Sunday, December 18, 2011

Error by Omission

The media likes to take a basic story and puff it up a bit to make it seem more dramatic.  People like to believe the more dramatic stories, particularly if it fits into their preconceived world-view.  Headlines are designed to sell newspapers, not to inform.

Headlines are a poor place to get useful information.  The news media hypes things all out of proportion, and yet so many people I know think it is a useful source of information.  And of course, the media rarely follows up on a story or corrects errors in stories.  There might be a small "corrections" section on page two, but who the heck reads that?  The retraction never gets as much play as the story.

Here are a few examples of how sensationalism can be used to get you all riled up about things and severely misinform you as to what is really going on:

The Headline:  Banks are taking short-cuts in foreclosure proceedings and throwing innocent people out of their homes!

The Reality:  The foreclosure crises is so vast that banks are swamped with paperwork.  Foreclosing on a home is not easy - in some States, such as New York, it can literally take years.  It was estimated that if every home facing foreclosure in New York went through the entire process, it would take 62 years to clear up the backlog.

Yea, in situations like that, you may be signing tons of documents in a group.  And you can call that "robo-signing" but that doesn't mean the underlying foreclosures were not legitimate.  A lot of people are not paying their mortgages - and foreclosure is the inevitable process that occurs when you stop paying your mortgage.  That is how it works, period.   You don't pay - you lose the house.  Amazing how this simple concept seems to elude so many people today.

In some instances, banks have been accused of "rushing" the process.  But in those cases, it was not a matter of borrowers who had not defaulted, but merely banks who did not follow the process to the letter.  And these same banks were ordered to pay back any costs that consumers may have lost in the process.  Guess what?  That probably won't amount to much.    These are people who stopped paying their mortgage payments, and had no way to stay in the home.  Whether they lost the house a month or two early is sort of irrelevant.  It is not like they would have kept it.  No one is losing a home they shouldn't have lost, as a result of these errors.

Now, there have been a very few cases, such as this one, where people with no mortgage whatsoever were improperly foreclosed upon.  But as the example illustrates, the situation was corrected, the bank was forced to pay attorney's fees, and the law firm that made the error is now out of business.  And no, they didn't lose their home, and they were not thrown out on the street.  Total damage?  $2500 in Attorney's fees, which the bank ended up paying.

And there are other cases where members of the military have been foreclosed upon while on active duty.  It is a little-known law, but you can't repo someone's car or take their house while they are overseas.  Unfortunately, there is no mechanism that allows a bank or loan company to check on this, at the present time, and as a result, some servicemen have been foreclosed upon or had cars towed.  But even in those cases, the payments were not being made.  At best, they would have lost their cars or homes, anyway, once they returned from deployment.  And it appears that they may have a legal cause of action to sue, as a result of these violations.  But it is not like they get a free car or house, just for being in the service.

There is no systematic attempt to steal homes from people, nor would such attempts even work.   If you pay off your mortgage and record the lien release at the County records office, they can't foreclose on you - legally.  But if you read the papers, you might come away with the impression that at any minute, a bank you never heard of is going to swoop down on you, take your house for no reason at all, and toss your ass out on the street - and you will have absolutely no recourse.

This is not to say mistakes don't happen.  But this is not some widespread conspiracy or occurrence.  The robo-signing "scandal" is hardly a scandal, but merely an example of clerks overwhelmed by a mountain of paper.

But I guess "Overworked Clerical Staff Makes Mistakes" isn't a very compelling headline.  No villains in that one!

The Headline:  Climate-gate E-mails Prove Global Warming a Hoax!

The Reality:  Some e-mails stolen from a Climate Research Center in the UK contain phrases, which when taken out of context, were used by right-wing bloggers to "prove" that global warming is a hoax.

What is not said, of course, is that these are e-mails from one research center in one country, and deal with discussions between four researchers.  This is hardly a worldwide conspiracy amongst researchers to "invent" global warming, even if the purported contents of the e-mails was as described.

Of course, the reality is, if you comb through over 1,000 e-mails - of anyone - you could extract phrases that purport to support a particular point of view.  It is akin to the "Tax Protesters" using phrases like "voluntary" in describing the self-reporting nature of tax returns, to argue that the underlying tax itself is optional.  This is, of course, not the case.

In both cases, people who have preconceived notions and agendas are willing to believe easy answers, rather than difficult facts.  "Gee, I'm glad that whole global warming thing is over!" people like to think.

And a lot of people like to think this.

The Headline:  Satan worshipers are abusing children!

The Reality:  No, they aren't.

In the 1980s, and even on until today, there have been a number of false accusations and grandstand prosecutions against individuals and groups, alleging crimes so vile that people merely assume the person or group is guilty, without bothering to check out the facts.

As these cases unwind, however, the allegations start to look less than plausible, and in fact, bizarre.  And, it turns out, some over-ambitions fundamentalist Christians are behind these phoney claims, often browbeating children into "testifying" to events that did not happen.  Rather than asking whether they were abused, these un-credentialed "researchers" asked questions like "which satanic symbols did they use?"

The screaming headlines sold papers - and made parents paranoid about their children being abused - a legacy that continues even until today.  After the most expensive trial in U.S. History, the owners of the McMartin preschool were acquitted.  But even today, many people merely assume they were guilty and went to jail.  The retraction is never published as prominently as the headline.

This example illustrates one real problem with the media - if someone is accused of a particularly notorious crime, people tend to assume they are guilty, as to defend that person - even if they are innocent - is seen as defending the crime itself.

It is a lot easier to railroad someone for murder than it is for a parking ticket!

The Headline:  The Economy is in Horrible Shape and Will Crumble!

The Reality:  The worst is behind us, and the economy is recovering, slowly.

Bad news sells, so goes the old adage, and while you may hear screaming headlines about how the Dow has dropped 100 points, you never hear much about the daily 10 point gains for the preceding 30 days.  And this usually is how the market works - it goes up a little bit, every day, over a long period of time, but drops are more sudden and dramatic in nature, and thus more newsworthy - as the news likes sudden and identifiable events.

Long-term trends are not newsworthy, until long after they occur.  And even then, not until someone writes a book or a report about it.  Global warming is not something that is a "news event" that fits into the "news cycle" - but "Climate-gate" is.  Similarly, big upsets in the economy are newsworthy, but general prosperity isn't.  As a result, if you watch the news, you will come away with a negative impression of the economy, even during periods of growth.

For example, the 1990's were a boom time in America, but if you lived in that era, you'd hardly have known it - if you watched the news.   The market went up, housing recovered, inflation was low, interest rates dropped, and unemployment dropped to all-time lows.  But the news media at the time reported nothing but bad news.  And there is never any shortage of bad news.

Sure the economy is doing well.  But what about that homeless guy living under a bridge?  What about HIM?  We have a five-page color spread on the "plight of the homeless" in the weekend section!  That makes a good "news story" as it has lots of "good visuals".  Get the homeless guy to stand next to that lady at the traffic light in the Jaguar - yea the one wearing fur!  Great picture!  Bam!  Page One, Baby!

No matter how good things get, the media seeks out cloudy linings.  Why? Because it sells newspapers and moreover, it is a "story".  General prosperity is not an event that you can point to, other than in retrospect.  People in the "Roaring 20's" didn't think things were all that great - until the Great Depression took hold.  Suddenly, the 20's were "roaring" in comparison.

Our current economy is reeling from a decade of over-consumption.   Perhaps it was the shock of 9/11 or something.  We wanted to show the world that we would not be bowed!  And even our President told us that "consumption as usual" was the way to preserve our economy and keep the terrorists from winning.  That gas-guzzling SUV was not just a piece of eye-candy, it was a rolling sign of your patriotism!  Your over-mortgaged mini-mansion was a stick-in-the-eye to Al Qaeda!

But the reality is, we spend an entire decade spending borrowed money. Middle-class Americans ran up debt, and then paid it off with home equity loans.  It was fun, for a while.  And even our government, under George Bush, ran up huge deficits.

And then it all fell apart, in the waning days of the Bush Administration - and the big banks were bailed out before Obama took office.

But people on the right will tell you that it all happened during the Obama administration - as this fits their preconceived world-view and also works in their political favor.  And they will tell you, even if you call them out on this, that the economy would have recovered faster, "but for" Obama's actions.

Maybe it is just me, but when Republicans utterly wreck the economy, I think they have no business offering helpful suggestions on how to fix it.  You had your eight years, thanks.

The reality is, every month, unemployment drops - not a lot, but a little bit.  Every month, the housing situation gets a little better - not a lot, but a little bit.  And over time, the foreclosures will work their way through the system and housing prices will recover to normal levels (not bubble levels) and the economy will grow again - and in fact it already is.

The world isn't going to end, although sometimes people think it is fun to think so.

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So what is the point of all this?  Well, you need, as a consumer(1) and a citizen, accurate data to make accurate financial and political decisions.  You need hard numbers before deciding to buy something or before deciding whether to invest.  Headlines about dot com companies are not good places to get investment advice.  But many folks look there - and invest based on that.

Getting accurate data often means looking beyond the headlines and perhaps not looking at them at all.  Once a story "ages" for a week, a month, or even a year, we find out that the screaming headlines were, in fact, all wrong.   And television is even worse, often exaggerating trivial events all out of proportion, on the premise that they can provide you with "up to the minute" information, when in fact they provide little or no useful information at all.

Just not watching this stuff is the best answer.  Because in most cases, it does nothing to add to your bottom line, does not "keep you informed" (but rather misinformed) and usually just raises your blood pressure and thus shortens your life, for no apparent reason.

Being "up to the minute" on the news, usually means you are less informed, not more so.

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(1) We refer to citizens, in terms of their financial life, as "consumers" and it struck me just now what a horrible normative cue that is.  Think about it, you are not being called an "investor" or a "saver" or even a "worker" (the NPR and Marxist favorite, but I am being redundant) but a consumer - as if your sole reason for existence was to buy an iPhone.  We need a better name than this.....