the public's continued pessimism about economic conditions even as the economy has expanded for 25 consecutive quarters.
On Tuesday, in an interview on CNBC, Los Angeles Times and Chicago Tribune owner Sam Zell took this thinking a little further when he suggested to "Squawk Box" anchor Becky Quick that many of the economic problems facing the country today are caused by fear-mongering and politicking by Hillary Clinton and Barack Obama.
“Not since the Depression has a larger share of Americans owed more on their homes than they are worth,” New York Times reporters Edmund Andrews and Louis Uchitelle wrote in a February 22 article. “With the collapse of the housing boom, nearly 8.8 million homeowners, or 10.3 percent of the total, are underwater.”
Steven Pearlstein, a one-time reporter for the Post who now pens a column for the newspaper, wrote February 20 that “the best thing that could happen to our economy is for a dozen high-profile hedge funds to collapse; for investment banking to enter a long, deep freeze; for a major bank to fail; and for the price of a typical Park Avenue duplex to fall by 30 percent.”
“For only then,” Pearlstein wrote, “might we finally stop genuflecting before the altar of unregulated financial markets and insist that Wall Street serve the interest of Main Street, rather than the other way around.”
He didn’t explain how hedge funds collapsing or banks failing would help Americans. Instead, he opted to cheer for a situation that would see millions of people suffer, admitting his was a “harsh and vengeful solution, and there will be lots of collateral damage.”
Granted, the National Association of Realtors (NAR) is a trade organization which will, as trade organizations do, try to put the best face on a bad situation. And granted, part of the press's job is to filter through hype and false sunniness to report the truth of what's really going on.
But that is most emphatically not what the Associated Press did with yesterday's NAR report on the state of the national housing market. Instead, AP failed to report overall statistics in favor of reporting individual metro areas; ignored most of the legitimately good news; ignored an important piece of historical context; and, most importantly, and as has been the case for well over a year in the national business press, emphasized reductions in unit sales while de-emphasizing much smaller reductions in sale prices.
One home supposedly burned because Sheryl Christman, a 38-year-old Michigan woman, was three days short of foreclosure. She pleaded no contest after the Sept. 1, 2007 arson. The other case was a Colorado arson where a man "may have" committed arson before an "imminent foreclosure."
A Yahoo photo slideshow of Ground Zero perfectly demonstrates the bias news agencies frequently insert into captions. Instead of just describing the photo, Yahoo included captions with partisan cheap shots unrelated to the image to score typical anti-War On Terror points (h/t NB reader Larry Jordan).
Out-of-place comments about waterboarding, the downturn in the economy and a criticism of Rudy Giuliani were captioned under photos of a smoking World Trade Center and Ground Zero rubble (bold mine throughout):
Slide 1: Early morning light illuminates the wreckage of the World Trade Center on September 25, 2001 in New York. The head of the CIA said Thursday it is uncertain whether the use of waterboarding, a form of simulated drowning widely condemned as torture, would be lawful if used today against Al-Qaeda detainees.
Two Ohio towns. Identical story. That's what the AFP presented to us on Sunday and then again yesterday. On Sunday, we read this:
The streets are empty. Trash rustles down the road past rusted barbecues, abandoned furniture, sagging homes and gardens turned to weed.
This is Shaker Heights, a suburb of Cleveland and a town ravaged by the subprime mortgage crisis roiling the United States.
Faded "for sale" signs sit in front of deserted houses. The residents are gone, either in search of new jobs after the factories shut down, or in shame after being evicted for missing their mortgage payments.
A red, white and blue American flag flies over windows and doors which have been boarded up to keep the drug dealers away.
Never underestimate the power of the media with a "doom and gloom" agenda - especially when it comes to such a renowned contest like the 18th annual American Dialect Society "Word of the Year" contest.
"‘Subprime' has been around with bankers for awhile, but now everyone is talking about ‘subprime,'" said Wayne Glowka, a spokesman for the group and a dean at Reinhardt College in Waleska, Ga. "It's affecting all kinds of people in all kinds of places."
A January 4 Associated Press story by Jeannine Aversa pointed to the job data as one of the "problems in the economy" that has "elevated fears about a recession." But even with all these "problems" - housing woes, the credit crunch, high oil prices, weak job numbers - the criteria of the economy being in a recession still haven't been close to being met.
Well, the New York Times certainly can't be accused of excessive free market idolization. Peter Goodman breaks off from his gloomy economic assessments to cheer for regulation in Sunday's Week in Review story "The Free Market: A False Idol After All?"
In Goodman's telling, there is no question mark, stating the argument against the free market in simplistic liberal terms, right down to echoing the Reagan-era pejorative of "trickle down economics."
As an exemplar of a government-run enterprise stuck in the mud, it’s hard to come with a better example than what is happening in the area that was the subject of the infamous Kelo v. New London ruling in 2005. Nearly 2-1/2 years after the US Supreme Court ruled that the city could evict Susette Kelo and other holdouts from their homes, and 17 months after the final settlement between the city and the final two holdouts, very little has been done in the affected area.
Make that "nearly three years" (New London Day link requires registration after a short time, and a paid subscription after that):
Steve Fraser might look mild-mannered, but when it comes to economic doomsaying, he is the Rocky Marciano of recession, the Tiger Woods of turndown, the David Beckham of depression.
Speaking of bending one, Fraser's LA Times column of today, "Symptoms of an Economic Depression," twists U.S. economic data into a harbinger of impending doom. Fraser begins by falsely claiming that "no one wants to utter the word 'depression.'" In fact, Fraser himself, a left-wing labor historian, wants not merely to utter it, but to bellow the word with a 10,000 megawatt bullhorn. Why? Because, as he gleefully predicts in that same column:
This perfect storm [of a bad economy] will be upon us just as the election season heats up, and it will inevitably hasten the already well-advanced implosion of the Republican Party.
As an exemplar of a government-run enterprise stuck in the mud, it's hard to come with a better example than what is happening in the area that was the subject of the infamous Kelo v. New London ruling in 2005. Nearly 2-1/2 years after the US Supreme Court ruled that the city could evict Susette Kelo and other holdouts and take their homes, and 17 months after the final settlement between the city and the final two holdouts, very little has been done in the affected area.
The latest setback to substantive progress in the area is significant, and is being totally ignored by the non-local press.
Here are the two major stories and the local paper's editorial from earlier this week (New London Day links require a paid subscription after seven days):
Nov. 27 (report by Elaine Stoll) -- Fort Trumbull Developer Asks For More Time, Misses Deadline NLDC could claim default, but delay in project more likely
*****Update at end of post includes detailed response to unhappy e-mail messages concerning this subject.
As someone that has done a lot of economic writing and financial media analysis, I'm used to gloom and doom from journalists.
However, Saturday's Associated Press article concerning the credit crunch and how it's impacting the mortgage market could be the worst example of economic and financial misreporting and exaggeration I've seen since the press universally forecast an economic downturn after Hurricane Katrina hit New Orleans.
Entitled "Have We Seen the Worst of the Mortgage Crisis," Joe Bel Bruno's piece actually suggested that a depression could be looming, and that housing prices in some areas could decline by 40 percent (emphasis added):
But on that night, one network (ABC) interpreted the data differently from the others about Stockton, Calif., the city with the nation's highest foreclosure statistics. "NBC Nightly News" and "CBS Evening News" reported 1 in 31 homes were in foreclosure and ABC "World News with Charles Gibson" reported 1 in 49 homes were in foreclosure.
According to RealtyTrac's Rick Sharga both numbers were "technically" correct, but the ABC report used the number for "unique household" – making its report more accurate.
Talk about talking down the economy! No fewer than three times today, Matt Lauer invited Barack Obama to declare that the U.S. economy is headed into recession. At the end of a "Today" interview that focused largely on Hillary-related issues and Iran, Lauer turned to the economy and pressed Obama to predict the worst.
The Los Angeles Times reported a run of Countrywide Bank by its customers as more and more are panicked about the potential of the nation’s largest home lender to go bankruptcy – something fueled by many of the reports in the media.
“[S]ales of existing homes fell in 41 states from April through June,” said CBS correspondent Susan McGinnis on the August 16 “The Early Show.” “Meanwhile, foreclosures continue to soar. And there are growing worries about the nation's biggest mortgage lender; Countrywide Financial could be forced into bankruptcy.”
But some experts seem to think this scare from the media over Countrywide’s bankruptcy is a little premature.
In a recent blog post by CBS Evening News correspondent Cynthia Bowers we find that she has had some problems with the housing market herself. Bowers apparently didn’t grasp the fact that her Adjustable Rate Mortgage (ARM) can actually adjust:
“For a while we were okay. Then that Fed rate started going up, and so did our ARM. Over a five-month period it increased the cost of our monthly mortgage by nearly 40%!” Bowers wrote.
But Bowers shouldn’t have been surprised about her rate adjustment. According to Nexis, Cynthia Bowers has been reporting on the mortgage and housing market since at least 1997. With a decade of industry reporting under her belt, you’d think she’d be able to anticipate the fact that rates shift and payments adjust.
Overall all the tax questions pushed Bush towards hiking taxes. Notice the first question out of the gate was on raising the gasoline tax, not about oh, how the gas tax funds are perpetually raided by Congress for non-infrastructure spending. The question on corporate tax rates and carried interest also come from the left, pushing Bush on the matter of tax "fairness." I particulary find the questions in bold obnoxious vis-a-vis fiscal policy.
11:18: president concludes news conference.
11:14, unid'd reporter: Given the decision to commute Libby, is it fair for people to ask about your commitment to accountability?
11:13, unid'd reporter, citing Libby pardon, Al Gonzales hearings: Can you give clear examples of how you've held people accountable during your presidency?
11:12, Ann, followup: So you're confident you can continue to sustain the level of spending in Iraq?
In a sympathetic story, reporter Russ Buettner relayed the plight of local property owners fighting abuse of eminent domain -- the taking of private property for public use -- by local governments. Such "takings" were made infamous by Kelo vs. New London, the controversial 2005 Supreme Court decision which found that the city of New London, Conn., was within its rights to condemn private property and hand it to a development corporation under the control of the city government, a decision that enraged left and right alike.
On a day when the National Association of Realtors (NAR) reported a rise in the price of homes so the average median price is above where it was a year ago, Wednesday's CBS Evening News featured a soundbite claiming “home price depreciation” unprecedented since the Great Depression. Apparently, reality wasn't negative enough for CBS, so they felt a need to add some embellishment.
“The housing market is going deeper in the dumper,” anchor Katie Couric rhymed, as “America's Realtors reported today that used homes were selling in June at the slowest pace in four and a half years.” She acknowledged “a bright note for homeowners,” but added a caveat in relaying that “house prices went up for the first time in nearly a year, but just barely.” The headline for the NAR press release from which CBS cribbed gave equal weight to two developments -- “Prices Rise, Existing-Home Sales Decline” -- but Anthony Mason's story explored only the negative, as he focused on rising foreclosures and declining sales, and even managed to spin the climbing home prices into a dire situation. “In a Wall Street conference call, Countrywide's CEO, Angelo Mozilo, had this warning,” Mason stressed. Then, with matching text on screen, viewers heard audio of Mozilo from a day before NAR's numbers were released on the higher median home price: “We are experiencing home price depreciation almost like never before, with the exception of the Great Depression.”
As NewsBusters has been reporting this week (see this and this), as the stock market hit new all-time highs, the media have been dour Nervous Nellies carping and whining about gas prices, the low value of the dollar, the housing slump, and the rising trade deficit.
Yet, there are a variety of issues that press outlets have conveniently ignored during this record bull run that not only explain rising stock prices, but also give a more accurate view of what is going on in the global economy.
For instance, Bloomberg was one of the only major media outlets Tuesday which reported record purchases of U.S. securities by foreigners in May (emphasis added):
On Friday evening, the CBS Evening News and ABC's World News with Charles Gibson offered opposite views on whether the recently released inflation figures for May should be viewed as good or bad. While CBS News anchor Russ Mitchell referred to "inflation alarms" going off, leading to higher interest rates that are "hitting [home] buyers hard," ABC News anchor Gibson characterized inflation as "under control" as he conveyed that the report "eased worries" and set off a stock market rally.
Below are transcripts of relevant portions of the CBS Evening News and ABC's World News with Charles Gibson from Friday June 15:
That's right. Bubble, shmubble, despite this picture from Matt Drudge, who got snookered on this one:
Fire sales, schmire sales.
The Chief Snookerer in the latest search for the elusive housing bubble is Martin Crutsinger of the Associated Press, with a significant assist from the Commerce Department (link is to a PDF), which inexplicably did not, and apparently does not, report the regional sales data needed for a more detailed look.
Crutsinger took Commerce's housing report showing a significant decline in the nationwide median selling price of a new home, both in the past month and year over year, and ran with it at an all-out sprint (bold is mine):
Although the Kelo v. New London Supreme Court ruling almost two years ago caused an outpouring of outrage that still resonates nationwide, what has happened in New London itself in the wake of the decision has, with rare exception, received relatively little coverage outside of the state of Connecticut or, in a few instances, New England.
It isn't as if there haven't been many noteworthy developments after the decision was handed down. To start, here is a rundown of events that ultimately led to last summer's settlement:
Within a month of the decision, the New London Development Corporation (NLDC) notified the Kelo holdouts that since they had been living on land that they didn't own during the duration of the lawsuit, they were liable for back rents during that entire time, in some cases amounting to hundreds of thousands of dollars. This outrage, originally noted in local Connecticut weekly whose article link is no longer available, got no national attention until bloggers took note of it (here, here, and here, to name a few) and percolated it to the higher levels of the blogosphere (examples here [f-bomb warning] and here). Even then, Old Media, with few exceptions, one of them being this USA Today editorial, gave this shocking example of bureaucratic chutzpah little notice.