Grey Matters

I’ve written previously regarding how a journalist’s world-view influences the manner in which that journalist reports a story, noting also that most persons drawn to journalism tend to have an anti-business, pro-government world-view. Thus it was that, true to form, the NBC Nightly news on February 23, 2009 ran a segment, reported by David Faber, which concluded that the housing crisis was caused by housing which became too affordable. And, of course, by the greed of Wall Street Bankers. And “lack of regulation.”

Into the transcript which follows, I’ve inserted my own commentary. To get the full effect of the segment, you may wish to read the segment, as aired, in its entirety, ignoring my comments, then re-read it with my commentary. Here’s how it went:

Brian Williams, in the show’s introduction said: “On our broadcast tonight… Meltdown: making sense of this financial crisis… Our special series begins tonight with a good, hard look at how we got where we are right now.“

Ah, wonderful. A “good, hard look” is exactly what’s required. 

Later in the broadcast, introducing the Meltdown segment, Brian said: “As you may know, all this week we’re teaming up with our friends at our financial news network. CNBC, to bring you a special series of reports aimed at making sense of this economic meltdown. We begin tonight with David Faber who takes us back to the roots of what ultimately became history’s biggest house of cards, and, David, you’re first and we thought it was helpful to kind of take a look back and see how we got here.“

I’m encouraged. David is going to take us back to the “roots” of the crisis. About time someone did. 

David Faber: “Sure, very important to do that, of course. The economic crisis, Brian, has many causes but the genesis can be traced to the U.S. housing market. It was there that a combination of greed and lack of regulation built the foundation for a house of cards.

Well, the part about the U.S. housing market is certainly true. But “greed and lack of regulation?” We’ll see how he explains this. 

“In the aftermath of 9-11, then Federal Reserve Chairman, Alan Greenspan, feared the shock to an already weak economy, could send the nation into collapse.”

So our look back — for the roots — is not looking back any further than 9-11? Well, this is where David went wrong. He should have looked back further — to the Clinton administration and beyond: to 1992. Here we find the Congress, controlled by Democrats at that time, requiring Fannie Mae and Freddie Mac to increase their purchase of sub-prime mortgages.  

Cut to a clip of Alan Greenspan: “I was very much concerned that we were… we were in the throes of something we had never seen before.“

David Faber narrating: “He oversaw a series of sharp interest rate cuts to ease borrowing and, for many, that cheap money came in the form of new mortgages.“

But low interest rates make homes more affordable. Surely David is not thinking this was a bad thing… 

There followed a series of clips of newscasts leading off with: “This week, 30-year, fixed-rate mortgages dropped to the lowest level since 1971…” and followed by numerous repetitions of the word “mortgage” from multiple clips.

We get it: Home ownership was more affordable than ever. 

David Faber: “Enter Wall Street bankers who smelled profits. They began to buy up mortgages, bundle them together and sell investors shares in the monthly payments those mortgages produced. By 2002, the number of mortgages Wall Street bought each month was exploding.“

So, low-interest loans, which pay lenders less than high-interest loans, caused Wall Street bankers to suddenly smell profits? 

Clip of Michael Francis, identified as a former Wall Street banker: “Once we saw 100 million dollars, we very rapidly moved right past it and within a six-month period, we were doing 500 million dollars.“

David Faber narrating: “To keep it up, Wall Street needed a constant stream of mortgages, so they encouraged lenders to ease their loan requirements.“

Ohhhh…, it was Wall Street exerting pressure on lenders, and not the fact that the Clinton administration required lenders to reduce loan requirements, under threat of discrimination lawsuits. The fact that Clinton required lenders to consider even unemployment benefits as income, for purposes of obtaining a home loan, had nothing to do with it? David really should have looked back further, to the time when political correctness replaced credit-worthiness. 

Michael Francis, former Wall Street banker again: “You’re not verifying any assets. That’s the breathe on a mirror, it’s the fog sort of get a loan.”

OK, I’m not sure what this foggy mirror business is about, but he’s apparently saying that people could lie on their loan applications and get away with it. 

Clip of a “Quick Loan Funding” commercial: “Quick Loan Funding can help put you in a low, 30-year, fixed rate program today.“

We get it: housing is more affordable than ever. Still not a bad thing. 

David Farber narrating: “Companies like Quick Loan Funding became experts at offering so-called sub-prime mortgages. Lou Pacific ran a sales force that wasn’t exactly seasoned.“

Clip of Lou Pacific interview by David Faber:

Lou: “With the loan officers, I mean, you’re taking a kid that used to sell pizzas, literally, and he’s making $20,000 a month, with no training.”

No training at all? Zero? You really expect us to believe that? “Here’s your desk. Here’s a pile of loan applications. Just have people fill ’em out and we’ll pay you twenty grand a month.” Sure. 

David: “Pizza. Pizza delivery men…“

Lou: “Pizza delivery men.“

David: “… became loan officers.“

Lou: “Yes. Car salesman, pizza delivery man, uhhh, kids who worked in electronics stores, they’re helping people deal with the largest investment of their lifetime…“

And with no training at all. 

David Faber narrating: “It didn’t matter that many of those people were getting mortgages they couldn’t afford, as long as home prices kept rising.”

Excuse me? This statement really needs some explanation. What do rising (or falling) home prices have to do with whether or not folks can afford the monthly loan payment called for in their mortgage contract? If their all-time-low, 30-year fixed mortgage requires a payment of XXX dollars a month, how does the value of their home change anything? They can either afford the mortgage payment or they cannot. If they cannot, they should not be getting the loan. They should buy a home they can afford. 

“But when the demand for homes was finally satisfied, prices began to sink and mortgage delinquencies began to rise.”

Is David implying some sort of cause-and-effect? Home prices sank, therefore people could no longer afford their mortgage payments? Again, I fail to see the connection. 

“Investments backed by those mortgage payments collapsed, bringing banks tens of billions in losses.“

“The federal government has been pouring trillions of taxpayer dollars into efforts to support the financial system and rouse the economy out of recession. But despite the painful lessons we’re learning, Alan Greenspan fears, it’s inevitable, it will all happen again.“

Another Alan Greenspan: “Somewhere in the future, we’re going to have this conversation again. It will not be for quite a period of time but it will occur, because the flaws in human nature are such that we cannot change that… It doesn’t work.“

We’re not sure exactly what “it” here is, as there’s an edit and we can only guess at what “it” is. But it suited David’s purposes. 

David Faber wrapping up his report: “Of course, right now we’re still dealing with many of the significant losses yet to come at many of our nation’s banks, Brian. You heard Trish talking about that earlier.“

Brian Williams: “With deference to Mr. Greenspan, I was going to say let’s deal with this one first. Uhhh, thank you very much, David, for being with us. And David’s superb documentary called “House Of Cards” is going to re-air on CNBC this Wednesday night.“

Of course, I’m going to view the House of Cards documentary. It’s likely to be just as unbiased as this Meltdown segment from NBC Nightly News.

Here are the facts, as I understand them. The home mortgage crisis was in fact a sub-prime (high-risk) mortgage crisis. That is, people who were credit-worthy typically had no problems making their (prime) mortgage payments. There was no sub-prime mortgage crisis until the numbers of sub-prime mortgages suddenly burgeoned during the Clinton administration. It’s fair to ask why that happened. (Too bad David Faber didn’t look into it.)

As noted above, the Clinton administration required lenders to lower standards, so as to allow more poor and minority borrowers to qualify. Clinton’s H.U.D. (Housing and Urban Development) secretary Andrew Cuomo proposed the goal that mortgage giants Fannie Mae and Freddie Mac have 50% of their portfolios made up of these sub-prime mortgages by the year 2001. Clinton actually thought it was a good thing to make high-risk loans — such is the logic of politicians. 

In summary, government intervention in the housing market created a demand for high-risk borrowers to take out loans, so that Fannie Mae and Freddie Mac could carry out their instructions to obtain more sub-prime loans. Wall Street could not have sold these loans to investors if the loans did not first exist, and they did not exist in abundance — enough to sink the world economy — until Clinton required it. The housing and mortgage business was just fine until government tried to improve it for poor people. It was not a “lack of regulation” but an excess, that precipitated this mess.

Remember, most mortgages were sound and most people made their payments just fine. These were solid investments for Wall Street. But the increasing numbers of sub-prime loans, mixed in with the good loans, made entire portfolios unsound. When your Return On Investment is just a few percent, having even five percent of loans go bad due to delinquencies, makes the portfolio unprofitable. No one wants to invest in something that’s losing money.

The problem that began with sub-prime loans then spilled over into the rest of the mortgage market, as the economic downturn has led to massive lay-offs, with the result that many formerly credit-worthy people are now unemployed and cannot make their mortgage payments either. 

So, the relatively small numbers of sub-prime loans that go bad, because the borrowers were not credit worthy to begin with, can bring down an entire world’s economy. We’ve proven that. 

Rather than place blame on the politicians who required that loans be made to those who were not credit worthy, politicians, and journalists, blame the lenders themselves. 

Like Alan Greenspan, I fear that human nature — that desire of politicians to help the less fortunate — will continue to be our undoing and we will be having this conversation again.

I have long held the view that our children cannot read and write well because they don’t read and write enough. Becoming proficient at anything requires practice. Lurking in the back of my mind I’ve also had the notion that we see far too many bad examples that we take as proper usage because they are created by ostensible professionals. 

I am particularly irked by issues of usage — like the Dole product described as “Pineapple chunks in its own juice.” That’s what the label on the can says. That this is actually on store shelves — that no one caught the error before this went out to the public, that no one has corrected it for some years, well, this is troubling indeed. 

In case you don’t see the error, let me explain. If “Pineapple chunks in its own juice” were a sentence, the subject would be “chunks” — a plural. Thus we would say: “chunks in their own juice” or, in this case, “Pineapple chunks in their own juice.” The label seems to indicate that its creator believed “pineapple” to be the subject, but it is not, “pineapple” is used as an adjective to describe the kind of chunks. We would be correct to say: “Pineapple in its own juice.” But as soon as we add “chunks,” pineapple is no longer a noun and no longer the subject. The word “chunks” takes on that role. Chunks is plural and “their” should take the place of “its” to make subject and adjective match. Of course, “Pineapple chunks in its own juice” is not a sentence, it’s merely a label, so maybe the rules don’t apply. Still, it irritates. 

I hear subject-verb mismatches occasionally on the evening news. Professional communicators say things like: “The bus filled with vacationeers were…” Really. The news anchor, supposedly a professional communicator, believed that “vacationeers” — a plural — was the subject of his sentence rather than the correct, but singular “bus.” Graduates of journalism school routinely make such errors in print and on the tube. For shame!

But — and this is the reason I was finally moved to write this blog entry — my ire is rasied each and every time I look for a check-out line and have to read something like: “10 items or less.” Now I know, because I have a high school education from back in the days when a high school education meant something, that the sign should say: “10 items or fewer” to be correct.

The distinction between “fewer” and “less” is a simple one. “Less” is to be used when talking about something in the aggregate — a collective noun, while “fewer” is to be used when comparing quantities. 

Example: “I have less merchandise in my cart than you.” Here, “merchandise” is a collective noun referring to an unknown quantity of items in the aggregate. “Less” is used properly. Also correct: “I have fewer items in my cart than you.” Here, “items” is not a collective noun, it’s simply the plural form of “item” and as such, “fewer” is the correct comparison.

Incorrect: “I have fewer merchandise than you.” Also incorrect: “I have less items than you.” For some reason, of these two incorrect examples, the former sounds wrong to most people while, apparently, the latter does not. And so we end up with “10 items or less” signs deployed all over the country in nationally-known stores. Have they no one at these companies who retained enough of their education to see the error? (Assuming, of course, that their education actually included instruction on such distinctions — and this assumption is, regarding recent years, probably not correct.)

I hold no hope that this will ever be corrected. Like the misuse of “media” and “data” as singulars, wide-spread misuse over time will make the usage of “less,” when referring to quantities, perfectly acceptable, and “fewer” will largely disappear as has “datum.” Acceptable, however, is not the same as proper. People put up with a lot of things we know are not right. We shouldn’t.

There was our new president on the news a couple of days ago providing a glimpse of the wonderful things he’s going to do to…, ummm, for the American people. He wants to ensure that every kid can go to college, that everyone has health care and — here’s the kicker —  “…that everyone who wants to buy a car can get a loan.”

Apparently, no one has explained to him that the world-wide financial meltdown was caused by the Clinton administration’s similar desire to ensure that everyone who wanted to buy a home could get a loan.

In case you weren’t paying attention, there was no sub-prime mortgage loan crisis until FedGov insisted that lenders loan money to people who could not afford to pay it back. Now, Obama wants to make loans to people who “want to buy a new car” instead of to people who can afford to buy a new car. He wants to do the same thing to the auto industry that Clinton did to the real estate market.

Oh, wait, the automobile industry is already in tatters, as a side-effect of the mortgage loan mess. Inasmuch as FedGov is responsible for the sorry state of American industry, I suppose it really should do something to remedy the problem, but is lending money willy-nilly the answer? I think not.

I’ll say it again: tampering with the free market is a good way to cause more harm than good. It helps to remember the Sixth (natural) Law Of Government. President Obama ignores it at your peril. That’s the way it is with government; they screw up and we pay the price.

A while ago, a friend introduced me to someone else and noted about me: “He’s a Mac nerd.” Naturally, I corrected him. It’s a common enough mistake — confusing geeks and nerds. This mistake is up there with not understanding the difference between “infer” and “imply.” So let me explain.

Geekiness is knowledge-based, nerdiness is lifestyle-based. When that big electronics retailer sends out someone to install your new high-tech purchase, do they send the Nerd Squad? Of course not. 

A geek is someone who is very knowledgeable in some area. A nerd is just really “into” it. Let me give you some examples.

A Star Trek geek knows every episode of the original series and each subsequent series based on the original.  A Star Trek nerd has a Star Fleet uniform and a set of Spock ears.

A Star Trek geek can name each Star Trek movie and knows who’s starring in the one that’s still in production. He understands the Star Date calendar. A Star Trek nerd made his own phaser, communicator  and tricorder and says “Beam me up, Scotty” whenever he can work it in. He speaks Klingon when among his Trekkie friends. 

A Harry Potter geek has read every Harry Potter book, seen every movie, has an exhaustive knowledge of each character and his “back-story” and knows J.K. Rowling’s email address. The nerd has Harry Potter glasses and a collection of wands from assorted Harry Potter characters, each in its own polished presentation case. The geek will wait in line for hours to get into the opening of the latest film, while the nerd will wait in line for hours to get into the opening of the latest film — in a Dumbledore costume. 

So, am I a Mac geek? Absolutely. I’ve owned and used Mac computers since 1984. I service and repair them and I’m the local “go-to” guy for anyone with a Mac problem. But am I a Mac nerd? I don’t even know what I could do to attain such status — dress up like Steve Jobs? 

So let me sum up. Geek: knowledge-based. Nerd: lifestyle based. Oh, and another common mistake: That guy with the pocket protector containing 14 different color pens and pencils… the guy with the white tape holding his glasses together on the bridge of his nose? A lot of people think that’s a nerd. It isn’t. That’s a dork.

Call me old fashioned. I still believe that “data” is the plural form of “datum.” Isn’t that quaint? In the Olde Days, that’s the way it was. But if enough people make the same mistake for long enough, that mistake gains legitimacy through some “common usage” exception. Thus it was that “data” came to be both singular and plural (and “datum” has largely fallen into disuse). Look up “data” in the dictionary and you’ll see that it is now both singular and plural.

I refuse to cave. I will never say “Data is…” unless I’m referring to that Star Trek android character played by Brent Spiner. (“Data is going to the bridge.”) With that exception, you’ll always hear “data are…” from me. “The polling data are on the flash drive.” 

Now the same thing is happening with “media” — the plural form of “medium.” I was watching some technology show on TV and the presenter was doing a piece on the importance of backing up one’s data (which he, of course, used as a singular: “All your data is in your Mydocuments folder”). He was burning someone’s files to a CD or DVD — some sort of optical medium — and in the process he said to his assistant, “Hand me another media.” 

Sad to say, not only has this plural gone singular, there’s even a plural of it now: “medias”. Ugh. Heaping injury upon injury, some people use “mediums” to mean more than one medium. It is obvious that the battle is already lost. “Media” has gone the way of “data” and then some. 

I weep.