The Unfiltered News

In 2009, the worst economic year for working people since the Great Depression, the top 25 hedge fund managers walked off with an average of $1 billion each. With the money those 25 people “earned,” we could have hired 658,000 entry level teachers. (They make about $38,000 a year, including benefits.) Those educators could have brought along over 13 million young people, assuming a class size of 20. That’s some value.

Apparently the 25 hedge managers did something that is even more valued in our society. But how valuable was it, really? To assess that, we need to answer a few basic questions: (more…)

As Charles Dickens reminded us in his classic novel Great Expectations, the line between crime and cash is a continually blurry one. And it’s easily manipulated by language and narrow self-interest.

For example, let’s just consider the overly extensive use of one term: “Unexpectedly.” It is especially ubiquitous in finance journalism, where it is repeatedly used to console a rightfully nervous readership that, while good news is a great expectation, bad news just seems to comes out of nowhere. Although I’ve been informally following this clumsy usage for years now since diving into the hazy, crazy world of finance, I’ve never run out of daily examples. Just plug the term “unexpectedly” into Google News on any given day, and neither will you.

Here’s a few that Google coughed up during this writing: “U.S. Home Sales Fall Unexpectedly in Feb.,”ABC News reported. “French Consumer Confidence Unexpectedly Falls On Job Concern,” Bloomberg News reported. “South Africa Unexpectedly Cuts Rates to 6.5%,” the Wall Street Journal reported.

Unpacking any of these headlines should be simple enough for those who aren’t economists, even without the benefit of reading the stories themselves. Nothing in the average American’s life and salary, to say nothing of the lenders and companies he or she has to deal with, warrants the surveyed optimism of economists who think home sales should be going up, rather than down, in any given month.

Meanwhile, France isn’t immune to our continuing global recession, which is being further enhanced by deepening unemployment and rising corporate profits. So it’s no wonder the French don’t feel like spending money, when they don’t have jobs. And although you need to be somewhat savvy on international currencies and markets to suss out the meaning of South Africa’s rate cut, it’s not a stretch to look at the headline and guess, correctly, that the nation is trying to encourage demand for its stocks and bonds. In other words, none of these things are unexpected. They make sense and cents.

Except to economists and the traders they enable, both of whom lately have been blowing calls with incorrect predictions, at a major cost to all of us.

“We always use the terms ‘expected’ and ‘unexpected’ when a rate decision, earnings and other data emerge counter to our surveys” of economists, Bloomberg spokesperson Judith Czelusniak told AlterNet.

“For better or for worse, Wall Street is all a game of expectations,” Paul La Monica, editor-at-large for CNN Money online, explained to AlterNet. “Stocks move based on how a number, be it an economic report or corporate earnings report, looks compared to expectations. That’s an admittedly myopic point of view, but that’s the way trading works.”

Or doesn’t. From ex-hedge funder Jim Cramer screaming at CNBC’s Mad Money viewers to keep buying Bear Stearns stocks on the eve of its collapse, to the consensus of top politicians and economists totally missing the recession, and down to the current cheerleaders for our so-called economic recovery, the market has been a volatile mess for years because of suspicious expectations. Those unreliable sources and a great many other drinkers of guilt-free derivatives Kool-Aid thought they could keep shuffling stratagems and paper, and the market would just keep inflating. But anyone with an understanding of just the term “bubble” understands that it is defined not by its inflation, but its annihilation. If it doesn’t pop, it isn’t a bubble. End of lesson.

This unsustainable desire for prophets and profits has led us down some dark alleys, where reality has administered ceaseless beatings to our integrity and accounts. But not our perception, which as advertisers often say, is reality itself. For some reason, that desire for great expectations unmoored from reality perseveres, and remains enchanted by a political and economic paradise that is not only incorrect, but impossible. Instead of continuing to rely on those who can’t seem to separate their perception from reality, we should be ignoring them outright. If anything, we shouldn’t keep paying them for being wrong when it literally counts, which starts with the headlines and ends with our wallets.

“How someone can read a collection of forecasts, and from that deduce a lack of evidence of potential recession is far beyond me,” said Barry Ritholz, financial analyst at the Big Picture and author of Bailout Nation, after Briefing.com’s president Dick Green analyzed the prediction of “top Wall Street economists” in November 2007 and concluded that “there is no evidence of recession…there is no evidence of a broad credit crunch.” That was mere months before the failure of Lehman Brothers and Bear Stearns. “It’s disingenuous beyond belief,” Ritholz added.

Perhaps, but Briefing.com, unlike many white-collar and blue-collar workers worldwide, still has a job, crunching numbers and surveying economists for financial publications like CNN Money and many more. It reaches millions of readers in 86 countries, and one hopes it doesn’t have access to their bank accounts. But it’s just part of a worldwide network of in-house and out-house analysts who filter economists’ data and predictions for the media and other clienteles. And those predictions move mountains of money on a daily basis, often in the wrong direction.

As recently as last month, economists surveyed by Briefing.com blew the call on how many Americans would file for unemployment for the first time. In the week ending Feb. 13, they had expected it to slide down to 438,000, building on the previous week’s upwardly revised 442,000. Instead, claims rose to 473,000, surprising probably no one but those economists responsible for influencing CNN Money’s story “Jobless claims rise unexpectedly.” The rest of us probably noticed that nothing in the nation’s employment picture had improved or warranted the optimism. In fact, the previous week’s tally had been revised upward, not downward, so an increase would make sense. It would be, in a word, expected.

After talking with CNN for this article, it changed tack and parsed April’s alleged curveball more directly: “Jobless claims soar.” Initial jobless claims ending the week April 3 hiked up to 460,000, 18,000 more than the week before. And that week was upwardly revised by the pained smilers at the Labor Department, who always manage to find crappy data they forgot to integrate before releasing their clumsy reports. But the paid analysts at Briefing nevertheless blew the call worse, expecting claims to fall to 435,000 rather than rise at all. Because we’re in a recovery and all.

This isn’t because they are terrible at what they do; their paychecks obviously posit the opposite. It is because their job is to sell confidence, rather than tempered or even depressed expectations, no matter how realistic they may be. And most of finance journalism is the engine of their function. They’re also there to lend weight to the dizzy optimism that all markets, especially depressed ones, need in order to stay solvent, coax money off the sidelines, whatever works. And woe to you if you hook your vulnerable equity to their unreliable propheteering.

“Failure is a good thing,” JP Morgan Chase CEO Jaime Dimon explained last October at the annual meeting of the Securities Industry and Financial Markets Association. “Everyone should be allowed to fall.”

Perhaps, but repeated failure is a recipe for, well, failure. Readers of financial journalism would be wise to avoid attributing any meaning to the “unexpected” swings of the market, when what is only unexpected about those swings is that they were expected to not swing at ail, but stay on an ever-upward course. Avoiding so-called expert opinions altogether would be a wiser choice. Instead, investor and dilettantes alike would be better off crunching some common sense, and allowing their perception and reality to meet. A quick glimpse at the details and histories of their own lives and nations, and those around them, will illustrate all too clearly that we have a long way to go before business as usual returns.

And given that in the 21st century so far business as usual has been spectacularly destructive, who needs it? Ignorance holds far more bliss than the blown calls of geeks like Alan Greenspan who are more wrong than they are right, to the detriment of us all. Given the past performance of the media’s prized economists, ignorance probably has a better track record.

“The financial press often gets too caught up in playing along with the Wall Street expectations game,” said La Monica. “Bleak economic news can be portrayed in a positive light, because the numbers weren’t as bad as expected. By the same token, good numbers are reported as surprisingly weak when they fail to meet lofty targets. The financial press definitely needs to do a better job of reporting about long-term trends, not just day-by-day gyrations in the market.”

Over the past week or so, stories about conservative hypocrisies have been popping up in mainstream media like cute kitten videos on the internets. There was the Vatican blaming the news media for the pedophilia practiced by priests; the Republicans blaming the violence against Democrats on the Democrats themselves; Sarah Palin, intoning that “violence isn’t the answer,” studding a map with gunsights to target the Dems who should be gotten rid of come November; and, of course, fundraisers for the family values party trying to expense-account their visit to that faux-lesbian, bondage-themed nightclub in West Hollywood. It almost made you think the conservative movement was about to collapse under the weight of its own delusions.

But then the cable ratings came out and showed that Fox News had had its best quarter ever, and that it’s the second most-watched cable channel in prime time, right after USA Network.

And that made me think of another recent story, the purge of former Bush speechwriter David Frum from the American Enterprise Institute, largely for delivering quotes like this: “The Republicans originally thought that Fox works for us, and now we’re discovering we work for Fox. The balance here has been completely reversed, and the thing that sustains a strong Fox network is the thing that undermines a strong Republican Party.”

How is it that conservatives keep getting caught violating their supposed bedrock values, weakening and ultimately discrediting the party that carries their political hopes, yet the network that promotes their cause continues to soar above its competition?

What neocons obsessed with Israel and American foreign policy (like Frum, who coined the term “axis of evil”) can’t seem to grasp is the domestic failure of the Bush administration at just about every level. Frum believes his own hype, and thinks the battle can still be joined for a “muscular” foreign policy. But Roger Ailes and Fox News realize that the worm has turned. They recognize the need to wage a rear-guard fight in defense of fragile right-wing victories (from tax cuts to a packed courts system) won over the past quarter century. They also need to keep their people out of jail for war crimes. And the best way to do that is to keep American politics in a state of chaos, with tea parties and fresh social outrages at every turn.

And that’s Fox’s storyline, which happens to be pretty good TV. It’s like an episode of Lost -it doesn’t have to make sense, it just has to keep the feeling of claustrophobic, terror-induced suspense bubbling away.

So, in Fox’s Sim Nation, white America feels victimized, spat upon, and ultimately vindicated by the outcome of every story. Fox allows viewers to complete each arc of moral judgment in their minds, if they keep watching long enough. For example, Republican whip Eric Cantor started last week as the hamhanded apparatchik who tried to say the Dems were attracting violence by whining about it. Someone had shot a bullet through his office window after the health care bill passed, too, he said, but you didn’t hear him complaining about it–that is, until he mentioned it in a press conference, provoking local cops to announce it was only random gunfire and not a deliberate attack.

Embarrassing, isn’t it, when reality mocks your spin? Fortunately, Fox viewers didn’t hear all that much about the Virginia police report, but they got an earful about Philly resident Norman Leboon, who was arrested a few days later for threatening Cantor and his family in a weird YouTube rant. That Leboon had threatened people of just about every political persuasion–he was arrested last June for threatening to have the angel Gabriel kill his roommate–wasn’t nearly as important to Fox as the fact that his threats, circulated when they did, seemed to vindicate Cantor’s original thesis.

Today’s left doesn’t have a dream machine that makes whatever they do seem to come out all right in the end. Quite the opposite, in fact. Always open to self-doubt and willing to acknowledge that the truth might yet be hidden from view, science-friendly liberals gravitate toward complexity and even ambiguity, themes difficult to squeeze into a bumper sticker. The left has its own spin, of course, and I’m all for it (luv ya, Ed Schultz), but it’s not the spin that eludes us, it’s the big-picture arc that we miss.

And the big picture is an art form, not a term paper. The left was once the master of such forms, couched in popular traditions and served up with brio, like the “Four Freedoms” FDR preached in 1941 (freedom of speech and worship and freedom from want and fear). Two years later, at the height of World War II, Norman Rockwell did four patriotic paintings that have gone on to become his most memorable images (”Freedom from Want” is the Rockwell used every year as an illustration for a family Thanksgiving).

Those schmaltzy pictures are as phony as John Boehner’s tan (absent as they are of blacks, Asians, gays, etc.), but they capture the promise of a democratic America that cares for all its people. The elisions in their cast of characters are a little like the details Fox de-emphasizes in its presentations–like, for example, the pre-recorded celebrity interviews that Sarah Palin never conducted but was able to commandeer for her Fox special last night, Real American Stories Fox knows never to let the details get in the way of its message, which in this case is that Palin is a caring television professional, not to mention a “real” American. The show strings together inspirational people profiles like those that end each nightly network newscast (ABC’s “The American Heart” is the most treacly titled). Palin, of course, benefits by the association with courageous citizens, and Fox is able to use Oprahanian TV techniques to domesticate her virulent rightwing politics.

And that’s why even when the Dems win, they don’t always gain traction (post-health care vote poll numbers are all over the place). They have to reconquer the same territory over and over again, in no small part because Fox is maniacally faithful to its big picture.