They Went To J-School, Not B-School

Yesterday Powerline highlighted a NY Times story and correction demonstrating that Times writers and editors are a bit hazy on some basic business principles - the correction acknowledged that business taxes are paid on income, not gross revenue.

Today the Times runs a laugher demonstrating that they are also out to sea on the current state of the real estate market:

Business Day

An article on the Square Feet pages on Wednesday about the role of Fannie Mae and Freddie Mac in financing multifamily housing projects misstated the average price that buyers are paying for apartment buildings that are being sold by Archstone, a national apartment company. It is $200,000 per unit, not per square foot. Similarly, Tishman Speyer and Lehman Brothers paid $240,000 per unit, not per square foot, when they bought the company last October. (Go to Article)      

Well.  Even if they lack common business sense, that J-School training sure does help them promote a story.  Today, as part of an ongoing series (The Debt Trap - A series about the surge in consumer debt and the lenders who made it possible) the Times looks at home equity lines of credit.  This scary stat (my emphasis) was featured on the A-1 front page before the jump back into the business section:

The portion of people who have home equity lines more than 30 days past due stands 55 percent above its average since the American Bankers Association began tracking it around 1990; delinquencies on home equity loans are 45 percent higher. Hundreds of thousands are delinquent, owing banks more than $10 billion on these loans, often on top of their first mortgages.

Oooh, 55 percent above the average!  First, do keep in mind that this is not a delinquency rate of 55%, a mistake I made with my initial quick glance.  Secondly, what is this average providing the baseline?  If delinquencies have moved from 2% to 3%, that would be a 50% increase, but maybe not so scary.  And since the reporter resolutely provides no other context, suspicion is warranted.

Ah, well - did I say 2%?  Not a bad guess - a bit of poking around reveals this July 2 2008 ABA news release:

WEAK ECONOMY PUSHES CONSUMER DELINQUENCIES HIGHER IN FIRST QUARTER 2008
HELOC and credit card delinquencies rise

WASHINGTON – Continued stress in the housing market combined with general weakness in the overall economy contributed to an increase in the delinquency rates for home equity lines of credit (HELOCs) and bank cards during the first quarter of 2008, according to the American Bankers Association's Consumer Credit Delinquency Bulletin.

The percentage of HELOC accounts that were more than 30 days past due rose 14 basis points to 1.10 percent during the first quarter (seasonally adjusted).  This was the highest recorded rate for this category since 1997, although the HELOC delinquency rate remains lower than all other consumer credit categories.
...Home equity loan delinquencies fell from 2.39 percent to 2.34 percent.

A HELOC is a revolving loan, somewhat like a credit card, where the homeowner can borrow at repay within a pre-set limit; a conventional home equity loan has a scheduled amount and repayments.  And these figures are troubling but not terrifying.

But the Times tells a more interesting story.

Comments

[anduril]

I spilled some stain and came in to clean up. Thought I'd drop a link, so to speak: The Pill may put you off smell of your man and ruin your relationship. I passed over this yesterday, but my brother sent it to me this morning and I have to agree: great and fascinating article. Maybe some of you read it already. OT? Hey, it's all about journalism.

[MikeS]

J school grads don't want to the job they're qualified for. Newspaper journalists and editor's don't want to do what they are qualified to do.

They want to advocate. Unashamedly, they invented the term advocacy journalism. The fact that they are clueless in no way stifles their urge to explain.

[kim]

The real problem is that they try to persuade with their bias rather than persuade with the facts. It's cart before the horse journalism and about like notching the arrow backwards or looking down the barrel of a gun. It's Wily Politics; yee hah, Coyote Journalism.
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[kim]

You wanna see a nice piece of journalism that is changing the circulation in the blogosphere go read Bishop Hill's takedown of Caspar Ammann and Eugene Wahl and their unethical manipulations of the academic peer review process to keep their incorrect defense of Michael Mann's Crook't Hockey Stick into the IPCC report. It is readable and stunning.
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[jimmyk]

Secondly, what is this average providing the baseline? If delinquencies have moved from 2% to 3%, that would be a 50% increase, but maybe not so scary.

Unfortunately this is not limited to business reporting. It comes up in medical reporting all the time. An article will say "People who eat french fries once a week are twice as likely to get rheumatoid arthritis" (that's a madeup quote), but we don't know if that's from 0.2% to 0.3% or 20% to 30%. They should report these things by the change in the percentage, not the percentage increase, but they almost never do.

[Granddaddy Long Legs]

Nice catch, Tom.

It's interesting when you realize that such reporters view the foreclosure/credit mess the same way they view drug addictions. In their entrenched way of thinking, there's always a victim and an oppressor. With drugs, the addict is the victim and the dealer is the oppressor. The addict is never even marginally faulted for creating the market for the dealer, and we as a “society” are called upon to redistribute our hard-earned wealth to those who blow their money on, er, blow.

With these banking scandals, the greedy and irresponsible loan defaulters are portrayed as innocent victims of money-grubbing robberbarrons hell bent on throwing families in the street for the sport of it. (example here)

Thanks to the media's macro-narrative of victimization, and the left's decades-long assault on individual responsibility, there's no reason to expect anything to change anytime soon. Until a majority of people in our society publicly chide those who break the financial rules and force the rest of us to subsidize their debts, the larger problem will not be solved.

It shocked me when Democrats were outraged by the bankruptcy bill that passed a couple of years ago -- Gasp! People should have to pay back what they borrowed if they can -- but I've been jaded since. I expect more stories like the one you’ve flagged here, and more deceptive wording that overstates the problem. Sadly, I expect everything to get a whole lot worse over the next generation. Political pandering and all that...

[Porchlight]

Michael Crichton has famously described what he calls the Murray Gell-Mann Amnesia Effect:

Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray's case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward, reversing cause and effect. I call these the "wet streets cause rain" stories. Paper's full of them.

In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.

He suggests that "falsus in uno, falsus in omnibus" would be a more appropriate reaction.

I just had a similar thing happen where some developments at my place of work were described in the paper. They got it all wrong, naturally. Some liberal co-workers were laughing about it, but when I mentioned the possiblity that if the paper got this wrong, maybe they're getting pretty much everything wrong, they looked surprised and laughed, as if they'd never thought of that possibility before.

[sbw]

Next thing you know they'll be reporting Exxon's profits in absolute dollars, not comparing it to the percentage of profits other businesses make, and, based on that, some opportunist politician will call for a windfall profits tax!

[steveaz]

The story the Times won't cover is the Student Loan Delinquency Crisis afflicting aging academics. I'd like to see more ink spilled on this story before I read another one about the other types of consumer debt "crises."

My guess as to why a Krugman or a Herbert won't touch this story is that the student loan market is heavily regulated by politicians, and because its victims, professional students, share their "liberal" intentions.

Aging students are financing degrees at universities and colleges that are useless in the labor marketplace, and many sign on never intending to pay them back - counting instead on politicians to fiddle with student-loan interest rates to bail them out.

A perfect example might br someone in her fifties who is borrowing "income" while she writes her dissertation in search of a doctorate in the esoteric political science discipline of, say, "Gender Studies." The amount of interest and principal owed on the debt will never be paid back by the earnings that a job derived from this fringe degree will provide over the years remaining in the borrower's working life-span.

Perversely, given the advanced age of the debtor, time is her biggest enemy, not the "Patriarchy." But it is she, not "the system" that will leave her heirs saddled with debt.

The result is the person is trapped in a mental and financial drain for which escape can only take the form of advocating against "the system" of lenders that bind her to her own loan-agreement.

So, like a cornered animal, her politics and debating style become evermore antagonistic to "Capitalism," and her delivery becomes tendentious and fevered in discussions with people of diverging viewpoints. The incongruity of railing against capitalism, America, and "rich, white men" without acknowledging having applied for the lending-market's assistance in the first place is lost on her, and credential-ism, transnationalism and Marxist economic texts become her practiced intellectual refuges in arguments.

I wonder how a Paul Krugman would even begin an essay on this point. But I'm certain he would studiously avoid any critique of the borrower.
-Steve

[anduril]

Very interesting, Steve. I never thought of that...before.

[steveaz]

Anduril,
The rule, "Form Follows Function" states that one can guess at any implement's function by studying its form.

This is just as true for discursive forms as it is for, say, biological ones.

I've come to label the modern progressive movement "Hippies in Debt" because I'm convinced that most lib's are adherents to the Prog movement out of functional necessity: avoiding personal responsibility for the debts they have knowingly accrued can be a powerful driver.
-Steve

[anduril]

"Hippies in Debt"

I like it.

[JorgXMcKie]

I have a simple rules about the reporting of statistics in newspapers: NEVER, EVER trust descriptive statistics that have been reported in the MSM. Means, medians, modes, percentages as reported are almost always accurate in the sense that mathematically they exist. They are almost always uniformly misused (I think deliberately since it is always in the same direction) by assigning them meanings that either cannot exist or are meaningless.

The example of medical research is a case of the stats being accurate but meaningless. If I were to say that "whistling Dixie" increased your chances of being hit by a meteorite, would you worry? Probably not unless you were already worried. After all, the data seems to show that talking on a cell phone increases your chances of having a car accident about the same as having a BAC of .08 or more. Does this worry those who talk on the cell while driving? No, they've already accepted the risk. But your health is different.

Anyway, the stats used by the MSM are generally worthless except for biasing (or playing to the bias) of the reader.

I can't remember the last time I saw an acceptable use of descriptive stats in the MSM.

[JM Hanes]

JorgXMcKie:

Sounds like my rule, although I apply it more broadly. Never trust any percentage that isn't attached to hard numbers.

[Fat Man]

I think the NYTimes should call on Congress to ban advertising by Home Equity Lime providers. That should help their advertising revenues.

[Peg C.]

I would say journalists are good at reporting, not at analysis, but even their reporting is suspect these days. We need them for facts and their facts can't be trusted. Meanwhile the blogosphere is chock-full of experts in every field who do excellent analysis and are starting to do reporting (since it's no longer getting done).

Folks like Instapundit keep arguing we need journalists and the MSM for some purposes and I keep wondering if that is true. Most of what comes out from them is garbage. Well, consider the source.

[Vulture]

While the NY Times is no doubt clueless, it saddens me to see "conservatives" pretend the financial tsunami just reaching our shores is not indeed terrifying.

The failure of IndyMac Bank wiped out $8 Billion of the nation's $50 Billion FDIC reserves. That's just one bank, with many more failures on the way.

Home prices are WAY out of line with both historical norms and incomes:

http://graphics.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif

Many consumers were led by realtors and hype in general to extend themselves financially to pay for overpriced shelter these last 5 years.

I have seen in my own town again and again, how people lose their homes after obtaining a second mortgage on a home they owned outright.

Bear Stearns is gone, Lehman is on the brink, and still on deck are the Alt-A and Prime.

Investment Banks are still sitting on $$ Trillions (with a T) of Level 3 and Level 2 mortgage-backed assets, much of which are near worthless. Merrill Lynch just sold $30 Billion of this toxic waste for 22 cents on the dollar (6 cents on the dollar after costs of the self-financed deal).

So I wish people would stop viewing this in a partisan manner -- for me it's not about politics.

And the housing "crisis" was home prices at 10 times median income. Today we have a welcome housing "correction" where people can soon hope to pay 3-4 times income for a home, as they have done for the last 70 years before this absurd housing bubble.

Home prices from 2000-2006 were an anomoly, fueled by toxic financing, HELOCs to add "granite and stainless steel," and too-low interest rates.

When the housing "crisis" is over, we will be looking at 2000 prices -- see chart, and how each boom/bust cycle reverts back to the mean:

http://graphics.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif

[Chris P]

The story the Times won't cover is the Student Loan Delinquency Crisis afflicting aging academics. ...

A perfect example might br someone in her fifties who is borrowing "income" while she writes her dissertation in search of a doctorate in the esoteric political science discipline of...

I don't know if this post was SUPPOSED to be funny, but it certainly is. "Why, oh why won't the media cover this weird little arcane thing that occasionally happens?"

[JorgXMcKie]

Vulture: you been studying to be a journalist? Your examples aren't even good enough to be laughable, and as JM noted, are absent real links to real numbers. The plural of anecdote is not data.

[Chris P]

The plural of anecdote is not data.

Well, it is, actually, eventually.

[Joe Miller]

Having studied both journalism and economics in college, I've concluded that graduates of journalism schools are ill-equipped to understand the things on which they report. Studying "journalism" without a knowledge of history would be like studying "cooking" without knowing anything about food.

[sbw]

I am a working journalist, but -- undecided about college at the time -- on the advice of a well-known dean of a well-known journalism school, I got an undergraduate liberal arts degree instead of an undergraduate journalism degree. "We can teach you all you need to know about journalism later."

Boy, am I ever grateful!

[glasater]

Lehman is on the brink

Actually Vulture--Soros took a large position in Lehman last Friday--so even he is rolling the dice and betting on a financial institution.

[Chris P]

Studying "journalism" without a knowledge of history would be like studying "cooking" without knowing anything about food.

That's a great analogy.

Funny thing is, some of the best journalists I know are college dropouts. They're brilliant -- but they're the kind of brilliant that comes with those who are self-driven and self-taught, driven by an unmatched and unrelenting curiosity about the world.

I don't know why some bloggers rail on the "media" so much, or on journalists as people. You're both the same creatures, when it comes down to it. You're enamored of information and current events, of figuring out what the world is all about, of observing reality and communicating it to others. You're both the sort who would read the encyclopedia for fun as kids. It's just that they made a profession of it and have bylines in newspapers; you made a hobby of it and have bylines in blogs.

I mean, don't get me wrong -- the liberal-bias stuff drives me as crazy as the next right-leaning guy. But, really, when it comes down to it, that's part of a pretty small corner of the news world. I otherwise admire (and can relate to) journalists and what they do, when it comes to the nuts-and-bolts of covering the news. They're basically doing what we all do out here on the web -- they just do it within the pages of some publication somewhere.

[mrbill]

They do the same manipulation with oil company or most any business Percent Profit.

They put out head lines such as: Profits Increase 75%. Then lay people get that 75% number in their mind and think Exxon etc actually MADE 75%. The forget the modifier word INCREASE. They did not make 75%. In fact they made a bit over 10%. But politicians and the public are to stupid to figure out how much these companies actually make.

They cant figure out that the little bakery next door also has a 75% INCREASE if their profits go from 4% to 7%. That is a 75% INCREASE also.

BUT, Im thinking that is the narrative they wanted to push anyway. The big evil company etc. The oil industry has made an average of 9 +/- % for the last 40 years. Most companies are in that range if they are a certain size.

[mrbill]

They do the same manipulation with oil company or most any business Percent Profit.

They put out head lines such as: Profits Increase 75%. Then lay people get that 75% number in their mind and think Exxon etc actually MADE 75%. The forget the modifier word INCREASE. They did not make 75%. In fact they made a bit over 10%. But politicians and the public are to stupid to figure out how much these companies actually make.

They cant figure out that the little bakery next door also has a 75% INCREASE if their profits go from 4% to 7%. That is a 75% INCREASE also.

BUT, Im thinking that is the narrative they wanted to push anyway. The big evil company etc. The oil industry has made an average of 9 +/- % for the last 40 years. Most companies are in that range if they are a certain size.

[mrbill]

They do the same manipulation with oil company or most any business Percent Profit.

They put out head lines such as: Profits Increase 75%. Then lay people get that 75% number in their mind and think Exxon etc actually MADE 75%. The forget the modifier word INCREASE. They did not make 75%. In fact they made a bit over 10%. But politicians and the public are to stupid to figure out how much these companies actually make.

They cant figure out that the little bakery next door also has a 75% INCREASE if their profits go from 4% to 7%. That is a 75% INCREASE also.

BUT, Im thinking that is the narrative they wanted to push anyway. The big evil company etc. The oil industry has made an average of 9 +/- % for the last 40 years. Most companies are in that range if they are a certain size.

[Chris P]

Geez, man. OK.

[sbw]

Chris P: I otherwise admire (and can relate to) journalists and what they do

Yes, Chris, admirable and all that. But I'd be surprised if you can define what it is that journalists do. You are close when you suggest that it is similar to what the rest of us do.

Individuals, journalists, and society are like concentric circles. What is important for one is important for the others. We are trying to improve the accuracy of our mental maps of reality, the better to plan one's future. But too many of the journalists I read and listen to have forgotten that, and believe instead their job is either to convince or entertain.

[Jane]

LOL

[Chris P]

Yes, Chris, admirable and all that. But I'd be surprised if you can define what it is that journalists do. You are close when you suggest that it is similar to what the rest of us do.

You'd be "surprised," why? Because it's undefinable? Because I've displayed some inability to convey thoughts via words?

At any rate, I didn't suggest that journalism is "similar" to what the rest of us do. I said it's the same thing. They observe reality and communicate those observations. It's pretty simple, really.

Some journalists -- or rather, some of the people whose names you see in newspapers -- probably DO believe "their job is either to convince or entertain." And, in fact, some of them do just that. I'm pretty sure that, say, James Lileks believes his job entails entertaining others.

The vast majority of journalists, though, are just out seeing what's going on in the world and then using language to tell others what they saw. They cover city council meetings and the latest change in your town's average gas price, or write items about ticket on-sale dates for the upcoming concert by fill-in-classic-rock-band-name-here. They write stories noting that yesterday's weather was glorious but we've got raining coming this afternoon, or briefs about the woman who was rushed to the hospital after a wreck on I-40 last night.

That's what journalists do. Not sure if that definition meets your expectation, but it IS the definition.

Bloggers and web commenters do the same thing. We look at the world and write about what we see. That we feel compelled to do that, the way people we happen to call "journalists" feel compelled to do that, makes us all part and parcel of the same enterprise. And thus much more alike than not.

[monkeyfan]

I suspect much of the dislike for journalists in general stems from their institutional role in perpetuating ignorance of the facts in the workaday world that amounts to disinformation in the service of a particular political worldview...All the while claiming some mystical lack of bias.

The attitude of intellectual omnipotence many of them project - despite having little demonstrable basis in reality - might have something to do with it too.

But I didn't go to J-school so, hell, what do I know? It's not as if history or expertise in a particular field of productive endeavor has anything to teach the mundane population they condescend to sell their bias' to...

[sbw]

Chris P., try "Journalistic Indifference" on for size.

I need to rewrite it because I think I can express it more clearly today, but, cut me some slack and try to wade through it.

[effinayright]

Years ago, a friend worked in the Placement Office at Harvard, himself a grad with contacts in the business and academic world who enjoyed helping graduates get their first gig. Not high level contacts, just a Rolodex of people he could call to support a job application. IOW what you would expect from a good Placement guy at the top Ivy League school. (sorry, Yalies)

He used to tell us about job seekers who said they didn't care what their first position was, "as long as I get to help make policy".

He kept a tape recorder in his drawer, with the sound of a toilet flushing. He reserved it for clowns like those; once they left his office, he opened the drawer and hit the "Play" button.

[ken]

You people obviously haven't been reading BUSINESS news pages lately. Fortune magazine has become virtually unreadable. Even the WSJ News pages at times are head scratchingly anti-business. CNBC is a laugher. (BTW, The Economist died as a serious voice on business with the rise of anti-Americanism in Europe). No, pure J-School grads especially from Columbia have been pouring into business reporting jobs for a decade. They barely know the difference between supply and demand. But they clearly know "how to make a difference."

[sbw]

I know it's not closely associated with Columbia, but I can't read CJR (or AJR, for that matter).

So how much of something should one read? Enough to realize it would not be productive to read more.

[Roger Godby]

For MrBill,

In junior high economics class, we once had a visitor from the BBB. He talked about various things but the clincher was: How much profit (the concept was well explained) do companies make on average? a: <10% b: 10-30% c: 30-50% d: >50%

The class response was like an arithmetic progression beginning with 3 for a, b, c, d. Of course (a) was correct, something that I've always carried with me since and which has always given me more respect for businesspeople who're working with fairly thin "safety" margins that government taxation makes even thinner.

We were only junior high students, so ignorance isn't a shocker, but still: 8 out of 10 of us were way off on average corporate profits and would probably answer the same question the same way today, which makes "soak the rich" and "windfall" profits so much easier to slobber for and get enacted.

Oh, and MrBill, watch out for MrHands (if you're old enough to know who he was)!

[Orbit Rain]

"How to Lie With Statistics" by Darrell Huff must be required reading in j-school. They probably have "How to Lie with Maps" on their bookshelves too...that is, if they have any self-respect for their professionalism.

heh

[Bob Hawkins]

This isn't the first time this sort of thing has happened. William Jennings Bryan was the Democratic nominee for President in 1896, 1900, and 1908. His base of support was farmers who had branched out into land speculation and owed more money in mortgages than they could pay. Bryan wanted to deliberately cause inflation so the mortgages could be repaid with cheaper dollars. To do this, he needed to get the US off the gold standard.

His speech at the 1896 Democratic convention is one of the most famous in US history. He concluded it by thundering "You will not press down upon the brow of Labor this crown of thorns! You will not crucify Mankind on a cross of gold!" Which loses some of its thump when you realize he's defining "crucifixion" as "maintaining a stable currency."

[Jack Olson]

Bob Hawkins, the currency of the time was not really stable since the latter decades of the 19th Century were a time of deflation. The money supply had not kept up with the growth in the economy so debtors were having to repay their loans in appreciated currency. Deflation gave additional political force to the Populists, the Greenbackers, and the Free Silver movement.