SeanReadsTheNews

Bloomberg's Postrel on Oprah Winfrey's Impact

Hey -did everyone notice that Bloomberg News launched an editorial page this week?  Well, like all good media do when they launch a new section and want to make sure someone reads it, they hired the great Virginia Postrel, late of NYTimes.com, The Wall Street Journal Weekend Review, and The Atlantic, to be one of their columnists.  She's rewarding them already with a snappy, insightful piece on Oprah Winfrey's retirement that puts her into a broader context of how society has changed since her 1986 debut.

I absolutely adore how she brought iconic humor magazine Spy into the same context as Oprah.

Both Spy and "The Oprah Winfrey Show" sold gossip and personal stories. Both made their audiences feel like members of a club of superior people. Both were self-congratulatory. But the bases for their self-congratulation were, of course, very different. Spy and its audience prided themselves on being wised-up, clever and edgy; Oprah and her audience on being empathetic, optimistic and resilient. If "Oprah" was about uplift, Spy was about putting people in their place.

Her closer on Winfrey embodied a certain trend in American exceptionalism that has been with us since its founding - even as she criticized her - is another Postrel classic.  She makes the obvious thought-provoking as she always has.  I wish she could edit Reason, write for the Wall Street Journal, blog for the Atlantic and write for Bloomberg at the same time - but this will do.

Oprah-ism doesn’t foster nuance or critical thinking. Yet even at its most philosophically ridiculous, it does manifest a singular, and characteristically American, virtue: It moves forward. The past, it affirms, is over and cannot be changed. What matters now is what happens next.

WSJ: Car Companies Discharge Accident Settlements in Bankruptcy

Mike Spector of The Wall Street Journal has a great cover story in today's edition detailing the winners and losers from the government-led reorganization of General Motors and the broader auto industry last year - identifying some of the biggest fat cats as winners and the saddest victims as losers.

In rescuing the car makers, the U.S. government prevented a potential meltdown of the auto industry and further shocks to the economy. But in the process, it created a wide universe of relative winners and losers. The U.S. Treasury received large ownerships stakes in the restructured auto makers, as did union retiree trusts. Chrysler's banks got some, not all, of their loans repaid in cash, and GM's lenders were fully repaid. On the other side, thousands of dealers, asbestos victims and other creditors received little to no recompense.

Among the creditors who suffered most, car-accident victims represent a distinct mold. Unlike banks and bondholders, this group didn't choose to extend credit to the auto makers. As consumers, they became creditors only after suffering injuries in vehicles they purchased.

So the bailout was very good to the fat cat bankers and left accident victims without their payments?  We needed Federal oversight to make sure the bankers were saved and the little guys got screwed?

The reason I'm highlighting this story is again because all of this information has been in filings since the reorganization - the story, explosive and counter-intuitive - was out there for any reporter covering the company to notice and follow-up on.

Spector, who isn't even a full-time auto reporter - was the one who noticed and deserves recognition for surfacing this story.

NYT: Fish Labels Often Fails

The long-abandoned "Signature Story" feature returns today thanks to Elizabeth Rosenthal's New York Times piece on the frequent mislabeling of fish sold to America's diners.  This example is a little different than a few of the other ones, in that I'm not using to mock the outlet for living down to stereotypes about it but rather to congratulate it for the kind of thorough journalism the NYT is also known for.

That said, it does seem written to provoke outrage among the upscale foodies - hence the designation - who make up the paper's readership but it's a strong story with a point.

Environmentalists, scientists and foodies are complaining that regulators are lax in policing seafood, and have been slow to adopt the latest scientific tools even though they are now readily available and easy to use.

“Customers buying fish have a right to know what the heck it is and where it’s from, but agencies like the F.D.A. are not taking this as seriously as they should,” said Michael Hirshfield, chief scientist of the nonprofit group Oceana, referring to the Food and Drug Administration.

It would be easy to dismis the pleadings of "foodies" who are otherwise happy with their meals but this is a case of fraud with a huge economic impact and might be one place where there is a legitimate place for law enforcement between buyers and sellers to attest to the legitimacy of the transaction.

Furthermore, and this is probably where publicists got involved, she has a technology solution to recommend that the government could implement.

With the new genetic techniques, the gene sequence found in a fish sample is compared with an electronic reference library like that maintained by the International Barcode of Life Project, which now covers 8,000 varieties of fish compiled by biologists over the last five years. The testing is now relatively cheap: commercial labs charge about $2,000 for analyzing 100 fish samples, for an average of $20 apiece, but the cost is under $1 per sample for labs that own the equipment.

It would be better if producers volunteered to work with a private body to do this and then charge a premium for guaranteed grouper or something rather than force another big technology buy on our overextended federal government - but that doesn't detract from the journalism.

This is a high-impact story well done.

Fortune on Who Wins in the Rental Economy

Nin-Hai Tseng of Fortune had a May 25 article on who benefits from the U.S. population's new skepticism regarding owning a home - and it turns out builders and REITS are two of the winners.  Who knew?

During the housing boom between 2001 and 2005, prices for rentals fell by nearly 10% as easy credit offered by banks lured many newcomers to homeownership. Since the bust of the housing market, rents have more than made up those declines as more people now question the financial merits of homeownership or simply can't get approved for a mortgage. From 2006 to 2009, rental prices on average increased by more than 15%, according to Moody's Analytics economist Andreas Carbacho-Burgos. Nationwide, the average rent today is $1,360 a month.

That home prices are always a news negative no matter they are doing is a long-held peeve of mine.  It was a crisis when they were rising, it is a crisis that they are falling - did I sleep in the day they were in perfect equilibirium and not a problem?

Tseng's article looks at benefits to falling prices such as homebuilders being able to focus on high-value apartment projects, REITs being able to capture some of that rental revenue in projects that had been white elephants during the housing boom - and even, eventually, the broader housing market as rents rise and make ownership attractive again.

It gets harder each day to write something interesting about housing prices, nice to see a thoughtful piece here.

CNBC on Why Greece Owns the EU

I'm going on a pre-Memorial Day Weekend binge of catch-up posts this afternoon, starting with Patrick Allen of CNBC.com's May 25 piece from on why the EU is boxed in by Greek borrowers.

If you owe the bank 100 euros it is your problem, if you owe it a million it is the bank's problem.

At some point this is going to dawn on the Greek people and the politicians will follow, analysts said.

 That's been a fact of banking life since we had banks but where sovereign debt is concerned it's rarely observed.  A substantial section is dedicated to debunking the idea that Greece can just quit the euro and soft-default through devaluation, quoting Jan Amrit Poser, the chief economist at Sarasin.

“The legal prerequisites for this do not exist, nor would it be technically feasible to implement an exit within a reasonable timeframe. We think a euro exit can be ruled out entirely for economic as well as political reasons,” he said.

The Greeks don't have enough Islands to sell or enough tax revenues to preserve even if they can muster the will to restructure their welfare state.  They will default.  I'm not sure why more major media aren't writing this story but since this is the story I noticed, I'm flagging it.

 

NYT on the Rise of Career Associates at Law Firms

Catherine Rampell writes a New York Times story today on how big law firms are starting to employ more low-cost talent and reserve the high-pressure, high-salary partner-track positions for the truly exceptional.

What law school associates at big firms make has always held fascination because the starting salaries are so high and the working conditions are legendarily bad (when PR people feel sorry for you...).  

For decades, firms used essentially the same model: charging increasingly higher rates for relatively routine work done by junior associates, whose entry-level salaries in major markets have now been bid up to $160,000 (plus bonus, of course), a sum reported by the big law schools. Even under pressure to reduce rates, firms are reluctant to lower starting salaries unilaterally for fear of losing the best talent — and their reputations.

“Everyone acknowledges that $160,000 is too much, but they don’t want to back down because that signals they’re just a midmarket firm,” said Mr. Henderson. “It’s a big game of chicken.”

Those jobs have long been supported by contract attorneys who make less and do the less sensitive tasks - Rampell's article suggests that it's becoming more common.  This move is a means to more honest billing and is welcome for that reason.  

There's also a social side to the story, noting that most of the top tier firms doing this are clustering the 2nd tier "career associates" in out of the way offices, keeping them out of San Francisco and New York. 

Form a PR perspective, the most interesting part is that the firms participated in what could be seen as a very negative article and did a pretty good job of getting positive messages out. To wit: cost savings for clients, identifying career associates who liked the better schedule in return for a lot less money and playing up the idea of keeping the jobs in the U.S.

PR teams at and representing lawyers are much more sophisticated than even 10 years ago, when any call to a firm about how they compensate their employees would have been like a hand grenade lobbed into the room.  It's been good to watch and occasionally be part of that growth.

NYT's Norris: Crony Capitalism in Japan

A late post from me on a post by Floyd Norris of The New York Times covers how Japan's government has kept pushing off the day of reckoning for bad Japanese business decisions, up to and including bailing out investors in Tepco, whom he convincingly argues deserve no such succor.

Tepco is clearly to blame. In hindsight, the plant should have had better protection against both earthquakes and tsunamis, or it should have been built in a region less vulnerable to them.

Yet it is deemed shocking to suggest those who financed the company should suffer losses.

In “free-market-based capitalism” — or at least the version they used to teach when I went to business school — lenders and shareholders were supposed to monitor the risks taken by companies. They would benefit if the company prospered and suffer if it failed.

Norris goes on to cover the lessons this attitude has for the United States, which also has favored bailouts over private reckoning since the start of the financial crisis.  He also notes how the Irish government decided to bail out international bankers and savage their own citizens.

This short piece is a great example of a polemic that reads like news because it is so carefully researched and supported.

PBS Stations Dropping Affiliation in Face of Rising Dues

It's pretty bad for PBS when they can't even get their own stations to participate in the fund raising - and they get a valuable network affiliation and not just a tote bag.  Elizabeth Jensen of The New York Times has the story on how these not-quite-businesses are valuing the goodwill of being a PBS station.  The problem markets include big ones like Los Angeles, Orlando, Chicago, New Jersey - with the biggest problem being overlapping franchises.

In Chicago, as in Los Angeles and Orlando, one crucial issue is that there are simply too many places to see PBS programs; each of those cities has more than one PBS station. The biggest station pays the highest amount of PBS dues and gets rights to all of PBS’s marquee shows, like “Masterpiece Theater” and “PBS NewsHour”; smaller stations pay less but can still broadcast some of the most popular shows, as long as they wait eight days.

Media watchers often look at PBS and NPR as separate from the rest of the media because they are taxpayer-and-donor funded but they react to the same economic demands as any other stations.

The article is an important look at weaknesses in a business model where money is raised locally, then sent to the national organization.  We may find in the long run that the stations are better off serving the direct needs of their individual markets rather than trying to be part of a national network.

 

TIME on Making a City from Scratch in Lagos

I see most of my long-time readers when I look in the mirror to shave every morning, but them that's there will recall that I love big picture international real estate development stories, and that includes Alex Perry's fascinating TIME article about attempts to build a modern, livable city in the unlikely place of Lagos, Nigeria.  The catch is that rather than trying to redevelop actual Lagos, they are build a whole new place offshore.

If it seems there is a gulf between the two, there is — literally. Eko Atlantic is an artificial island, just offshore, being created entirely from scratch, built of sand dredged from the ocean floor. It will be 7 km wide, extend about 2 km out to sea and house 250,000 residents, with offices for 150,000 commuters. A scale model at the offices of its developers, South Energyx Nigeria, features gin-clear canals, giant malls, three marinas, trams, the island's own power station and a sail-shaped 55-story skyscraper that will be the new headquarters for a Nigerian bank. David Frame, South Energyx Nigeria's managing director, calls Eko Atlantic "the new face of Africa." 

The article starts out with a familar chronicle of bad governance that reads like a chapter edited out of Atlas Shrugged (it would have improved the novel, IMHO).

Such epic overcrowding has spawned a host of other difficulties — not only legendary traffic but also unemployment, poor housing, crime and disease. All that has been exacerbated by Nigeria's notoriously poor government, something that, in turn, has its roots in the country's large oil reserves. Oil, which accounts for about 85% of revenue, detaches a government from its people. Because it does not depend on them for money, it feels little need to serve them. That disconnection helps explain Lagos' decline. When oil prices collapsed in the early 1980s and state revenues tumbled, work on Lagos' infrastructure stopped. But when crude prices recovered, no one thought to resume it.

The planners are saying the right things about making the new city a free market region with rule of law, driven by profit-seeking developers rather than the World Bank - although an approving quote from one of its officials earlier in the story is worrisome.

How to get Lagosians into the system? Property rights, said de Soto. Because of the chaotic way the city had grown, most land and buildings there were untitled, making them difficult to buy, sell or borrow against. But if Fashola were to set clear property rights, that massive asset could be tapped. 

It's a great story of how Babatunde Fashola, a governor/businessman sees an opportunity in a failed state and thinks he's found a way to take advantage.  For the Africans' sakes, we can only hope he is right.

When the Mets Are More Honest Than Congress

I'm a day late in highlighting this R. Jeffrey Smith story from The Washington Post on the latest fall-out from the Allen Stanford Ponzi Scheme - politicians who were the recipient of donations from the schemer refusing to give the money back to the people it was stolen from.

The receiver, Dallas lawyer Ralph S. Janvey, has been able to recover only about 5 percent of the political contributions he has targeted. Four of the principal national Republican and Democratic fundraising committees took in $1.6 million in Stanford donations, but they are vigorously fighting demands that they return it.

If Sanford had robbed their houses, and given the victim's stolen goods to the politicians, they'd return it but apparently not their money.  Nice.

Smith's story is a legal education in the legal loopholes our nation's leaders are exploiting to try and invalidate the trustee's demands for the money, as well as all of the red flags around Sanford that first surfaced in 1997.  At conclusion, it's a damning indictment of our political class as well as a top flight investigative story.