Watching another stirring speech from President Obama I put on my old-guy hat. He was describing his new plan to save home owners threatened with foreclosure. Again I donned that sense of superiority that I have been there. It's deja vu all over again. There is nothing new about the crash in home values. There is nothing new ab0out people walking away from properties that are no longer worth as much as the mortgage against them. In the long-ago and best-forgotten time of absurd interest rates (over 20%) there was the Farm Gate Crisis. (Not to be confused with all the crises that are named "...gate" after Watergate.) These go back to the high interest times when farmers were abandoning their farms; when they were marching on Ottawa demanding some kind, any kind, of help.
All I say is that there is nothing new about the current mortgage crisis, a crisis peculiar to the United States where buccaneer lending has been rampant. (We shouldn't get too smug because with bad times many people here will be hard-pressed to pay their mortgages, but the situation is not the same as the one 9in the U.S.)
So, under the now-tired heading of "Been there Done That" I remember the housing slump of 1960-61, another in I think '82 and the last one in '92. Home values had risen meteorically. Everyomne was euphoric. Then the air went out of the balloon and we came back to earth. There was a saying that applied to business, but it applies equally to home ownership: "Who is the smartest person in business?" Ansewer: "The second last owner of a hotel in Nassau." (The Bahamas was, when the saying was current, a hotbed of investor speculation.)
So someone got rich while prices were on the rise. Someone, and there were many of them, got out before the crash. Many however, consumed by the idiotic notion that what went up would never come down but would continue to rise, got stung.
Obama hit the constrution nail on the head: too much supply and a dimishing number of buyers. The supply comes from the abundance of newly reposssessed houses being sold under "power of sale" for a fraction of their one-time value. (But you know all this.) The President clearly wants to reduce the supply by stopping the spiral of foreclosures.
Ask any retailer what happens to the market for his product when a competitor goes bankrupt and the receiver sells the stock through a liquidator. There is a sudden bargain-basement supply of the very product the retailer is trying to sell. In some cases the bank will not allow the liquidator to go in but will try to sell the bankrupt stock to other retailers in the sasme business, just to keep the prices from collapsing.
Nexr point: why do so many people equate success with home ownership? What is so wonderful about "owning." In a previous piece I wrote for this spae,I commented that the "owenershjip society" of George Bush helped bring about the rush to buy a home whether it made financial sense or not.
Simple question: the people who have been foreclosed on or who have simply upped and left - where are they living now? In the basement of their parents' home?
What has been done to use offer those foreclosed homes as rental properties? What moves have been made to tell the family that can no longer pay the mortgage, stay in the home and we'll rent it to you.
It may be a goofy idea, but something has to happen to oversupply in an under-demand economy. Millions of people delay purchases which further clogs the market with supply. But look out - all that pent up demand will have to go somewhere. When it does, the spiral will resume. Unless more people refuse to jump on the bandwagon of consumer insanity and actually "save" their money.
Wednesday, February 18, 2009
VANISHING NEWS MEDIA??
I nearly fell off my chair the other evening watching Global News make themselves look stupid. But I'll get to that later.
First: a day hardly goes by without some "wailing and gnashing of teeth" over the decline and demise of daily newspapers. The malaise has filtered down to TV network news, which is being battered(as are the newspapers) by the internet. Most of what is written about the decline is self-serving boilerplate. It wails about how corporate ownership cares nothing about journalism. It weeps over the loss of readers and viewers under the age of 40. Evidence of that decline is clear. Watch TV News, especially the U.S. networks. Almost all the commercials are for aches and pains and osteoporosis and erectile dysfunction - all "maladies" prevalent among older viewers.
Newspapers have for years lamented that their audience is dying of old age. The same is evident in attendance at jazz concerts (real jazz, not "fusion" which may be everything from rap to hip hop) classical music concerts - where the only younger people are probably music students. New York's Metropolitan Opera is in a deep hole. La Scala in Milan is kept going by government subsidies and tourists.
The mourners are right. Interest in conventional news media is diminishing. The shrinkage is accelerated by the feckless rush toward making the media more youth-friendly. The rush to lure a younger demographic (see CBC Radio) has left thousands of listeners, viewers, readers stranded.
But there is another wide to it all. Many years ago when the Davey Commission on Media (Senator Keith Davey) met to examine the decline (this was almost 40 years ago!) of media, one of the pronouncements made by Senator Davey was that many people in the media (print and electronic) knew much less than their readers/listeners/viewers.
The word is: credibility. Of course you say, the New York Times or the Washington Post or the Globe and Mail present a high standard of journalism and, aside from differences of opinion) do not insult the intelligence of their readers.
But print media have suffered more than anywhere else, by a loss of revenue from the cash cow: classified advertising. It's virtually gone.
Back to the top of this item. Credibility. I have the greatest sympathy for the financial woes of Canwest Global TV. Yes their revenuea are down. Yes, they have cut staff. Yes, they made reckless acquisitions that haemmorhage money. But there is, lamentably, more. There is credibility.
Monday February 16th was Canada's new "Family Day." Along with President's Day in the U.S., both stock markets were closed. I watched Gobal National on that Monday evening. The news reader announced: "Here are today's financial numbers." Up on the screen pooped the index for TSX and the Dow. They were correct, except they were Friday's close! I waited patiently for the news reader to apologize for the gaffe. There was nothing. The next day I tuned in again, hoping for some recognition that they had goofed. Nothing. I EMailed my complaints. Response? Nothing.
What is worse - that the TV News people didn't recognize their mistake, or that the audience was compliant and said nothing?
Yes, there are problems for the media. But those problems are aggravated by a precipitous drop in credibility. And oh yes - one last jab: did anyone tell the august host Kevin Newman that there is no such word as "mis-cheev-ee-us."
First: a day hardly goes by without some "wailing and gnashing of teeth" over the decline and demise of daily newspapers. The malaise has filtered down to TV network news, which is being battered(as are the newspapers) by the internet. Most of what is written about the decline is self-serving boilerplate. It wails about how corporate ownership cares nothing about journalism. It weeps over the loss of readers and viewers under the age of 40. Evidence of that decline is clear. Watch TV News, especially the U.S. networks. Almost all the commercials are for aches and pains and osteoporosis and erectile dysfunction - all "maladies" prevalent among older viewers.
Newspapers have for years lamented that their audience is dying of old age. The same is evident in attendance at jazz concerts (real jazz, not "fusion" which may be everything from rap to hip hop) classical music concerts - where the only younger people are probably music students. New York's Metropolitan Opera is in a deep hole. La Scala in Milan is kept going by government subsidies and tourists.
The mourners are right. Interest in conventional news media is diminishing. The shrinkage is accelerated by the feckless rush toward making the media more youth-friendly. The rush to lure a younger demographic (see CBC Radio) has left thousands of listeners, viewers, readers stranded.
But there is another wide to it all. Many years ago when the Davey Commission on Media (Senator Keith Davey) met to examine the decline (this was almost 40 years ago!) of media, one of the pronouncements made by Senator Davey was that many people in the media (print and electronic) knew much less than their readers/listeners/viewers.
The word is: credibility. Of course you say, the New York Times or the Washington Post or the Globe and Mail present a high standard of journalism and, aside from differences of opinion) do not insult the intelligence of their readers.
But print media have suffered more than anywhere else, by a loss of revenue from the cash cow: classified advertising. It's virtually gone.
Back to the top of this item. Credibility. I have the greatest sympathy for the financial woes of Canwest Global TV. Yes their revenuea are down. Yes, they have cut staff. Yes, they made reckless acquisitions that haemmorhage money. But there is, lamentably, more. There is credibility.
Monday February 16th was Canada's new "Family Day." Along with President's Day in the U.S., both stock markets were closed. I watched Gobal National on that Monday evening. The news reader announced: "Here are today's financial numbers." Up on the screen pooped the index for TSX and the Dow. They were correct, except they were Friday's close! I waited patiently for the news reader to apologize for the gaffe. There was nothing. The next day I tuned in again, hoping for some recognition that they had goofed. Nothing. I EMailed my complaints. Response? Nothing.
What is worse - that the TV News people didn't recognize their mistake, or that the audience was compliant and said nothing?
Yes, there are problems for the media. But those problems are aggravated by a precipitous drop in credibility. And oh yes - one last jab: did anyone tell the august host Kevin Newman that there is no such word as "mis-cheev-ee-us."
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