Liberals Support Animal Torture Videos: A New Low for the Culture of Death

This blog is normally about economics, although I've written about politics a few times. The following story really caught my attention and I felt compelled to blog about it.

The L.A. Times is reporting that the Supreme Court will hear a case this fall to decide whether or not videos of animal torture are protected by the 1st Amendment. At issue are various types of videos marketed to people with certain sexual fetishes. These videos are meant to sexually stimulate the viewer by showing small animals, kittens and such, being crushed and burned to death. Also at issue are dogfighting-related videos that show animals being trapped and left defenseless only to be killed and torn apart by pit bulls. [1]

Liberals are launching an all-out campaign to overturn federal legislation that makes these types of videos illegal. The American Civil Liberties Union (ACLU) is leading the charge. A coalition representing major media interests, including movie producers and journalists, is providing a ton of legal aid to the producers of these films under the guise of supposedly defending free speech. However, even the extremely liberal L.A. Times points out that their argument is complete baloney. The existing federal law explicitly states that depictions of hunting, fishing and other sportsmen-related activities are not illegal, nor are images that have "religious, political, scientific, journalistic, historical or artistic value" such as, say, a video of a medical/veterinary animal dissection or a documentary on food production. The law is specifically and only aimed at sadistic depictions of animal cruelty, torture or death. The things depicted in these videos would already land their producers in prison in all 50 states under existing animal cruelty laws, were they to be caught in the act of perpetrating them. Yet, Hollywood and corporate media interests are trying to convince the public that somehow your right to free speech will be infringed if these videos are banned.

Where were these liberal champions of free speech when individuals were being arrested for putting up images that depicted President Obama as The Joker? [2] Where were Hollywood's expensive lawyers when corporate interests had a billboard that criticized an insurance company censored and removed in Los Angeles? [3] Nowhere, that's where. So stop and think about that for a second before you take these jokers (heh) at face value. Why is it that they don't seem to give a damn about defending political speech, especially if that political speech criticizes their candidate of choice or challenges powerful financial interests, but they become raging libertarians when it comes to defending the "right" of some degenerate to painfully kill an innocent animal so that they can masturbate? I ask that question in all seriousness because I don't have definitive answers. All I know is that when I look around at contemporary America I see a culture that glamorizes death, promotes moral relativism (often through coercion and almost always undemocratically) and denigrates anyone who dares to believe in the dignity of living things or who dares to live by a moral code.

After all, how many of the people supporting the production of these videos are the same people who criticize anyone who hunts or fishes? When was the last time you saw Hollywood paying for lawyers to defend the 2nd Amendment? When was the last time the ACLU launched a campaign to defend the rights of hunters and fishermen? Apparently, humanely and legally hunting game to feed your family is barbaric but crushing a kitten to death under a woman's high heel (psychoanalyze that fetish, eh? ... better yet, don't) so that you can masturbate is just fine and dandy.

How are we not living in a culture of death?

This brings to mind another low point in Hollywood's history: the execution of Stanley "Tookie" Williams. In case you don't know, "Tookie" Williams was the founder of the Crips street gang who was convicted of four murders. Not only did he admit to shooting an innocent man at point-blank range and finding the man's dying gasps "hilarious," not only did he admit to targeting white and Asian victims solely because of their race, but he is also indirectly responsible (through the creation of the Crips gang) for destroying the lives of an untold number of people and transforming entire neighborhoods of Los Angeles into war zones. Yet, a wide variety of individuals in Hollywood stood by Williams and criticized the state of California for executing him. Liberals gathered in droves outside of San Quentin Prison on the night of his execution to publicly mourn the death of one of the most vile, destructive human beings to walk the earth in recent memory. These are the same people who think that anyone who has any qualms whatsoever over abortion must be a theocratic, far-right fundamentalist Christian that only wants to control women's bodies. No contradiction there, right?

What kind of society not only accepts but commercializes the suffering, misery and death of the weak, defenseless and innocent while simultaneously valorizing and praising violent psychopaths that kill other living things for their own amusement?

Is this the kind of society you want your kids to grow up in? No doubt years from now when kids are perpetrating more acts of violence, when more kids are medicated daily so that they can "deal" with reality, when more kids are psychologically damaged, liberals will blame it on ... not spending enough money on schools. Yep, we need to spend more. The possibility that it could have something to do with growing up in a culture that expresses itself through sadism and cruelty? Nah. You must be one of those old-fashioned moral absolutists. Quit making value judgments.

Am I the only who thinks our society is messed up? Not just messed up but deeply messed up? Who's promoting this culture of death and why?

Sources:
1: http://www.latimes.com/news/nationworld/nation/la-na-cruelty23-2009sep23,0,1482217.story?page=1
2: http://www.thepittsburghchannel.com/politics/20952603/detail.html
3: http://cbfe-econ.blogspot.com/2009/09/truth-is-more-controversial-than.html

"Truth is more controversial than pornography"

The Los Angeles Times has an interesting article out today (9/9/09) written by Steve Lopez entitled 'It's funny what passes for offensive these days.'

In the article, Lopez points out the divergent fates of two billboards in Los Angeles.

The first billboard is a stark yellow ad with simple black text that reads "Consumer Watchdog says: 'You Can't Trust Mercury Insurance.'" The text is followed by a referral to Consumer Watchdog's website. Their website features ten objectively factual reasons explaining why Consumer Watchdog believes consumers should be wary of doing business with L.A.-based Mercury Insurance Company. The billboard was located on Wilshire Boulevard in L.A.'s Koreatown.

A few blocks down Wilshire, also in Koreatown, stands another billboard, this one advertising Absolut Mango vodka. This billboard depicts a mango fruit surrounded on two sides by a series of wavy lines. That description might sound innocuous in text but if you look at an image of the billboard (you can see an image by clicking here) you'll see that the artists clearly intended to suggest the shape of a woman's vagina. The image, which is not on a traditional billboard but rather is draped across the side of a building, is described by Lopez as "a 10-story vagina on a building."

So what happened to these billboards? Mercury Insurance Company complained to CBS Outdoor about the Consumer Watchdog one. Even though Consumer Watchdog's billboard (and Consumer Watchdog's website) contains only factual information and the billboard was determined not to be in violation of any laws or of CBS Outdoor's policies when it was first put up, CBS Outdoor caved to Mercury's pressure and pre-emptively pulled it down.

What happened to the Absolut vagina ad? Well ... nothing, really. Its still up there as of today. Apparently Absolut has other, very similar, ad campaigns for it's pear-flavored vodka (image here), citron-flavored vodka (click here), as well as their mandarin-orange and peach flavors (I don't have images for those). Of course, as far as Absolut is concerned, these ads are meant to depict "streams" and not the female anatomy. Apparently, anyone out there who dares to think that a large corporation, especially a corporation that sells alcohol, would dare to use sex to market its products (especially in a veiled, suggestive way) must be deeply cynical and simply projecting their own dirty-mind onto Absolut's noble efforts to promote artistic endeavor. Whats your take on this?

So ... what's the lesson here? Well, if you dare to speak up and criticize the practices of a major corporation in a lawful and objective manner, you can expect big business to leverage its financial and political clout (Mercury Insurance is one of the biggest political contributors in the state of California) in order to silence you and your message, or at least prevent you from airing it in a public environment. What if you drape the image of a 10-story tall vagina on the side of a building in a major metropolitan area? You can expect to sell more products, get rich and face very little public scrutiny. In Los Angeles, economic truth is not welcome in public places but pornography is.

As Harvey Rosenfield, founder of Consumer Watchdog, puts it: "Truth is more controversial than pornography."

Life Settlements Update: "investors are looking for the individuals most likely to die"

Yesterday I posted about Wall Street's proposal to securitize "life settlements." If you haven't read that post yet, you can find it by clicking here. The post got a huge response. In fact, the initial New York Times article got media attention from around the world. Its pretty clear that this is an issue that resonates strongly with the public. People are angry. Righteously so, in my opinion.

Since this is an issue many of you clearly care about, I thought I would dig deeper and bring you readers some more information.

Some readers pointed out that the concept of "life settlements" isn't new. That's true. They've actually been around since the early part of the 20th century. For most of their history they were known as "viatical settlements."[1] Historically, these kind of settlements were mostly engaged in by "high networth" (read: rich) elderly individuals who were fairly certain they only had a few years of life left (for more on how viatical settlements transformed into the modern form of life settlements, keep reading below). However, we shouldn't dismiss the story just because the concept isn't new. There are a few factors that make this story worthy of people's attention:

(a) Some banks are clearly planning on transforming this into a big business. The New York Times quotes an estimate that states that the market for this type of financial product could grow to $500 billion [2]. The Economist estimates that the market currently stands at about $18-19 billion.[3]

(b)The proposal is to securitize these life settlements into CDO-like securities. Thats the same business model that was used to transform subprime mortages into securities. That ended horribly. Why is Wall Street so insistent on following a business model that has failed so dramatically in the recent past?

(c)Lets look at who is behind this proposal. The New York Times article points to a Jan Buckler at a firm called DBRS as one of the pioneers in life settlement risk management.[2] If we look at Jan Buckler's LinkedIn.com page, [4] we see that she worked for Bear Stearns from 1999 to 2007. The article also points to an individual named Andrew Terrell, who was in charge of Bear Stearn's longetivity and mortality desk, as a major proponent of the idea. Most readers will know that Bear Stearn's was one of the first bank casualties of the recession. These are only two individuals, a tiny fraction of the total number involved in this "industry." However, this illustrates a point: do you trust people who worked for failed banks (that were driven into the ground because of their greed) to employ a business model that has failed dramatically over the past few years to package and trade securities which make it in the investor's interest for an innocent human being to die as fast as possible? Thats a serious question because a lot of the financial media is reporting that this whole proposal is no big deal and they don't understand what the fuss is about.

(d) This idea is being proposed in the middle of a brutal recession that is leaving lots of people out of work and desperate. Wall Street says financial agreements like this help those people make ends meet. Others would say this is just a new way for Wall Street to make a buck off people in one of their weakest and most vulnerable moments.

(e) This idea is being proposed at a time when many seniors are already worried about the proposals for nationalized health care and are suspicious about the possible existence of so-called "death panels" that might refuse healthcare in one form or another to the elderly or very sick. Here, we're talking about a proposal that explicitly puts it in the interest of banks and investors for the elderly and very sick to die as fast as possible. I'm not one for conspiracy theories but even I can't avoid mentioning the fact that Goldman Sachs (which is one of the banks lining up behind this proposal) has a lot of ties to the current administration. Make of that what you will.

Okay, a lot of that was reiterating some of what I said yesterday. I apologize for that but I thought it was necessary to point out why this story isn't just ho-hum or driven by paranoia.

Elsewhere, NJ.com (out of New Jersey) published an article [5] on the topic on Sunday (September 6th). This is the part where I explain how viatical settlements became life settlements. The article states:

The life settlement business grew out of the AIDS crisis of the 1980s. In what were called viatical settlements, people living with AIDS sold their unwanted life insurance policies for sold their unwanted life insurance policies for cash they often used to cover medications or treatments.

As medical breakthroughs extended the lives of many people with AIDS, the industry shifted its focus from the terminally ill and toward seniors in their mid-60s or older, said Scott Gibson, of Lewis and Ellis, an actuarial consulting firm in Richardson.

Part of the reason why the name changed was because viatical statements had gotten a bad rap with both the public (over fraud issues, more on that later) and with investors (because those darn scientists created life-saving medications that allowed people to live longer, cutting into investor profits, dang!). But there was also something of a business model change. When people dying of AIDS could not longer produce a profit for them, investors had to go out looking for new people to buy policies from. I mean, seriously, re-read the above quote and tell me that doesn't sound predatory!

And then theres this beauty:

Seniors also need to understand that their medical records will be examined as part of the sales and that the buyers of their policies will occasionally check on them to determine when to collect the death benefits, she said.

"In this buyers' market, investors are looking for the individuals most likely to die," said Stephan Leimberg, editor of Tools and Techniques of Life Settlement Planning. "They want you old and ripe. That way, they'll pay the fewest premiums and get the best return on their investment."

The bold emphasis was added by me. I'm going to guess that there was some sarcasm intended there, but still ... this is the guy who writes a major industry publication in the world of life settlements and hes joking like this? I thought people should read that.

And, isn't that great? If you enter into of these contracts, you apparently waiver some of your rights to medical privacy and the investors get to periodically check on your health just to see how close to death you really are. Yeah, no potential for abuse there ...

Politics is also involved here. If you follow this link [6] to a blog that focuses on life settlement news, you'll see that, in one week, Connecticut, New York, California and Ohio all considered (or approved) legislation that would normalize and regulate the life settlements business in their respective states. Of course, New York, Connecticut and California alone contain a big chunk of the financial services industry of the United States. On October 8th, 2008, Credit Suisse Life Settlements LLC obstained approval to buy life insurance policies in Florida and Puerto Rico. [7] This brought their total tally to 45 jurisdictions (43 states + D.C. + Puerto Rico). This is what I found in a very quick, basic online search. I'm sure someone with more experience and understanding of the legal and political world could present a more complete picture.

Still reading? Good! I'll end this post with a reference to an article from BusinessWeek published in July of 2007.[8] First of all, BusinessWeek reminds us of the massive potential for fraud:

It all sounds great, except that many of the life settlements that Wall Street firms are buying fall into categories ranging from sketchy to toxic. "They are creating a very risky product," says Janet Tavakoli, a Chicago financial consultant who specializes in advising clients on asset-backed investments. "They may be planning to sell them to sophisticated investors, but they could be roping in people who don't appreciate the risk."

Many life settlement providers, for example, are trying to lure people who don't even hold insurance. In this tail-wagging-the-dog scenario, speculators take out policies on the individuals' behalf, pay them something up front, cover the premiums, and then wait for the people to die so they can collect. At the most outlandish extreme, one outfit devised a plan involving the population of the Federation of St. Kitts and Nevis in the Caribbean.

Investors, meanwhile, have been burned by operators who have misrepresented the profit potential on deals. Two men now awaiting trial in California hatched an allegedly fraudulent scheme aimed at the entire congregation of a black church in South Central Los Angeles. They promised investors 25% annual returns because African Americans die earlier than other racial groups—an ugly pitch that prosecutors say overstated the upside potential.

Bold emphasis added by me.

That didn't discourage the high-powered guests at the New York conference, though. As they tossed back cocktails and dined on pan-seared filet mignon, they enthused about the market's possibilities. "Wall Street firms are here because they know this is an asset class that isn't going away," says David C. Dorr, president and CEO of Life-Exchange Inc. (LFXG), an electronic platform for trading life settlements. "There's big potential.

No. No, I am not making this stuff up. The potential for absurd levels of fraud. Greedy investors targetting black people because they statistically die earlier. Rich people eating filet mignon while they toast their future successes earning profits off of the deaths of the elderly and chronically sick. What more can I really say? What more do I really have to say? I think this all speaks for itself. You *really* should read that BusinessWeek article, it'll surprise you.

Sources:
1: http://dictionary.reference.com/browse/viatical+statement?jss=0
2:http://www.nytimes.com/2009/09/06/business/06insurance.html
3:http://www.economist.com/businessfinance/displayStory.cfm?story_id=13832179
4:http://www.linkedin.com/pub/jan-buckler/8/209/8ab
5:http://www.nj.com/business/index.ssf/2009/09/seniors_raise_cash_by_tapping.html
6:http://lifesettlements.dealflowmedia.com/wires/060908.cfm
7:http://www.pr-inside.com/credit-suisse-obtains-life-settlement-licenses-r850769.htm
8:http://www.businessweek.com/magazine/content/07_31/b4044001.htm

Is the U.S. Making a Profit Off of it's Bailouts?: Media Spin and Reality

Today, the New York Times presents us a lovely piece of journalism entitled "As Banks Repay Bailout Money, U.S. Sees a Profit," written by Zachery Kouwe. What an optimistic title! Then we read the first two paragraphs:

Nearly a year after the federal rescue of the nation’s biggest banks, taxpayers have begun seeing profits from the hundreds of billions of dollars in aid that many critics thought might never be seen again.

The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent annually, according to calculations compiled for The New York Times.

Wow! That's great, right? Then the "buts" begin ....

The government still faces potentially huge long-term losses from its bailouts of the insurance giant American International Group, the mortgage finance companies Fannie Mae and Freddie Mac, and the automakers General Motors and Chrysler. The Treasury Department could also take a hit from its guarantees on billions of dollars of toxic mortgages.

So, this article reports that the U.S. has earned about $4 Billion in profit from the TARP program. At the same time, the trillions of dollars in other bail-outs, the stimulus program, and the rest of the TARP program have yet to produce much of any kind of positive return. In other words, the overall picture is still negative but you wouldn't be able to deduce that based on the headline and tone of this article.

The naked capitalism blog calls out the New York Times (and the Financial Times, which published a similar story) on their transparent attempts at spin.

In a simply remarkable coincidence of timing, the New York Time running a story with the very same message, namely that bailouts are good for taxpayers because the Treasury has made money on the TARP.

If you believe that, I have a bridge in Brooklyn I’d like to sell you. The fact that we have such patent garbage running as a front page New York Times story says either the reporter and his editors lack the ability to think critically (or find sources who could do that for them) or that we have a controlled press. Given that subscriber-driven Bloomberg has even fallen in line, I am inclined to the latter view, but I am still curious as to how this has been achieved. Is this the price of access journalism, or is something more pernicious at work?

Naked capitalism refutes the idea that the TARP program is transforming into a profitable venture for the federal government:

A quick but not conclusive search suggests that only a small portion of the TARP has been retired, so it is wildly premature to declare victory.

In fact, another source looked at the TARP as of June and estimated that it had lost $148 billion, and had lowered loss total as a result of the repayments. Now bank stocks have rallied since then, but the biggest contributors to the red ink, namely AIG and Citigroup, are not in any better shape fundamentally than they were then. Indeed, the fact that new AIG CEO Robert Benmosche has in a remarkable show of hubris, effectively told the US taxpayer to stuff it, AIG has the dough and is in no particular hurry to return it, nor does it care what the public or Treasury wants, its demands are unreasonable. I wouldn’t hold my breath about having the loans repaid.

I don't want to leech any more of naked capitalism's post, so I encourage you to go over there and read for yourself, there is much more. Another, similar post from earlier in the day can be found by clicking here.

Response to Agnes Crane on Reuters

Writer Agnes Crane has written an article for Reuters Blogs entitled 'Don't be fooled by global stock stumble.' Her basic argument? Don't lose confidence in U.S. stocks because of today's (8/17/09) stock market drop.

I want to emphasize that I am definitely not a stock market "guru." I personally feel that the stock market doesn't accurately represent the real American economy. To begin with, the stock market does not encompass the entire American economy - small-businesses often drive American economic growth and expansion much more than publicly-owned corporations. Secondly, the stock-market is driven much more by psychology than by economic fundamentals. The various bubbles that have popped or are in the process of popping during this recession were created because individuals ignored the fundamentals of the economy and latched onto blindly optimistic sentiment that grossly overvalued just about everything in our economy. Psychology changes on a whim, but the fundamentals stay basic.

Still, I do follow news concerning the stock market because it does have some relationship with the real economy. I just try and keep a critical mind that attempts to discern between reality and falsehood. With that in mind, I want to respond to Crane's commentary here.

She writes:

Don’t blame global stock markets for being skittish. It is August, after all, a month that has spelled trouble in the past two years.

Recall that, a year ago, Fannie Mae and Freddie Mac started wobbling at the precipice while AIG, desperate for cash, began paying junk-like yields in the corporate bond market. A month later, all hell broke loose.

In August 2007, a shutdown in short-term lending markets forced global policy makers to rush in with a flood of liquidity to keep the lifeblood of the financial system from clotting.

So it’s only natural that, this year, sellers are trigger-happy at the slightest whiff of trouble.

Once again, the argument is entirely psychological. According to her, all that is wrong is that investors are psychologically uneasy because of the significance of August (and presumably, her commentary will serve to destroy this notion and keep you psychologically optimistic and ready to invest in stocks). Is this argument true? Personally, I find it laughable. Lets try to imagine this scenario for a moment ... an investor is watching his money grows as the stock market rallies, suddenly he looks at his calendar and sees its August ... uh-oh, bad things have happened the past two Augusts ... I guess its time to pull all of his money out! Sound realistic? Last week Reuters reported that major "insider" investors were pulling out of stocks. Do we really imagine that big-time investors with lots of experience and lots of money invested in the market are going to pull-out based on what month it is?!

Problems surfaced in the United States last week, when a double-whammy of soft retail sales followed by a drop in consumer sentiment reignited worries that for all the good cheer about an emerging recovery, the exhausted American shopper is still unfit to carry the economy.

These concerns carried over into Monday trading in Asia, where they mingled with homegrown worries. In China, a drop-off in direct foreign investment helped fuel a nearly 6 percent decline in the Shanghai stock index and concerns about the Japanese economy helped trim more than 3 percent from the Nikkei.

U.S. stock indices have followed suit, with the S&P 500 off 2.43 percent and the Dow Jones Industrial Average off 2 percent.

Hmm ... wait, I thought it was all just skittishness on the part of investors? So, Crane admits here that the economy has serious problems that cast major doubt on the viability of the current rally. Should you be worried, like a lot of those "insider" investors are?

Monday was an ugly day, but investors should try to rein in their anxiety about what it means for such big-picture questions as what shape the economic recovery will take. That’s because a battle between bulls and bears, which typically emerges at economic turning points, has taken hold of financial markets — meaning today’s worries about the global economy are likely to morph into tomorrow’s worries about too much stimulus creating dangerous asset bubbles.

It’s a constant tension and one that will continue to push and pull financial markets for some time to come.

Her answer is no. What shes basically saying is that we're in a time of great volatility. Keep in mind that the Great Depression was a period of great volatility as well. The Great Depression saw some impressive stock rallies, which all turned out to be illusory by the way. The author has no way of ascertaining that this is a "turning point" except through hindsight, so it is merely supposition, or wishful thinking, on her part.

“The markets have very selectively reacted to economic data,” says Stephen Stanley, chief economist at RBS. Little more than a week ago, for example, the S&P 500 hit a 10-month high after the U.S. reported “only” 247,000 workers were dropped from payrolls in July.

When do the markets not selectively react to data? The entire housing bubble was caused by "selective reaction." Furthermore, the July unemployment numbers have been challenged for being artificially-low by various sources. I won't go into it now, but if you want to know more about how the U.S. calculates unemployment from payroll sources, I point you to ShadowStats.com's page on the matter.

Given the big run up in risky assets like stocks and corporate debt since March, and last week’s data, it’s not surprising that investors are now worried that the rosier outlooks failed to take into account the growing fixation of the U.S. consumer on savings.

Take price-earnings ratios. Bespoke Investment Group noted last week that the P/E ratio of companies in the S&P 500 climbed to its highest peak since 2004, as earnings failed to keep pace with the optimism that fueled a 50 percent jump in the S&P 500 stock index since March. For earnings to catch up, the consumer will have to shake off worries about high unemployment rates and pitch in with good old-fashioned shopping. So far, that’s looking like a stretch.

So, chalk up the stock declines to correcting what had become overbought conditions and get ready for more choppiness ahead.

This is the messy reality of turning points, not necessarily the foreshadowing of something truly ugly to come. Even if it is August.

I don't have much to add here. The author asks the reader to not be worried and assures us that this is merely a "turning point" towards better times ... yet provides us with nothing but troubling economics forecasts. Where is the positive news to convince the reader to stay invested? It is definitely not present in this article. The author seems to think that by merely explaining the reasons why investors have lost confidence in the market rally that somehow negates those reasons.

Overall, I found this to be a very poorly argued commentary piece and I'm quite disappointed in Reuters. Financial journalism isn't very good these days. More often than not, you're better off reading independent and alternative news sources for actual truth.

Analyst Expectations and Reality

Recently the mainstream media has been full of supposedly good news for the economy. If you've been following the news lately, you probably know what I'm talking about ... it seems like every week we hear of more corporations that are managing to beat analyst expectations in regards to quarterly earnings or profits.

Not familiar with what I'm talking about? A quick Google search of recently published news stories returns the following ... an article from MarketWatch reporting that Applied Materials Inc. beat analyst expectations for quarterly earnings and sales ... an article from the Wall Street Journal reporting that Anheuser-Busch InBev beat analyst expectations for second quarter earnings ... an article from the Epoch Times reporting that Macy's also beat analyst expectations for second quarter earnings ... etc. These examples are just to give you a taste of what I'm talking about. They are all from the past several days. Look for yourself and you'll find many, many more.

It's pretty clear that the media has put a huge spotlight on analyst expectations. I'd like to put my own spotlight on this trend.

The first question I'd like to ask is: why is the media focusing so hard on analyst expectations? There are various reasons that I suspect.

1. A lot of people are very thirsty for any kind of positive economic news. If you read any of these articles you'll see that conditions for most of these corporations are pretty dreary. Most are actually seeing declining sales and earnings. About the only positive thing to report is that they beat analyst expectations.

2. Many of these media organizations are clearly suffering in this downturn as well. A recovery would greatly benefit them. So its in their interest to promote as much positive economic news as possible, possibly in an effort to shift public opinion and promote more economic confidence (regardless of whether it is warranted or not).

3. Many of these media organizations want to paint a positive picture regarding the financial situation of these corporations because they have ties to them. For example, remember the story about Macy's I linked to up top? The retail sector is one of the biggest advertisers in just about every form of media.

4. Its the predominant thinking on Wall Street and these media groups don't want to rock the boat. Call it inertia, if you will.

The second queston I'm asking is: why do we care that a company beat analyst expectations?

What a lot of these news stories are essentially saying is: this company is taking a complete nosedive in every respect BUT it beat the estimates set by a third-party.

What is left out of this type of reporting is:

Who are these analysts? What firms do they work for? What ties do they and their firms have to these corporations? to Wall Street institutions in general?

What were their expectations based on in the first place? What changed for this company that made it beat expectations? Does beating expectations mean that the company's financial situation is actually bettering or was the analyst merely far off the mark?

None of these questions are ever really asked because the point isn't to give you an accurate picture of the health of a company. The point is to offer you a quick soundbite that sounds positive and upbeat and restores confidence. At least thats how I see it right now.

I also want to say that I'm not insinuating that there is any kind of collusion between analysts and corporations. However, I encourage you to remember the role credit-rating agencies played in overestimating the value and security of subprime mortgage-based securities. If you aren't familiar with what I'm talking about, I strongly encourage you to look into it. On top of that, we all know that corporations have tons of way of creatively fudging their books. With that in mind, how can any responsible financial journalist *not* be asking these questions? How can we be sure that these analyst expectations actually represent valuable standards by which to judge the health of a company or of the economy as a whole? Yet, I don't see any of these questions being asked in the mainstream media. I do, however, see the mainstream media using these supposedly positive reports as a basis on which to begin promoting stocks as a great investment again.

The moral of the story? Look deeper. Think critically. Ask the right questions. Don't believe the hype.

Hopefully we will start seeing some better reporting soon, but I'm not holding my breath ...