The Mainstream Media and their Owners are biased in Favor of Government Largess, not Objectivity

Posted by PITHOCRATES - April 10th, 2011

The Mainstream Media is Biased after All

Problems with a for-profit education dependent on federal student loans beset The Washington Post.  Reveals a clear and present bias.  And threatens the venerable masthead (see The Washington Post’s dependence on the government it covers by Glenn Greenwald posted 4/10/2011 on Salon).

“The fate of The Post Co. has become inextricably linked with that of Kaplan, where revenue climbed to $2.9 billion in 2010, 61 percent of The Post Co.’s total,” the article detailed; “the company is more dependent than ever on a single business,’ [CEO Donald] Graham wrote in last year’s annual report, adding that the newspaper had never accounted for as large a share of overall company revenue as Kaplan does today.”

And that single business is an educational one.  A network of for-profit universities aimed at those who can’t afford a traditional college education.  These ‘poor’ people often pay for this education with federal loans.  And, of course, education is highly regulated by the federal government.  So this puts this The Post Co. into a bit of a sticky wicket.

Put another way, the company that owns The Washington Post is almost entirely at the mercy of the Federal Government and the Obama administration — the entities which its newspaper ostensibly checks and holds accountable.

Which is another way of saying there is a conflict of interest.  Which may taint their objectivity.  At times.  Not necessarily.  But possibly.  Which may explain the dominance of FOX NEWS.  Who may be beholden to corporate interests, too.  But it is clear that they are not beholden to the Obama Administration.  No, the current administration doesn’t much care for FOX.  Which can’t help but to lend an air of objectivity.

Beyond being reliant on federal money and not alienating federal regulators, the Post Co. desperately needs favorable treatment from members of Congress, and has been willing to use its newspaper to obtain it…

The Post is hardly alone among major media outlets in being owned by an entity which relies on the Federal Government for its continued profitability. NBC News and MSNBC were long owned by GE, and now by Comcast, both of which desperately need good relations with government officials for their profits. The same is true of CBS (owned by Viacom), ABC (owned by Disney), and CNN (owned by TimeWarner). For each of these large corporations, alienating federal government officials is about the worst possible move it could make — something of which all of its employees, including its media division employees, are well aware.

Of course, they left off two other entities that depend on not alienating the federal government.  PBS.  And NPR.  They have no corporate middlemen.  They get their funding directly from the federal government.  So they’ll be even more careful not to bite the hand that’s feeding them.

It would appear that journalism somehow went awry.  They will still criticize corporate fat cats.  Just not the corporate fat cats that sign their checks.  Or the government that signs the corporate fat cats’ checks.

The whole point of the First Amendment’s free press guarantee is that adversarial journalism is possible only if journalists are independent of political power. Yet the U.S. now has exactly the opposite dynamic: most major media outlets are owned by corporations that are anything but independent of government: they are quite dependent upon political officials for their profit in countless ways. We have anything but an independent press, which is another way of saying we have anything but a free press.

It is interesting that many attack the Republicans for being in the hip pocket of the big corporations.  And some of their loudest critics are themselves in the hip pocket of big corporations.  But claims of media bias are laughed off by those in the hip pocket of big corporations.  Meanwhile, they attack FOX NEWS for not being a legitimate news organization.  When many of these attackers are themselves far from legitimate.  So are these people inherently immoral?  Amoral?  Or are they just human?

Currying favor with political officials is how they secure scoops, leaks and access. Because media stars are now as wealthy and celebrated as the politically powerful whom they cover, they identify on socioeconomic and cultural grounds with these political officials; media stars are far more integrated into the halls of political power than they are outside of them.

They’re just human.  Craving attention.  Fame.  Wealth.  The good life.  And more fame.  They all want to be Walter Cronkite.  To become a legend.  By achieving greatness just for reporting the greatness of others.  That’s why reality television is so successful.  People watch rank amateurs achieve celebrity without any real talent.  And they say, hey, that could be me.  And so it is with many of today’s journalists.

FOX NEWS Dares to say the King Isn’t Wearing any Clothes

So how biased is today’s media?  Perhaps not that biased.  Here’s a newspaper story pretty critical of President Obama (see O meets the fog of war posted 4/10/2011 on New York Post).

Gen. Carter Ham, who commanded US military forces in Libya until control of the operation was handed over to NATO, told a Senate hearing Thursday that “there might be some consideration” of sending US ground troops to Libya to aid the anti-Khadafy rebels.

But President Obama said there would be no boots on the ground.  That we were only there on a humanitarian mission to protect Libyan civilians.  That we would be in and out in days, not weeks.  That there would be no mission-creep.  But this sounds like mission-creep.  A lot like in Vietnam.  We were only advisors at first.  To help an outmatched military force.  Then the mission crept.  And the next thing we knew we had hundreds of thousands of boots on the ground.  Could history be repeating?

The point being that situations, both on the ground and in the air, tend to change in unpredictable ways.

Gen. Ham surely knows this. Indeed, brand new second lieutenants know it.

But there’s no indication that President Obama and his defense team understand it — which probably explains why he doesn’t hesitate before making sweeping promises about the length and nature of America’s military commitments.

Perhaps.  While another Democrat president bungles us into another long-term military commitment in a land far from home that never attacked us.

Now that’s a pretty critical, objective news report on the Obama administration.  Perhaps the news media can maintain objectivity in the face of their corporate overlords dependent on the federal government for their profits.  Wait a tic.  The New York PostRupert Murdoch owns this, doesn’t he?  The same Rupert Murdoch who owns FOX NEWS?  Why, yes.  He does.  No wonder the New York Post isn’t afraid to say the king isn’t wearing any clothes.  Their income isn’t dependent on pleasing the king.

I guess a good rule of thumb for objective journalism is this.  Does Rupert Murdoch own the media outlet?  If so, it’s not an Obama administration toady.  And most likely objective.

A Detailed and Objective Mea Culpa

If you want to read more about the problems besetting The Washington Post thanks to its Kaplan division you can read a pretty detailed and objective accounting of it in The Washington Post (see The trials of Kaplan Higher Ed and the education of The Washington Post Co. by Steven Mufson and Jia Lynn Yang posted 4/9/2011 on The Washington Post).  It’s a fascinating read.  And quite the mea culpa.

Yes, they may be biased.  But they don’t like the position they’re in.  And that says something about the organization.  Besides, Charles Krauthammer is a columnist over there.  Not exactly a friend of the Obama administration.  And any paper that has Krauthammer as a columnist is all right by me.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

LESSONS LEARNED #24: “You cannot lobby a politician unless he or she is for sale.” -Old Pithy

Posted by PITHOCRATES - July 29th, 2010

BUILDING A RAILROAD ain’t cheap.  It needs dump trucks of money.  Especially if it’s transcontinental.  And that’s what the Union Pacific and the Central Pacific were building.  Starting during the Civil War in 1863 (the year Vicksburg fell and Lee retreated from Gettysburg).  The Union Pacific was building west from Iowa.  And the Central pacific was building east from California. 

For the most part, Protestant, English-speaking Americans settled Texas.  Mexico had encouraged the American colonists to settle this region.  Because few Mexicans were moving north to do so.   The deal was that the colonists conduct official business in Spanish and convert to Catholicism.  They didn’t.  These and other issues soured relations between Mexico and the American Texans.  The Republic of Texas proclaimed their independence from Mexico.  America annexed Texas.  Mexico tried to get it back.  The Mexican-American War followed.  America won.  Texas became a state in 1845.  And that other Spanish/Mexican territory that America was especially interested in, California, became a state in 1850.  Hence the desire for a transcontinental railroad.

The U.S. government was very eager to connect the new state of California to the rest of America.  So they acted aggressively.  They would provide the dump trucks of money.  As America expanded, the U.S. government became the owner of more and more public land.  The sale of new lands provided a large amount of revenue for the federal government.  (Other forms of taxation (income taxes, excise taxes, etc.) grew as the amount of public lands to sell decreased.)  Land is valuable.  So they would grant the railroad companies some 44 million acres of land (i.e., land grants) for their use.  The railroad companies, then, would sell the land to raise the capital to build their railroads.  The government also provided some $60 million in federal loans.

But it didn’t end there.  The federal government came up with incentives to speed things up.  They based the amount of loans upon the miles of track laid.  The more difficult the ground, the more cash.  So, what you got from these incentives was the wrong incentive.  To lay as much track as possible on the most difficult ground they could find.  And then there were mineral rights.  The railroad would own the property they built on.  And any minerals located underneath.  So the tracks wandered and meandered to maximize these benefits.  And speed was key.  Not longevity.  Wherever possible they used wood instead of masonry.  The used the cheapest iron for track.  They even laid track on ice.   (They had to rebuild large chunks of the line before any trains would roll.)  And when the Union Pacific and Central Pacific met, they kept building, parallel to each other.  To lay more miles of track.  And get more cash from the government.

PAR FOR THE COURSE.  When government gets involved they can really mess things up.  But it gets worse.  Not only was government throwing dump trucks of American money down the toilet, they were also profiting from this hemorrhaging of public money.  As shareholders in Crédit Mobilier.

Thomas Durant of Union Pacific concocted the Crédit Mobilier Scandal.  As part of the government requirements to build the transcontinental railroad, Union Pacific had to sell stock at $100 per share.  Problem was, few believed the railroad could be built.  So there were few takers to buy the stock at $100 per share.  So he created Crédit Mobilier to buy that stock.  Once they did, they then resold the stock on the open market at prevailing market prices.  Which were well below $100 per share.  Union Pacific met the government requirements thanks to the willingness of Crédit Mobilier to buy their stock.  The only thing was, both companies had the same stockholders.  Crédit Mobilier was a sham company.  Union Pacific WAS Crédit Mobilier.  And it gets worse.

Union Pacific chose Crédit Mobilier to build their railroad.  Crédit Mobilier submitted highly inflated bills to Union Pacific who promptly paid them.  They then submitted the bills to the federal government (plus a small administration fee) for reimbursement.  Which the federal government promptly paid.  Crédit Mobilier proved to be highly profitable.  This pleased their shareholders.  Which included members of Congress who approved the overbillings as wells as additional funding for cost overruns.  No doubt Union Pacific/Crédit Mobilier had very good friends in Washington.  Including members of the Grant administration.  Until the party ended.  The press exposed the scandal during the 1872 presidential campaign.  Outraged, the federal government conducted an investigation.  But when you investigate yourself for wrongdoing you can guess the outcome.  Oh, there were some slaps on the wrists, but government came out relatively unscathed.  But the public money was gone.  As is usually the case with political graft.  Politicians get rich while the public pays the bill.

(Incidentally, the investigation did not implicate Ulysses Grant.  However, because members of his administration were implicated, this scandal tarnished his presidency.  Grant, though, was not corrupt.  He was a great general.  But not a shrewd politician.  Where there was a code of honor in the military, he found no such code in politics.  Friends used his political naivety for personal profit.  If you read Grant’s personal memoirs you can get a sense of Grant’s character.  Many consider his memoirs among the finest ever written.  He was honest and humble.  A man of integrity.  An expert horseman, he was reduced to riding in a horse and buggy in his later years.  Once, while president, he was stopped for speeding through the streets of Washington.  When the young policeman saw who he had pulled over, he apologized profusely to the president and let him go.  Grant told the young man to write him the ticket.  Because it was his job.  And the right thing to do.  For no man, even the president, was above the law.)

THE FINANCIAL WORLD fell apart in 2007.  And this happened because someone changed the definition of the American Dream from individual liberty to owning a house.  Even if you couldn’t afford to buy one.  Even if you couldn’t qualify for a mortgage.  Even, if you should get a mortgage, you had no chance in hell of making your payments.

Home ownership would be the key to American prosperity.  Per the American government.  Build homes and grow the economy.   That was the official mantra.  So Washington designed American policy accordingly.  Lenders came up with clever financing schemes to put ever more people into new homes.  And they were clever.  But left out were the poorest of the poor.  Even a small down payment on the most modest of homes was out of their range.  Proponents of these poor said this was discriminatory.  Many of the inner city poor in the biggest of cities were minority.  People cried racism in mortgage lending.  Government heard.  They pressured lenders to lend to these poor people.  Or else.  Lenders were reluctant.  With no money for down payments and questionable employment to service these mortgages, they saw great financial risk.  So the government said not to worry.  We’ll take that risk.  Fannie Mae and Freddie Mac would guarantee certain ‘risky’ loans as long as they met minimum criteria.  And they would also buy risky mortgages and get them off their books.  Well, with no risk, the lenders would lend to anyone.  They made NINJA loans (loans to people with No Income, No Job, and no Assets).  And why not?  If any loan was likely to default it was a NINJA loan.  But if Freddie or Fannie bought before the default, what did a lender care?  And even they defaulted before, Fannie and Freddie guaranteed the loan.  How could a lender lose?

Once upon a time, there was no safer loan than a home mortgage.  Why?  Because it would take someone’s lifesavings to pay for the down payment (20% of the home price in the common conventional mortgage).  And people lived in these houses.  In other words, these new home owners had a vested interested to service those mortgages.  Someone who doesn’t put up that 20% down payment with their own money, though, has less incentive to service that mortgage.  They can walk away with little financial loss.

ARE YOU GETTING the picture?  With this easy lending there was a housing boom.  Then a bubble.  With such easy money, housing demand went up.  As did prices.  So housing values soared.  Some poor people were buying these homes with creative financing (used to make the unqualified qualify for a mortgage).  We call these subprime mortgages.  They include Adjustable Rate Mortgages (ARMs).  These have adjustable interest rates.  This removes the risk of inflation.  So they have lower interest rates than fixed-rate mortgages.  If there is inflation (and interest rates go up), they adjust the interest rate on the mortgage up.  Other clever financing included interest only mortgages.  These include a balloon payment at the end of a set term of the full principal.  These and other clever instruments put people into houses who could only afford the smallest of monthly payments.  The idea was that they would refinance after an ‘introductory’ period.  And it would work as long as interest rates did not go up.  But they went up.  And house prices fell.  The bubble burst.  Mortgages went underwater (people owed more than the houses were worth).  Some people struggled to make their payments and simply couldn’t.  Others with little of their own money invested simply walked away.  The subprime industry imploded.  So what happened, then, to all those subprime mortgages?

Fannie and Freddie bought these risky mortgages.  And securitized them.  They chopped and diced them and created investment devices called Collateralized Debt Obligations (CDOs).  These are fancy bonds backed by those ‘safe’ home mortgages.  Especially safe with those Fannie and Freddie guarantees.  They were as safe as government bonds but more profitable.  As long as people kept making their mortgage payments.

But risk is a funny thing.  You can manage it.  But you can’t get rid of it.  Interest rates went up.  The ARMs reset their interest rates.  People defaulted.  The value of the subprime mortgages that backed those CDOs collapsed, making the value of the CDOs collapse.  And everyone who bought those CDOs took a hit.  Investors around the globe shared those losses. 

Those subprime loans were very risky.  Lenders would not make the loans unless someone else took that risk.  The government took that risk in the guise of Fannie and Freddie.  Who passed on that risk to the investors buying what they thought were safe investments.  Who saw large chunks of their investment portfolios go ‘puff’ into thin air.

SO WHAT ARE Freddie and Fannie exactly?  They are government-sponsored enterprises (GSEs).  They key word here is government.  Once again, you put huge piles of money and government together and the results are predictable.  In an effort to extend the ‘American Dream’ to as many Americans as possible, the federal oversight body for Freddie and Fannie lowered the minimum criteria for making those risky loans.  Even excluding an applicant’s credit worthiness from the application process (so called ‘no-doc’ loans were loans made without any documentation to prove the credit worthiness of the applicant.)  To encourage further reckless lending.  Ultimately causing the worst financial crisis since the Great Depression. 

And, of course, members of Congress did well during the good times of the subprime boom.  They got large campaign contributions.  Some sweetheart mortgagee deals.  A grateful voting bloc.  And other largess from the profitable subprime industry.  Government did well.  Just as they did during the Crédit Mobilier Scandal.  And the American taxpayer gets to pay the bill.  Some things never change.  Government created both of these scandals.  As government is wont to do whenever around huge piles of money.  For when it comes to stealing from the government, someone in the government has to let it happen.  For it takes a nod and a wink from someone in power to let such massive fraud to take place. 

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,