Like most blogs, this blog often takes up space discussing the media, but I don’t like to think of this site as a media watchdog, particularly.  If the media is discussed, it’s often because in order to discuss the story adequately, the media’s role in it is necessary background.  I criticize local media even less because, frankly, I don’t pay attention to much of it.  Often on issues of national import, where a great opportunity lies to make those issues local, the opportunity is missed by a media culture that chooses to view Rochester as exceptional.

And if there’s one issue in particular where the local media adds no value – and in some cases, seems to have actively engaged in doing the Rochester public a disservice – it is the subprime lending crisis, which has now bloomed into the global credit crunch. This story has been out there for a year and a half, but you’d never know it by the local media coverage.

When the shit really started hitting the fan and the story became impossible not to cover about eight months or so ago, the story locally became about those people in California and elsewhere.  The D&C, in particular, ran stories claiming that because we don’t have the swings in real estate values other places had, we’d be just fine.  Rochester, we were told, was exceptional in that way.  We’re just a sleepy little town that the “Big Issues” don’t affect.  We’re not like California, heavens no!

When reports came out on how Rochester and Monroe County were being affected, the local media promptly reported that the report came out. . . .  no analysis, no deeper coverage, no exploration of the places affected by the Subprime foreclosure rate, just a report that the report happened.  No one noticed, for example, that foreclosure rates bloomed not only in the inner city (as is in keeping with the obliquely racist and classist narrative on the national level), but in the outlying suburbs as well, particularly on the east side.  It might have been illuminating to Rochestarians to know that it wasn’t just a poor people problem, it wasn’t just a brown people problem.  It might have prepared them for what’s come next if they’d known how big a problem this really was and is.

And now that the credit crisis has moved into a new and more malignant phase, freezing global credit markets and causing Wall Street to tumble, the story has moved to the Business section, where it can be once again ignored.  The direct line that could be traced from Medon, through JP Morgan Chase, through Avenida D, through – yes – California, and through Washington was never traced.  Best of all, this morning, the creme de la creme of benighted journalism steped in with the following doozie:

Markets oblivious to rate cut | democratandchronicle.com | Democrat and Chronicle

For the second consecutive day, the Federal Reserve took action in hopes of staving off a global financial collapse. And again U.S. financial markets failed to calm, extending losses for a sixth straight day while shrugging off a Fed-led, globally coordinated half-point cut in interest rates.

. . .

“The fundamental problem here is around expectations and around psychology,” said economist Kent Gardner, chief executive of the Center for Governmental Research in Rochester. “The interest rate cut will stimulate demand to some degree. They’re trying to calm the waters.”

Wow.  It’s the Markets that are oblivious, are they?

Imagine this: you go to Gentile’s Farm Market in Penfield and discover that they’ve sold out of corn.  They announce to you that, in order to sell more corn, they’ve reduced the price by half a percentage point.  You leave and wait till there’s more corn to buy.  And the next day, the D&C puts out an article proclaiming “Local Corn Consumers Oblivious to Corn Price Reduction.”

If there’s nothing to buy, the price doesn’t matter.  There’s a credit freeze sweeping the planet – banks are afraid to lend even to other banks, hence there is now or soon will be no credit for the rest of us.  It’s as simple as that.  Meanwhile, the rate cut is there to protect the *financial* markets, not Wall Street.  Normal lending and borrowing are not conducted on the Stock Market: stocks are sold on the Stock Market.  ((Sheesh, I would have thought that fucking-a obvious.))  Further, if companies are maintaining profits by holding investments – and many do – then those holdings may be now worthless and the stocks must necessarily fall in value.

But the local media has gone to such lengths to bury their collective heads – and our own – in the sand on this issue, it’s not difficult to imagine that they’re bound to be uninformed.  Local media continues to be noticeably absent on the issue, preferring instead to rebroadcast wire stories without the slightest context.  The crisis continues to be treated like just another Business Section non-issue that people don’t care about.

The D&C for it’s part has been studiously unwitted in its modicum of reporting and now, after years of supporting Republican candidates and swallowing Republican talking points, they remain true to type and adopt the same faux-Populist outrage as their Conservative political counterparts.  They now write headlines which seem to tremble with rage over the “oblivious” Wall Street.

There are no mysteries in the current crisis and no surprises.  All of this has been written on the wall for a long time, now, for those of us who cared to look.  What’s more, it’s been written on this blog, as I’ve done my best to try to report the goings on as they’ve happened.  I’m one guy with a day job and no real resources to speak of and as far as I can tell, I’m doing a vastly better job of reporting the issue than the entirety of Rochester media.  Prove me wrong, Ed.  I’m not saying I’m doing a great job – I’m not – I’m saying my half-assed job is embarrassing local media.

The Federal Reserve Bank has announced that it will be funding short term debt for businesses – commonly referred to as “commercial paper” – in order to free up capital.  What does this all mean?  Another sop for the rich?

Well, yes.  But they’re all sops to the rich, so get used to seeing that.  But the point in this case is that businesses often use short two- or three-day loans to pay their employees while they await the week’s returns on sales or whatever.  This market, like all lending markets, has begun to get a bit frozen over, and that means the potential of companies not being able to pay their employees and inevitably having to let some go.

The Fed is stepping in and – with a loan from the Treasury of some estimated 99 billion dollars – providing that short term lending vehicle to keep capital flowing to the people who are going to ultimately be the saviours of this crisis: American workers and consumers.

So, I grant that I don’t know all that much about economics.  But it seems like this is the sort of thing we want the government doing, at least temporarily.  I find it odd that companies need to use two-day loans to pay their bills, but I’m sure it’s all very technical.  And this doesn’t seem like the type of lending that’s going to lead to the government losing it’s shirt, since we’re talking about two-day loans of relatively small amounts.

But we’ll keep an eye on it.

The irony here is that in his speech last night, ol’ George said there was too much foreign capital in the market, and now a foreign news service has audio of ol’ George telling people that there wasn’t enough in 2002.  Which is it?

Look, I’m all for reforming the way Wall Street does business, and I agree that this would ultimately include finding some way to bring top executive compensation down to a reasonable level.  But why is this the most important thing in the current crisis?  Is there some subtlety of economics I’m missing (entirely possible)?

Democrats in Congress are pushing for a slower and more deliberate pace to the process of aiding Wall Street out of it’s current crisis.  Bravo.  But why the sudden inclusion of executive compensation?  Are we going to risk forcing issues and looking petty in the face of a crisis?  I don’t get it:

Dems push for cautious approach to bailout – Stocks & economy- msnbc.com

“We want to limit those as a condition for giving them aid,” Frank, D-Mass., told ABC’s “Good Morning America.” “If Secretary Paulson would agree to that, we could move quickly.”

Rep. Christopher Shays, R-Conn., who also serves on the panel, said members “need enough time to debate this” and echoed Frank’s concerns about executive pay. “We don’t have these great golden parachutes and so on. In the end we’re doing it for the taxpayers.”

Oversight is certainly a proper demand.  Reforming banking rules is a good idea – like, for example, erecting the wall separating commodities trading and mortgages that Phil Gramm destroyed in the Ninties would be a good start.  Keeping banks on the hook for the difference between what the government spends in the bailout and what it gets back from selling off assets is an excellent suggestion.

But executive compensation?  Is that really going to change anything?

OK, it took me three reads to get to where I thought I understood this article from Paul Krugman, but it’s worth understanding the montetary policy side of the current financial crisis.  Typically, when the economy gets into trouble, The Fed simply produces more money, which increases inflation and helps bouy unstable markets.

That’s what they usually do.  However, in this case the T-bill market is in bad enough shape that it’s not capable of helping out in any way.  Krugman does a really wonky job of explaining it.  It’s worth the multiple reads, honest.