What we're searching for

Google Zeitgeist has listed the most searched news terms in the United States for 2009. Among the top categories were economy, health care, the Senate, green energy and the bailout.

"Swine flu" led the headline news searches, followed by "inauguration" and "Limbaugh". Queries about the bailout led to acronyms: "AIG", "TARP", and "GM" were the top three searches.

"Kennedy" was the top search among those interested in the U.S. Senate, and "Obama" led the list for queries about health care reform, with "HR 3200," the House reform bill, and "universal health care" in the second and third slot.

When it came to the economy, the top search term was "crisis", followed by "cash for clunkers". "Iceland", "California", and "recession" rounded out the top 5.

Among the issues that led to a spike in interest, "Nayda Suleman," the woman who had eight babies, topped the list. "Somali pirates" came in fourth place and "balloon boy" floated in at fifth.

Big search spikes also followed real life disasters, from the earthquake in Italy to the fires in Los Angeles.

The full GZ list is here.

(found via Nieman Journalism Lab)

Information warehouse

The Economist takes a turn analyzing the decline of newspapers and speculating about what comes next. The British magazine argues that newspapers, as a news delivery system, are going through an evolution something like what happened to retail outlets - from mom & pop, to city department stores, to national chains, to Wal-Martization. Alongside the information warehouses, there are the boutique aggregator sites, specializing in specialized content and providing a higher level of curating, as editorial content control is now called.

From the Economist:

The main victim of this trend is not so much the newspaper (although it is certainly declining) as the conventional news package. Open almost any leading metropolitan newspaper, or look at its website, and you will find the same things. There will be a mixture of local, national, international, business and sports news. There will be weather forecasts. There will be display and classified advertisements. There will be leaders, letters from readers, and probably a crossword.

This package, which was emulated first by broadcasters and then by internet pioneers such as AOL.com and MSN.com, works rather like an old-fashioned department store. It provides a fair selection of useful information of dependable quality in a single place. And the fate of the news package is similar to that of the department store. Some customers have been lured away by discount chains; others have been drawn to boutiques.

The Wal-Marts of the news world are online portals like Yahoo! and Google News, which collect tens of thousands of stories. Some are licensed from wire services like Reuters and the Associated Press. But most consist simply of a headline, a sentence and a link to a newspaper or television website where the full story can be read. The aggregators make money by funnelling readers past advertisements, which may be tailored to their presumed interests. They are cheap to run: Google News does not even employ an editor.

If the model is true, then we'd be seeing depressed wages (check), cheaper production values (check), increased outsourcing (check), less local control despite calls for more (check), a push to lower quality and standards (check), and mass consolidation, bankruptcies and layoffs (check, check, check).

Detoxification

Early next week, the Obama Administration will roll out its plan to buy up those nasty mortgage-backed securities blamed for bringing the credit markets to a grinding halt. Apparently, the Treasury Department will push for public-private partnerships to sop up the toxic soup. From the New York Times:

The Treasury Department is expected to unveil early next week its long-delayed plan to buy as much as $1 trillion in troubled mortgages and related assets from financial institutions, according to people close to the talks.

The plan is likely to offer generous subsidies, in the form of low-interest loans, to coax investors to form partnerships with the government to buy toxic assets from banks.

Wall Street Journal

*Updated March 21, 9:49 a.m.: Paul Krugman digs into the details and finds the plan seriously wanting:

And I fear that when the plan fails, as it almost surely will, the administration will have shot its bolt: it won’t be able to come back to Congress for a plan that might actually work.

What an awful mess.

Living on credit

The influence credit cards have had on the way we spend, and ultimately on the health of our economy, cannot be overstated. We took a look at the credit card culture and calls for reform on Monday's "To The Point". Listen to the show here.

Remaking America in the Great Recession

The corporate titans that once stood as symbols of America's economic might are faltering and the Great Job Purge of 2008-09 has spread from sea to shining sea, signaling a massive reshaping of the American economic landscape is underway. So what will the new America look like when the recovery finally comes? It's too big a question to answer, but one we're wrestling with at "To The Point." Here's a first attempt at getting our head around the issue.

Fixing a hole before it forms

Former Washington Post editor Marsha Hamilton offers an instructive analysis of the news media's failure to adequately signal the severity of the coming economic crisis (it's certainly more informative than the hyperventilation found here).

Hamilton writes:

But even in hindsight, I think it would have taken a miracle for business journalists to have foreseen the current crisis in its magnitude and depth. Beat reporters saw the pieces of it, and columnists who took a broader view warned about the buildup of risk. But even those who predicted disaster, I think it’s fair to say, didn’t know how widespread it would become or how unprecedented the government’s reaction would be...

Nonetheless, there are certainly lessons to be learned about how to change some structural and cultural biases that might have gotten in the way—including the segregated silos we sometimes fall into in our beats, and a bias against speculative “this trend could be dangerous” stories. It’s not as sexy to prevent disasters as it is to cover them, but maybe we should rethink that, and learn to view warnings and prevention as one of the most important parts of our jobs.

One of the biggest obstacles to understanding, however, was out of our control: it was the decision to let major financial markets full of new types of housing-related investments expand with little or no federal oversight. No regulation means no transparency. Reporters and investors alike were kept from seeing what was going on behind the curtain.

The article, which Hamilton wrote for Columbia Journalism Review, contains this wise observation:

...there isn’t much appetite for speculative stories about complicated issues in most newsrooms. Once the crisis occurs, once you can quote government officials referring to credit-derivative obligations and credit-default swaps as “toxic assets,” it gets easier.

The truth is, there isn't much appetite for these kinds of stories outside the newsroom either. It makes me think of the film "Jaws" and the difficulty Roy Scheider's character had convincing people to get out of the water before they saw the shark fin for themselves.

Also, speculation can be dangerous. Just ask Judy Miller. In hindsight, we often assume that the newspaper warnings would have pointed to the danger that came to pass - but speculation can just as often warn of false dangers, and in the process embolden bad decision-making.

(CJR vis LA Biz Observed)

The upside of down

Less money,
less consumption,
less trash.

(photo Luis Sinco of the Los Angeles Times)

Company for the miserable

It's not surprising that a majority of Americans are worried about the economy - 63 percent say it's in a long-term decline, according to an ABC News poll out today. What is surprising is the number of people who say they're feeling the pinch. From the ABC poll (paraphrased):

63 percent say they've been hurt by the recession; three in 10 say they've been hurt "a great deal"

51 percent say they've been hit by the stock market collapse

Two-thirds are worried about maintaining their standard of living (74 percent of women vs. 57 percent of men)

27 percent say someone in their household has had their pay or work hours cut; 18 percent say someone in their household has lost a job

21 percent worry they'll lose their job, and almost half think they'd be unable to find as good a job if they had to look

53 percent are worried about health care (59 percent of women vs. 46 percent of men); 75 percent of lower-income Americans worry about health care

15 percent have fallen behind on the mortgage or the rent; 37 percent are worried they will (the numbers are highest for women, lower income and those under 40)
57 percent say they'll spend less this Christmas

24 percent approve of Bush's handling of the economic crisis; 23 percent approve of the overall response; 55 percent say Obama's off to a good start, but just over half think he can do anything about it

The trouble with free (redux)

Setting aside such questions as, 'Should journalism become a web of interlinking updates?', "Should we change the definition of journalist?', and 'Are editors an arrogant and unnecessary appendage that need to be surgically removed?', what's eating the bottom out of newspapers' bottom lines?

James Surowiecki, economics writer for the New Yorker, agrees with David Simon, former Baltimore Sun reporter and creator of "The Wire," that newspapers (and other forms of media that compete with themselves online) cannot hope to survive financially as long as they give away the news for free.

From Surowiecki's blog post:

Usually, when an industry runs into the kind of trouble that Levitt was talking about, it’s because people are abandoning its products. But people don’t use the Times less than they did a decade ago. They use it more. The difference is that today they don’t have to pay for it. The real problem for newspapers, in other words, isn’t the Internet; it’s us. We want access to everything, we want it now, and we want it for free. That’s a consumer’s dream, but eventually it’s going to collide with reality: if newspapers’ profits vanish, so will their product.

-snip-

For a while now, readers have had the best of both worlds: all the benefits of the old, high-profit regime—intensive reporting, experienced editors, and so on—and the low costs of the new one. But that situation can’t last. Soon enough, we’re going to start getting what we pay for, and we may find out just how little that is.

I've argued before that giving away the news for free affects more than profit. It diminishes the value of news - and of newsrooms - in the minds of both the reader and the owner; and, to some extent, in the mind of the reporter.

*UPDATE: Brian Till indicts himself as a media murderer in a column in the Las Vegas Sun (via Romenesko).

Et tu, Google?

Tough times are trickling up.

With Google's shares now trading at the bargain-basement price of $275, the once impervious shining-corporation-on-a-hill has been moved to do some belt-tightening. The Wall Street Journal has the latest on Google's austerity diet:

Then?

For much of its 10-year history, Google spent money at a pace that was the marvel of Silicon Valley. It hired by the thousands and dished out generous perks, including three free meals a day, free doctors, ski trips and laundry facilities, and subsidized personal trainers. It let engineers spend 20% of their time pursuing pet projects. The company's goal was to develop new products that would reduce its nearly total reliance on selling ads connected to Internet searches.

Now?

So with the U.S. economy in a recession, Google is ratcheting back spending and cutting new projects.

-snip-

This fall, the company announced plans to "significantly" reduce its roughly 10,000 contract workers, whose jobs range from engineering to food services. While the timing and focus of the cuts remain unclear, Google employees already are joking that it's getting easier to find a spot in the company's crowded parking lots.

Google has also begun chipping away at perks. In recent months, it reduced the hours of its free cafeteria service and suspended the traditional afternoon tea in its New York office.

I've eaten at a free Google cafeteria and it was pretty fucking good, so I know that's going to hurt.

The recession is real

The recession economists have speculated about and confidently asserted had taken hold despite there being no official statement from the Business Cycle Dating Committee, which decides such things, has now been officially recognized. Indeed, it's been with us since last year.

The bleakness of Black Friday

Peter Goodman of the New York Times offers a welcome exception the tired Black Friday retread.

Instead of counting shoppers and speculating about whether retailers are gonna make out like they hoped, he examines what transformed our annual frenzied ritual of consumption into something that on Friday killed a temp worker at Wal-Mart, an outcome that somehow seemed preordained in an economy addicted to bad habits and desperation.

Goodman writes:

It was a tragedy, yet it did not feel like an accident. All those people were there, lined up in the cold and darkness, because of sophisticated marketing forces that have produced this day now called Black Friday. They were engaging in early-morning shopping as contact sport. American business has long excelled at creating a sense of shortage amid abundance, an anxiety that one must act now or miss out.

-snip-

For decades, Americans have been effectively programmed to shop. China, Japan and other foreign powers have provided the wherewithal to purchase their goods by buying staggering quantities of American debt. Financial institutions have scattered credit card offers as if they were takeout menus and turned our houses into A.T.M.’s. Hollywood and Madison Avenue have excelled at persuading us that the holiday season is a time to spend lavishly or risk being found insufficiently appreciative of our loved ones.

-snip-

Wages for most Americans have fallen in real terms over the last eight years. Pensions have been turned into 401(k) plans that have just relinquished half their value to an angry market. Health benefits have been downgraded or eliminated altogether. Working hours are being slashed, and full-time workers are having to settle for jobs through temp agencies.

Indeed, this was the situation for the unfortunate man who found himself working at the Valley Stream Wal-Mart at 5 a.m. Friday, a temp at a company emblematic of low wages and weak benefits, earning his dollars by trying to police an unruly crowd worried about missing out.

In a sense, the American economy has become a kind of piñata — lots of treats in there, but no guarantee that you will get any, making people prone to frenzy and sending some home bruised.

It seemed fitting then, in a tragic way, that the holiday season began with violence fueled by desperation; with a mob making a frantic reach for things they wanted badly, knowing they might go home empty-handed.

The downward trend line steepens

The economy is bad and getting badder, and a bad economy is bad for newspapers, which are already struggling from a bunch of bad news. Alan Mutter has the stats:

Unless the global economy miraculously turns around on a dime, newspaper advertising revenue may plunge some $7.5 billion in 2008, according to a new projection attempting to assess the impact of the meltdown on the industry.

Should this forecast prove to be correct, sales would tumble by 16.5% to $37.9 billion from last year’ s depressed level and the industry will have lost a staggering 23.4% of its revenues since producing a record $49.4 billion in sales in 2005.

Slip, sliding away*, **

The bailout plan appears to be going down in flames in the House of Representatives, although the vote has been kept open to do some heavy duty arm twisting and turn 11 recalcitrant lawmakers around.

The Dow plunged more than 700 points as traders saw the bailout wasn't passing and is now down about 460 points (although it could be up or down 100 by the time I hit the button to publish this).

Oh, and Wachovia and Washington Mutual have disappeared.

*11:08 a.m. PST: The bill has failed, at least for now... Dow down 620 points, but swinging wildly like a cornered and wounded animal.

**11:14 a.m. PST: The New York Times reports: House Rejects Bailout Plan, 228-205; Leadership Plans Second Attempt to Pass Bill. Stories in the Washington Post and NYT.

Also, a federal grand jury subpoenas documents from Fannie Mae and Freddie Mac.

UPDATE: Read the roll call of today's vote here. Interestingly, given that Pelosi hails from the Bay Area, the bill would have passed had she been able to convince 13 of her fellow California Democrats to switch their votes from 'nay' to 'yea.'

In all, 15 California Democrats voted against the bailout package: Adam Schiff of Pasadena; Loretta Sanchez of Garden Grove; Linda Sanchez of Lakewood; Joe Baca of San Bernardino; Xavier Becerra of Los Angeles; Grace Napolitano of Santa Fe Springs; Lucille Roybal-Allard of East Los Angeles; Hilda Solis of El Monte; Brad Sherman of Sherman Oaks; Mike Thompson of Napa; Lynn Woolsey of Marin; Barbara Lee of Oakland; Diane Watson of Los Angeles; Pete Stark of Fremont; and, Bob Filner of San Diego.

That's nearly half of the 34 Democrats in the California delegation. On the other side, nine of the 19 California Republicans opposed the bill.

UPDATE II: As of the closing bell, the Dow had fallen 778 points, the worst single-day drop in two decades.

Dissecting the autopsies

The cuts have been made and now media observers are trying to figure out what it all means. Twenty two reporters and editors lost their jobs at the Los Angeles Daily News, another 9 jobs were eliminated at the Torrance Daily Breeze and 9 at the Long Beach Press-Telegram.

One assumption I've seen repeated over and over, including at the Los Angeles Times, is that the economy is the reason for the staff cuts. Here's what Mark Madler has to say about it at the San Fernando Valley Business Journal: This time around a weak economy is to blame for the Daily News job losses and those at other papers. Advertising revenues continue to drop, not helped by the mortgage meltdown, the credit crunch and high gas prices.

I think that's wrong.

The current economic downturn played a role in the timing of the cuts, but it's not the reason the cuts happened. Reducing staff is one of the least effective ways to address a short-term economic crisis. Rather, MediaNews long ago devised a blueprint for consolidation of its Southern California newspapers to create a business model it believes will be successful over the long term. The bad economic picture provided the rationale to get it done at this moment.

Newspapers across the country are contending with what insiders call the "downward trend lines" in advertising and circulation. The idea is that whatever happens in the short run, papers will continue to lose subscribers and advertising dollars at a steady rate for the foreseeable future.

Different papers are dealing with this issue in different ways. The Los Angeles Times appears to be buying into the philosophy that going local is a safer, and cheaper, bet over the long term. MediaNews wants to eliminate the redundancies it sees among the papers in the chain. This means concentrating a few resources at individual papers to exploit a perceived strength while consolidating the rest.

Look at who lost jobs at the Daily News. Almost all of the reporters covered beats (the NFL, baseball, Washington, DC) that could be filled either by wire services or copy taken from "sister" papers. The remainder - editorial assistants, an editor emeritus, a music critic, a librarian - are positions considered luxuries in a chain that will rely more on common pages and online updates.

The cuts made at the Daily Breeze and the Press-Telegram were more obviously part of this consolidation plan. The P-T is now a bureau of the Daily Breeze and both papers will become feeders to the Daily News. Indeed, the Daily Breeze is getting an expanded copy desk out of this because it will become the hub for entertainment and features reporting for the chain.

Yes, the chain. That's the word to remember here. The Daily News, the Press-Telegram and the Daily Breeze all have long and storied histories. None of them wants to lose its identity or autonomy. Yet that's exactly what has to happen for the MediaNews dream to come true.

It's all about efficiencies

What was done in the East has been done in the West.

The massive cuts implemented this week at Singleton's three L.A. papers - the Daily News, the Breeze and the Press-Telegram - have paved the way for structural changes long sought by Denver.

It's about knocking down walls as much as its about saving money.

Rather than have three papers with full staffs that look to protect their turf, Singleton wants a partnership that operates as a single business entity. If you want to see how it works, look no further than the San Gabriel Valley, where the Star-News, Tribune, Whittier Daily News share revenues, a copy desk, a reporting staff, an executive editor... and just about everything else you can imagine.

In the wake of these cuts, I imagine there will be a further mixing of editorial staff (and probably an overall reduction of editors), more common pages, a centralized copy desk, and the eventual elimination of anything and everything considered to be redundant.

The merger should also do away with the unions, allowing for cheaper hires over the long term.

Resentments will run deep and newsroom morale will drop, but anyone not with the program will be welcome to leave.

To put it another way: These cuts are not a hasty response to a sudden drop in revenues. These cuts are part of a larger reorganization plan that was simply waiting for a downturn to be implemented.

Credit cards are us

As the subprime mortgage crisis continues to reveal the weaknesses in our shoddy middle-class economy, more attention is being paid to the financial instrument at the heart of it all: the credit card.

If you want to know how countless families came to believe they could afford houses that they could not afford, and then refinanced these house to fill them with more things they could not afford, look no further than the economic lessons offered by the credit card.

The credit card isn't merely a mechanism with which we buy things. It is a part of the foundation of our economy and a touchstone of our culture.

The credit card has taught generations how to spend. It has altered our sense of value and influenced our understanding of responsibility. It closes the gap between the life we have and the life we want - the life we think we deserve. It is how we keep up with the Joneses; how we mask our poverty; how we keep up with inflation; how we keep realty at bay.

Credit cards prop up countless families. They make attainable that which cannot otherwise be attained. They augment stagnant wages. They reinforce the American ethic of instant gratification with a carefully structured repayment plan that masks the true cost of the bargain.

The devil should be so crafty.

TIME magazine has a short piece about the abusive penalties and fees credit card companies are charging customers these days (and have been for years). Congress, having spent decades giving banks a freer hand, now appears to be rethinking deregulation. But whatever Washington does, it will come too late.

The entire country is approaching its credit limit and the bill has come due. No one is blameless in this transaction - not the banks that made it too easy to get into hock, not the politicians who relied on this false economy to claim economic success, not the credit card holders who knew it was all too good to be true.

But what will we use to pay down our debts, since such a huge portion of our assets are on loan?

The entire nation needs to rethink the value of things and come to grips with how much it really earns. Otherwise someone else is going to buy up all of our debt and, like those credit card companies, start charging such excessive fees and penalties that everything we earn will go to paying them off.

Virtual reality check

The American economy requires a certain suspension of disbelief to operate.

Consider, for example, the credit markets. Unfortunately, the fourth wall has come down and the play has fallen apart.

I've long argued that our economy is based on a false foundation of credit and was bound to implode - perhaps in a series of bubbles, perhaps in a series of recessions.

I'm reminded of the old admonition: Neither a borrower nor a lender be. A good line, but an unrealistic goal in an economy that trades on bets made about the future. But something fundamental needs to change if the middle class - a relatively new invention, I might add - is to survive.

To me, the question isn't what happened to cause this credit crisis. The question is whether this economy can find something other than credit-based schemes to keep the middle afloat? After all, it was ill-advised mortgages that provided the money to millions to pay down other debts and buy the cars, computers and boats that kept our remaining industries singing along, including our biggest industry of all: service.

So what's next? After all the dominoes have fallen, do we set them back up? If not, what's the new strategy? What's the new way?

Just thinking out loud.

Monkeys on typewriters

If one person can mismanage a stock portfolio to the tune of a $7.1 billion loss, then I contend no one on a trading floor really knows what the fuck they are doing.

A related thought: Is the stimulus package agreed to by the White House and Congress anything more than a back door way of redistributing tax revenues to the very creditors who are ailing because of their bad bets on subprime mortgages and credit cards?

Indeed, something seems fishy about a stimulus package premised on the idea that if you give more money to people who have already overspent you'll spur the economy forward by encouraging them to spend more.

But, then, I'm no economist.

Also, what's with the Fed's 3/4 percent rate cut? The solution to our credit crisis is to encourage more borrowing?

This is casino economics. Let the drunk who's down $500 at the craps table gamble the house's money and fleece him for another $700 as he tries to dig his way out of the hole he's in.

Real hard times*

Forget stocks dropping on Wall Street and poor Citibank writing down billions in debt. Here's a story about a real American economy that a one-time stimulus packages will do nothing to help.

After reading the story, I have three initial questions.

First, how recent is this terrible transformation from working class to working poor in the Midwest?

Second, is our health care "crisis" really about rising medical costs or a result of our stagnant and often falling wages?

Third, how in the world can a Republican beat a Democrat in Ohio this year? Mitt Romney's Democratic-lite turn in Michigan notwithstanding, no one making $8 or $9 an hour at McDonald's is going to respond to calls for more tax cuts as a way to dig out of this hole.

*Also, I hope any print journalists wondering why they're still in the business will read this and be inspired.