The Audit

Exclusive survey: A year out, Times-Pic downsizing leaves bitterness, scorn among ex-, current employees

Harsh words for management and the Newhouse family

By Rebecca Theim   Jun 14, 2013 at 06:50 AM

A year ago this week, about 200 now-former employees of the New Orleans Times-Picayune, including almost half the newsroom, learned they would lose their jobs and that their newspaper—175 years old, but still lively, potent, and deeply interwoven into the life of a great American city—would be seriously diminished.

Although The New York Times had weeks earlier broken in broad-brush strokes news of the coming restructuring, the axe finally fell on June, 12, 2012. Throughout the day, employees left distressingly brief meetings in which they learned their individual professional fates and faced throngs of anxious colleagues. Most signaled the outcome of those meeting with either a “thumbs-up” gesture or a slash across the throat. As veteran religion reporter Bruce Nolan later recounted to CJR’s Ryan Chittum, “I came out, and I walked through a corridor and into the newsroom, where everyone is standing around. It’s a death march. Every face turns to me, and I draw my finger across my throat. It was stunning.” Scores then logged on to a private Facebook page created for current and former employees and supporters, and typed the symbol reporters historically used to signal to editors that the story had come to an end: -30-.

I was a Times-Picayune reporter from 1988-1994 and am now writing a book about the ultimately failed grassroots battle to save the daily newspaper and the dynamics in the newspaper industry that served as a backdrop to the radical plan implemented by the paper’s owner, Advance Publications, which is closely held by New York’s Newhouse family. As part of the research for the book, I hired Carey Stapleton, a doctoral candidate at the University of New Orleans, who also works for the UNO Survey Research Center, to help me conduct a survey of current and former employees of NOLA Media Group (the corporate entity that succeeded the now-dissolved parent of the Times-Picayune).

We’re making the survey public today:

The online poll was administered May 18-28. I issued invitations to take it through a private Facebook page and a confidential email I sent to roughly 100 former and current employees whom I either know personally or who had received assistance through dashTHIRTYdash, the fund I helped establish to assist those who lost their jobs.

The survey is not scientific but does comprise a representative sample of the Times-Picayune workforce before the restructuring. Ultimately, 126 people took the survey, 101 former and 25 current employees, out of roughly 600 employed by the company at the time of the changes. Because of the way the data was collected, the survey should be seen as a snapshot of the thoughts and feelings of self-selected current and former employees. Still, the findings give sense of the profound sense of betrayal felt by members of the Times-Picayune community toward the company’s hierarchy.

NOLA Media Group President Ricky Mathews and Vice President of Content Jim Amoss have not responded to requests for interviews for my book, and did not respond to an email request Wednesday for an interview or comment for this report.

Among the survey’s findings:

—Almost no one thought the changes had been handled well. Among current employees, 85 percent disagreed with the statement that the company had done a good job handling the changes and among former employees, disagreement was virtually unanimous. As one respondent wrote: “The way the layoffs were handled was a huge lesson in what NOT to do.” Another said: “As the end drew near, as I showed up for work for more than three months knowing I had no future there, I had to accept that I had been deleted and there was no ‘undo’ key.”

—Even employees who stayed believed the changes were driven by greed on the part of the Newhouse family; few believed the newspaper’s financial performance warranted such wrenching changes. “Unlike the first and second generations of Newhouses, the third generation has no interest at all in working for their money,” one respondent wrote. “They want to squeeze every little dime they can from the business and take the money and run.” Another respondent who had left the company and has landed a new job wrote, “I am blessed to no longer be associated with the Times-Picayune. I can’t fathom knowingly putting my talents, time and energy into a company that totally abandons its purpose to serve the public and allows GREED to be its compass. Agreed, it is a business, but it was one with a higher moral responsibility to the community. If money were the ONLY factor, the owners should never have gotten into the business of providing such an important public service. There are plenty of other ways to make money.”

—Of those who had left the newspaper, fewer than half have found full-time jobs: Of those who have not yet found full-time jobs, almost 70 percent continue to look for work, and one-third are supplementing whatever income they now have by freelancing. In comments, some described financial hardship: “I had to sell the home I loved in order to survive,” one respondent wrote. “I have applied for dozens of jobs and rarely get even verification that my resume was received. I have had several interviews, but in most cases, I am either over- or under-qualified. I feel lonely and hopeless most of the time and would rather be dead if I didn’t have the few responsibilities I do have.” Another wrote, “It has been a very difficult time, financially and emotionally. It has been very hard to move forward in finding another job, and feeling good about myself as a person.”

—Of those who have found full-time jobs, about half still work in the news business. Editorial employees have had the most success finding jobs among all of the newspaper’s departments. About two-thirds of editorial employees who responded have found new jobs.

—Only 29 percent of respondents 50 and older have secured new employment, compared with 58 percent of those under 50. Open-ended comments provided by older employees who lost their jobs indicated that they felt their age was a determining factor in getting laid off. “I truly believe my age and income were major factors in being replaced with a 28 year old,” one former employee who had just turned 50 wrote.

—About two-thirds of respondents who found new full-time work earn less than they did at the Times-Picayune. “My life, career-wise, is worse,” one wrote. “I make about half what I made at the Times-Picayune, which is stressful for my family. I was forced to find a less-expensive school for my children because of the salary cut. My current job is much less stressful and more nine-to-five than the Times-Picayune, but there are none of the rewards of working in daily journalism.”

—Most respondents left the newspaper involuntarily, but 27 percent departed of their own accord. The most-cited reasons for choosing to leave were the way the changes were handled or the feeling that the work environment was no longer pleasurable.

Although many of the stories were grim, some respondents have found happiness post-Times-Picayune. “I am extremely happy in my new job and life and often wonder why I didn’t leave sooner,” one former employee wrote. “I am working at a place where my skills are appreciated and admired—something I rarely felt at The T-P.”

That happy ending aside, the survey makes clear that scores of former Times-Picayune employees remain jobless, and severance payments to most formerly veteran employees have either ended or are close to running out. If you’d like to commemorate this sad anniversary by helping those still looking for work, dashTHIRTYdash continues to accept donations. In addition, one-half of my book’s post-expense proceeds will go to the fund.

-30-

Tide goes out on News Corp.’s newspapers

The Times of London newsroom cuts staff as its parent company splits in two

By Dean Starkman   Jun 12, 2013 at 06:55 AM

It’s not a great sign that the Times of London is laying off 20 editorial staffers just as it parent company is splitting in two. And while the layoffs amount to less than 10 percent of the staff, the significance is in the reason given by its acting editor, John Witherow, who explicitly says that “subsidies” from News Corp.’s more lucrative cable, TV, satellite, and film operations are coming to an end.

As Warren Buffett famously said, “You only find out who’s swimming naked when the tide goes out,” and we’re about to see what News Corps.’s 120 or so newspapers, including its most celebrated acquisition, The Wall Street Journal , have been wearing all these years. The split of the company into publishing and entertainment units became official Tuesday.

This is going to be interesting, maybe in the Chinese curse sense, as the new company (which keeps the old News Corp. name) promises to be much more vulnerable to the era of media upheaval.

It will certainly be a lot smaller. The publishing segment, with $8.2 billion in revenue, makes up about 24 percent of the current News Corp.’s $33.7 billion and 11 percent of its operating income ($597 million of $5.4 billion).

It’s nothing to sneeze at. It will still be a Fortune 500 company and four times bigger than the New York Times Co., for instance.

But still, it’s not, as the current company is, the second-largest entertainment company in the world (the entertainment company, 21st Century Fox, will likely slip to third after the split).

What’s more, the value of the publishing segment itself has been shrinking. On the eve of the split, the company announced it was writing down between $1.2 billion and $1.4 billion of its value (more than the entire NYTco. is worth). Among other things, the segment was hurt by the closing of The News of the World in the wake of the hacking fiasco, as well as struggles in the Australian market.

As Bloomberg reported, the publishing unit posted a net loss of $1.89 billion for the fiscal year ending June 30, due to writedowns of $2.6 billion, mostly related to “reductions in the value of newspapers.” In 2009, News Corp. also wrote down its Dow Jones unit, The Wall Street Journal’s publisher, by another $2.8 billion, about half the $5 billion-plus that Murdoch paid for the company in December 2007.

And at an investor meeting last month, Robert Thomson, the chief executive officer of the publishing group, said the company expects “to be relentless in our cost-cutting and in our pursuit of profits.”

Okay. None of that bodes well for The Wall Street Journal and its sister papers, especially, you’d think, the New York Post, which loses as much as a whopping $110 million annually, according to Brett Harriss, an analyst with Gabelli & Co., quoted by Bloomberg.

But a couple of things to keep in mind.

The Journal itself is profitable, by its own account, and an analyst quoted by Ad Age, who calls it calls it “solidly” so.

Circulation at the paper is up, propelled by the digital side and its paywall, one of the oldest in the business.

And the new News Corp. starts with $2.6 billion in cash, a parting gift from the entertainment wing, and no debt.

At the investor conference, News Corp. executives went to great lengths to stress that half of the new publishing company’s revenue will come from something other than advertising, which of course has been plunging across the industry. They pointed, for instance, to Dow Jones’s financial-information business, which has the unenviable task of competing with Bloomberg, as well as Reuters.

How it will do is anyone’s guess.

But there will be a lot more visibility for one of the world’s largest newspaper publishers now that the tide has gone out.

Nonprofits are still a drop in the news bucket

And there isn’t a growth story

By Dean Starkman   Jun 10, 2013 at 02:55 PM

Yes, as Kira Goldenberg writes, the most remarkable finding of the big new Pew study on nonprofit news organizations is their confidence in their own future—fully 81 percent said they were “very” or “somewhat” confident they’d be solvent in five years.

That’s heartening.

But, as Pew itself hints, it’s hard to know exactly what that confidence is based on, and whether we, the rest of us, can have any confidence that these operations will ever become more than they are now—marginal supplements to a deracinated news-gathering infrastructure.

First, the good news: Well, first, we have a good number for the universe of nonprofit news organizations, and that number is 172. Pew does its usual rigorous job in scouring the landscape for the category. What’s more, the number is up 25 percent since 2010-2012 and up 46 percent since newspapers began their revenue free fall in 2007-2008. All but nine states have one of these organizations.

And for the most part, they’re doing core reporting. Of the 93 organizations that responded to Pew: 26 percent do general news, 21 percent do investigations, 17 percent cover government, etc.

But as the report makes clear, we’re looking at mostly tiny operations: 52 percent have between 1 and 5 fulltime staffers; 26 percent have none at all. Only 6 percent have more than 25. And that includes business-side people, administrators etc.

By comparison, Pew reports, the 1,396 daily print newspapers in the U.S. averaged 29 full time journalists, and that’s down from 39 full timers in 2001, back in the day.

This isn’t to look at the glass as half empty (though it sort of is that, too) but it is point up the difference between artisanal and industrial scale journalism, even in its current sad state.

And the comparisons become even more striking when you consider actual output of content:

Pew gives this chart that shows nonprofits’ output over two weeks. It shows that only 32 percent were able to post more than 11 straight news stories in the period, that is to say, or more or less put up something everyday. That’s not a knock. But there’s only so much small operations can do, and it speaks to the difficulty of coming up with bespoke content, day in and day out.

Pew doesn’t give totals—and quantity doesn’t matter so much in and of itself, anyway, of course—but extrapolating a bit from the data, you’ll see that all of the nonprofits in the country don’t produce more than what a couple of regional dailies did a decade ago.

To get there, assume that all the outlets in Pew’s study produce at the top of the range in the above graphic (i.e., if you assume “1-5” means 5 stories in two weeks). Then we substitute some higher number for the highest end of the range, since Pew says “16 or more.” Let’s say the top of the range is 25, which is just a guess, but a generous one. So for example, I’ll say 23 percent produced 25 straight news stories, instead of “16 or more.” THEN you double your totals, since only 54 percent of the nonprofits responded.

What you get is about 3,200 stories (3,262 to be exact if you’re figuring along) and 460 stories over 1,000 words every two weeks. (The 1,000-word definition stretches the definition of “longform”—or shrinks it, if you will— but let’s go with it.)

And to be clear: this is beyond generous. But as a point of reference, that’s about less than what two of the national papers did last year (the NYT did about 2500 in two weeks and the LA Times a little more).

Even if the nonprofits’ output is only half that number I posit, which is likely, it is nothing sneeze at.

Still, it’s less than the Boston Globe and Providence Journal did alone a decade ago:

And here’s a graph for stories longer than 1,000 words:

Actually, the Globe alone did more than nonprofits’ best-case scenario but the point is made. Again, not to look a gift horse in the mouth. It goes without saying that this production is much better than the alternative—which is nothing.

But it also helps to show that, even if you weren’t a fan of old media, how big a hole there is to fill, at least in term of quantity and, it’s fair to say, sheer coverage.

Which brings us back to the confidence question. Nonprofits got their revenue from two main sources, Pew found: Foundations and wealthy individuals.

“Other forms of income,” Pew says, “pale by comparison.” Sponsorships, ads, events, and other income sources were still supplemental at best:

Nearly half of the organizations with at least three streams generated 75% or more of their revenue from just one of those—almost always foundation grants.

Foundations and wealthy individuals are important revenue sources, and will continue to be, one hopes, for a long time. But philanthropy goes up, and it comes down. It is many things, comes in many forms, and has been described in many ways. But it cannot be fairly described as a model for growth.

And, as respondents reported, one of their biggest needs is the time to raise money and create a business model:

When one small nonprofit news organization discussed its ongoing struggle to raise money, the message was simple. “We don’t have time to do this,” it reported. “And we don’t know how.”

Fair enough. That’s not uncommon in nonprofit news, and we’re not strangers to the problem here.

But the question at this point is, nonprofits’ confidence notwithstanding, where does the growth come from?

‘The future is medieval’

A discussion with the scholars behind the “Gutenberg Parenthesis,” a sweeping theory of digital—and journalism—transformation

By Dean Starkman   Jun 7, 2013 at 08:05 AM

What follows is an interview and discussion I had in Odense, Denmark, with Thomas Pettitt and Lars Ole Sauerberg, two scholars at the University of Southern Denmark, who made a splash in digital media circles with their theory of the “Gutenberg Parenthesis,” the idea that the digital age, rather than solely a leap into the future, also marks a return to practices and ways of thinking that were central to human societies before Johannes Gutenberg’s 15th century invention changed human literacy and the world.

The technological change led to nothing less than a change in human experience itself, the scholars say, and paved the way for new ways of looking at the world that emphasized separateness and authority: individualism, nation states, etc. The “parenthesis” idea sees the digital age as bringing about a return to earlier, more fluid, less permanent, more connected, modes of communication, and, indeed, of being. Good summaries of the idea are contained in, oops, flow through Megan Garber’s good post for Nieman Lab from 2010 and a discussion at MIT the same year. (ADDING: a recently revised new paper by Pettitt on parenthesis theory’s implications for privacy is here.) I push back a bit toward the bottom. This Q&A took place last November, which is not that long ago when you think, as we do, in five-hundred-year chunks. (ADDING: Painstakingly transcribed by Peter Sterne,) Iit has been extensively edited but is still purposely long and rambling, as befitting free-flowing communication modes in the post-Gutenberg era. Best read with some lute music in the background.

Dean Starkman: The thing that first got me interested in the Gutenberg Parenthesis idea was learning that Thomas wasn’t a futurist, like a lot of media thinkers, but a medievalist.

Thomas Pettitt: Well it turns out that in some ways they’re the same thing, aren’t they? We are not just moving upwards and onwards, we are moving upwards and backwards. Even though it’s going to be much more technologically sophisticated from now on than it was 50 years ago, in many ways, we are going back to the way things were long before. This is the definition of a “parentheses.” It’s an idea, which interrupts an ongoing idea, and when the interruption’s over, the ongoing idea comes back.

With the right spelling, “media studies” is contained within “mediaeval studies”. One of those neat cabbalistic things that means nothing in itself but is useful for making you think: a medievalist can be a futurist because the Gutenberg Parenthesis tells us the future is medieval.

DS: Got it. One of the important distinctions to think about is, there’s sort of a concept of return, but not a “revolution” in the literal sense, as in revolving 360 degrees to the beginning.

Sauerberg: They are both revolutions, but the second revolution is reversing the first.

DS: But “revolution” isn’t quite right because that turns you to the point where you began.

Pettitt: We’ve played with “return”. We’ve played with the notion of going back where we started—“reversion.” That sounds like we’re going all the way back. If our computers all go dead and we have to start using pen and paper again, that will be a reversion. My current favorite word is “restoration.” So you are restoring the way things were before. Like the Restoration of the monarchy in England after the Civil War. A restoration where things had nonetheless changed in the interim.

Sauerberg: And kept changing.

DS: What’s the mode of communication that existed before the printing press that you think is now being restored?

Sauerberg: I don’t think that Tom and I think in completely parallel ways here, but we have a return to a situation where you count on individualism and where authority is a problem. If you go back to a time before the parentheses started, you sometimes could match authority with God or with a metaphysical world picture that made sense. The problem is that, nowadays, after the parentheses, you would have to find a new sense of authority. The Wikipedia phenomenon is very characteristic of the situation because on the one hand, we have the destruction of all paper, all print encyclopedias. We have to use the online facilities, but the online facilities like Wikipedia are looking desperately for authority in order to become credible, so there is a war out there in cyberspace fighting for authority. But the point is that with the encyclopedia, within parentheses, the authority was in the encyclopedia, in the format of the book, in the book as a symbol. We no longer have that. You have to make up your own authority. Whenever you look up a word, you have to be very much aware of, “how far is this authoritative?” So you have to think in two planes at the same time, on two levels.

DS: So you’re saying that’s in contrast to before the parenthesis, when authority was clear?

Sauerberg: I think authority was always invoked before the parentheses. You lived with God in the back of your mind all the time. What happened within the parentheses was that you abandoned God. I mean you didn’t realize it until Nietzsche, but you abandoned the metaphysical theory behind everything. But now you have to have this double mindset. You’re always looking out, checking, at the same time, as you are experiencing things.

DS:I want to stay in the period before the parentheses and understand how did people think and communicate and how the way they communicated altered the way they thought?

Pettitt: I think we agree but we have our different emphases. After all, Lars Ole is interested in literature and philosophy and the higher reaches of culture and cogniniton. Specializing in folklore and popular culture, I’m more interested in what happened on the ground. Well, my phrase for it is that networking was replaced by the “containment” that we talked about. I’m right at the base of the cultural processes; I’m thinking about the actual physical means by which information was communicated, and it was done by connections. It was done by people who spoke to people. Any tale, any narrative that survived existed by virtue of someone performing it. Someone who knew it, remembered it, and they performed it again and again. Or they performed it, and someone else heard it and remembered it, and they performed it, and someone learned it from them—just connections. Connections between a series of performances from one person who knows the tale and then a series of people who passed the material onto each other.

That process of connection also involves instability because there’s no authoritative text. If you’re telling a story of King Arthur and Sir Lancelot, then the person who told it to you isn’t there when you’re telling it, and he didn’t compose it anyway, and there’s no fixed text. You will tell a story that works for the audience you are speaking to, and that story will change. So we’re talking about connections between performers, and through those connections, the material changes. The words are unstable and that is certainly going to have an effect on the way people think.

DS: So they were singing songs, reciting poems, playing the lute, and whatever else they were doing in the town square. But how did that affect the way they thought of themselves as people, of the society they lived in, of the world?

Pettitt: This is the most speculative part. There is an interesting analogy between what happens in the delivery system, the very material business of transmission, and what happens in the stories they tell, and what happens in the way of thinking reflected in those stories. And the key word is connection—a series of connected performances, a series of connected performers, and that same structure appears in the works themselves, in the stories they tell. And finally, to answer your question—in my view people who experience communication in that way, they will also see the world in terms of connection. For example, their social arrangements: The Middle Ages was not strong on membership of communities. They were not obsessive about inside versus outside. They didn’t emphasize, “I’m a denizen of this town, I’m a citizen of this country, I belong in this nation, behind these frontiers.” They saw themselves rather like Hobbits (Tolkien was a medievalist). Hobbits knew their relatives to the seventh degree: second cousins three times removed, and so on. In the Middle Ages people saw themselves as part of a network of connections. They knew their family trees. They knew with whom they were related. They identified themselves as a node in a network and they saw pathways, connections to other people in their extended family. They also saw themselves in terms depending on their profession. If they were in the Church, they saw themselves in the Church hierarchy as being a priest here, subject to the archdeacon here, subject to the bishop there, and the archbishop and the pope. You could have status by being the servant to a servant to someone important.

Sauerberg: Which is quite interesting because the first book-borne PR campaign was the Reformation in Northern Europe, which spread like wildfire because of the printing technique, which took away hierarchy. And the Counter-Revolution then made use of the same printing technique in order to protest against the Reformation, so you have it here.

Pettitt: And then there’s the Treaty of Westphalia: The Westphalian system of nation states in the early seventeenth century and that’s the same—the nation-state and the dominance of the book are more or less contemporaneous.

DS: Got it. An important idea that is hard to argue against is that the idea of personhood and individualism is contemporaneous with the book as well.

Pettitt: Which comes first is hard to tell.

DS: So before the parenthesis, people saw themselves as some sort of organic whole?

Pettitt: A molecular structure, I don’t know about organic. But the same with social relations. Everybody had a lord above them and a subject below them: and you were the vassal of this lord who was subject to the king. It was based on connections, so I don’t know about organic. Just connective, networking, it was a networked society; the media were networked. The things communicated through the media were built up of networks and peoples notions of the world were in terms of connections and networks. … And then comes the book.

DS: The book is container, a bound thing.

Sauerberg: If you take a look at this room, it’s like a library. I mean you could do without it.

Pettitt: Today exactly they have closed the main entrance of our university library for building purposes and we’re wondering will it matter?

DS: In parenthesis, you’re saying that it’s contemporaneous with the Renaissance and the primacy of the individual and separateness. And it’s about, “I’m me,” and “You are you,” and “We’re Denmark, that’s Germany.” You’re saying that’s all part of the book, right?

Pettitt: It’s not “part of” the book, but it’s a parallel developmemt, which must be connected in some way. Nations didn’t have frontier conflicts. Denmark’s a wonderful example. South of Denmark there are a couple of Duchies that were technically subject to the German empire but the King of Denmark was their Duke, and no one bothered much until suddenly every nation had to have a frontier, and so the Germans and the Danes had several wars about where to draw the frontier.

DS: And that’s because people started thinking in terms of boundaries and containment?

Sauerberg: I mean what sparked off the collapse of Eastern Europe was the fax machine, wasn’t it? I mean that there were no boundaries.

DS: One thing I was curious about is the idea of hierarchy and authority. It’s interesting that hierarchy and authority were a defining feature of the pre-book era. So, if we’re restoring something, if we’re picking up where we left off, what are we looking at here?

Sauerberg: We are restoring the problem of authority. That is what we’re restoring. Medieval people had God in their minds all the time as kind of a guarantee, what they were told by the priests. Now what corresponds to it is the urge to authority.

DS: But isn’t that a little too clever? Before the parenthesis, society was defined by hierarchy.

Pettitt: It was defined by connections.

DS: But in the end the political structure was feudal. Now if you listen to people who don’t believe in the parenthesis but who believe in technological progress, they will tell you that the Internet revolution is about flattening hierarchy and the decomposition of authority. And yet the pre-parenthesis period was almost the opposite—it was all about hierarchy. What are we looking at from your perspective on what happens now that the parenthesis is closed

Sauerberg: New hierarchies will emerge. We’re looking for the urge for authority, the need for points of orientation.

Pettitt: And the authority of the book, the authority of the medium. In the parenthesis, the medium itself guaranteed authority because of its nature and solidness. This flattening out means that books are not more important than other forms of communication.

DS: So this is not necessarily a hopeful vision for the future. One thing about the book is that you can say that while it was an authoritative object, at least you can argue that was democratizing. Anyone, theoretically, could write a book. Martin Luther could, for instance.

Pettitt: He became a new authority.

Sauerberg: What Luther wrote was that whenever two or three people gather together, the Church was there. They could read about it. They could read about themselves. That was thanks to the book, to the spread of print.

DS: What Luther was saying sounds like what Internet advocates are saying today. The book there was a liberating thing.

Sauerberg: It was not as neat as all that. You cannot think of going back to something that was there. It’s rather kind of a structural thing. Are you familiar with the phenomenon of fan fiction? I invented a term some years back called the “unintended sequel”—that’s a new phenomenon in literature that people write on to establish canonical works. They write it in their own fashion, the way they want things to end up. So they add something. That is a new phenomenon that coincides with the closing of the parenthesis. Fan fiction is the phenomenon that people write on in large numbers of well-known books and do it in cyberspace alone. They never “publish.” They’re not intended for publication. It’s a ‘net thing and the one who leads that at the moment is Rowling and Harry Potter. There are, I think, at the last count more than 600,000 fan fiction contributions to the Harry Potter saga. And this is something that completely put out without any boundaries. It grows by its own energy, and people tell stories.

Pettitt: Which sounds pretty medieval to me because in the medieval period, the simple business of embroidering further on existing stories was their default mode. The existence of a story didn’t mean it was finished or completed. Anyone with a talent or the ability to contribute could rewrite bits or add material. What were they doing in between this event and that event or what were they doing before? There were prequels. What happened to them afterwards? There were sequels. It’s the norm of medieval storytelling that you take a story and you elaborate on it.

DS: And so the idea of authorship is now completely up for grabs. I was trying to assert the importance of authorship in the journalism field, but what you’re saying now is…

Pettitt: Well, of course, Clay Shirky’s Here Comes Everybody wasn’t written by everybody. That’s a challenging thought.

Sauerberg: We are under considerable pressure to produce a book about Gutenberg’s Parenthesis.

Pettitt: So how do we report on the end of the book, in a book?

DS: So before the parenthesis, authorship was not really necessary?

Pettitt: No, and it was mostly anonymous. And sometimes, if there was a name, there’s often no information about the name. There are those who say that the first known author, Homer, isn’t the name of an author, it’s the name of a process because in very Ancient Greek “homer” meant “the joiner of pieces.” It specified a function, rather than an identity.

DS: And you were even talking about Shakespeare and the question of his authorship.

Pettitt: That’s right on the edge. That’s why I find being a Shakespeare scholar has also become very interesting.

DS: Shakespeare, the iconic author.

Pettitt: Well, he is now. The bracket goes right through his career. I put that bracket at about 1600, and Shakespeare is a very good example of someone who recycled material.

Sauerberg: It’s a Gutenberg-parenthesis symptom to hunt for the real Shakespeare.

Pettitt: He didn’t care. He didn’t care. Half of his works appeared without his name on them.

DS: They were published in quartos [big sheets folded into quarters]?

Pettitt: Quartos. Their equivalent of our paperbacks. They were published as paperbacks, and let’s say, half of them didn’t have his name on them. Shakespeare did not invent any of his plots. Shakespeare rewrote dramatized existing narratives, and in many cases, wrote new versions of existing plays. There’s an awful lot in Shakespeare, which is not Shakespeare. And he also used standardized techniques. He used verbal formulas and traditional dramatic structures, standard units—a bit like Lego bricks fitted together.

DS: Okay, not to keep us going all day, but there’s a couple things I wanted to work with and one of them is the limits of the idea of restoration and return. This idea of poets, storytellers and people who deliver news verbally—all that resonates as being restored today. But there seems to be a real fundamental difference between that kind of cultural production and the digital age, and that is this idea of a record. Sometimes I feel like the Internet is the ultimate container.

Pettitt: Well how long is it since you tried to link to a place, and it said, “no longer exists?” What is the average lifespan of an Internet site? I think I read it’s two years.

Sauerberg: You’re forced to change platforms every 10 years.

DS: Do you really have faith—in a serious way—that something you upload today will not be available later to come back to haunt you? Now we’re talking about authority. Now we’re talking about a thing in which all of your musings, and your poems, and your songs are now open to scrutiny, and I want to say permanently, and I think you should concede there’s a problem here, right?

Pettitt: In my experience and my thinking, the Internet, digital technology are as ephemeral as speech in the sense that I cannot easily now access documents I wrote in 2003. I will ask for special help to do it. And a lot will survive. I’m sure anything wicked I’ve written will turn up somewhere, but an awful lot of other things will disappear.

DS: But you see the issue about someone in Medieval times telling a story that was outside the bounds of authoritative sanction, afterward it was gone. Now, for journalists, this is not a small deal. But also as just people living in this new environment, the fluidity is, to me, within a giant container.

Sauerberg: Yes, but if you take a look at things before the parentheses, people had to keep all those things in their heads. Within the parenthesis, you have books, you can put all of your memories up on shelves. It was easily recognizable and accessible and you know exactly where it is on the shelf. Now you put everything into the computer. I’ve spent most of this morning looking for exact texts from seven years ago, that I hope to be able to recycle and find them. They are somewhere in there. I have to use my own head as the sort of control and I find that, increasingly so, that I have to keep a personal touch on what I need because I cannot rely on the computer because everything goes into it. It’s far too plentiful.

DS: But isn’t the reason that Google is the largest corporation in the face of the earth precisely because of its ability to perform searches just like the one you’re talking about and if you couldn’t find it, someone with a greater technical expertise could? And we’re talking about authority at this point.

Sauerberg: But I need to know what to look for exactly, which means I would have to use my head in the first place.

DS: I wish I could be as comfortable that everything we’re doing now. For instance, this machine [the voice recorder], it changes the whole story, right? Say this was a live feed…

Pettitt: We’d have to worry about it for about four years.

DS: You’d have to worry about it for at least four years.

Pettitt: Yeah, and then after that it would disappear. There’d be so much stuff around, it would disappear. Google only goes for the stuff with plenty of links. Or all the links would be broken.

Sauerberg: That we would have to rely on memory.

Pettitt: And we would claim that it’s been manipulated. That’s the other point.

DS: And so you’re rejecting the idea of the Internet as a container?

Pettitt: Yes, I do. It’s a network.

DS: And the computer file is not a container?

Pettitt: Yes it is, if it’s static, and you can’t manipulate it. You can even manipulate PDF now, can’t you? A static computer file belongs within the Gutenberg Parenthesis because it can’t be interfered with—it is contained; demarcated. That is the last form of the book, I think.

DS: So you’re saying anything can be hacked?

Pettitt: No I’m saying if it’s unhackable, it’s still a book. Books are unhackable. Most digital files can be hacked, and they belong to the new age, just like memories.

DS: The interesting thing about the theory is that, projecting out, we’re not looking at just new ways of communications, but new ways of being, new ways of organizing society, right?

Pettitt: History shows the changes in the one are normally accompanied by changes of the other levels as well. There are those that say it’s the media technology that causes the other changes. I’m not quite there yet, but so far they’ve been synchronized.

DS: And you’re saying essentially that people will be searching for authority? Authoritative hierarchical structures will return because that was a component of pre-Gutenberg society.

Sauerberg: Authorities returning as a problem as something that people are aware of, rather than something people take for granted and place in books.

Pettitt: There was a time when the book was an authority in itself, so that you didn’t need to worry about the other authority.

DS: With the book what do we get? We get the Scientific Revolution, we get the Enlightenment, we got universities and we got democracy. We got the Declaration of Independence, and Freud and everyone else. Before the parenthesis what did we have? We had the Dark Ages. With the destruction of this apparatus, is that what we get?

Pettitt: Quite possibly. We may be surfing to serfdom; to a digital feudalism.

Sauerberg: But perhaps we get diversity, first and foremost.

DS: What’s the public today in this new environment?

Pettitt: The question itself is ultimately inconceivable. The question is parenthetical. Distinguishing between the publisher who produces and the public who receives, that in itself is a categorization, which will decay in the new circumstances because we’re in an era where the boundaries between the journalists and the public are decaying.

DS: What do you think of this idea of one person who has earned authority by doing the work and now has presented—not users and not participants—but let’s face it, readers. They can send out chunks of it later but while they are doing it, they are presented with a coherent idea of what’s happening in, for instance, the U.S. financial system.

Pettitt: The notion of the “right” story is parenthetical. The complete story—the truth and the whole truth and nothing but the truth—I think there are faint glimpses of hope, well, for you. We’re in the business of predicting the future on the basis of the past, not if it’s going to be good or bad, or democratic or otherwise. What’s happened in the first instance is that journalism and the newspapers have lost their status, their high category status, in the Internet world. Blogs and newspapers are starting to resemble each other, and it’s very difficult for people to decide whom they will believe, where will they put their trust. A newspaper is just another voice in the marketplace of exchanging information. That’s where it’s going. So, journalists need to have some kind of character that distinguishes them and the hope I’ve detected is there are people who are exploring this kind of world—a world of gossip. Newspapers are sinking into a sea of gossip and rumor, and what do you do? How do people survive in a world of gossip and rumor? Well the good news is, there are people who’ve been studying rumor and gossip from a scientific perspective for some years, and, it turns out that not all are equal. People have done case studies, fieldwork. People have gone out to a business and interviewed them and recorded people gossiping at lunch and over the water machine.

It turns out that we are not all equal in the world of gossip. In a given area where gossip and rumor are exchanged, there are gatekeepers, in a new sense. I mean we already use “gatekeepers,” of news people, “gate-keeping journalism” as deciding what comes into the news and what doesn’t. The new sense is: What is going to go on and in what form in the next stage in the transmission of the rumor? And in any gossip community there are gatekeepers who set the scene. They decide, is this rumor going in, am I going to pass this on, and in what shape, and it seems that they have an influence. The last sentence is, journalists need to be gatekeepers, not in the old sense, but in this new sense of those who shape the passing on of gossip, and who can have a good effect or a bad effect on it.

DS: Let me read from Michael Schudson, a journalism scholar where I work. He wrote this in 1995. It says:

Imagine a world, one easily conceivable today, where governments, businesses, lobbyists, candidates, and social movements deliver information directly to citizens on home computers. Journalism is momentarily abolished. Citizens tap into whatever information source they want on computer networks. They also send their own information and their own commentary. They are as easily disseminators as recipients of the news. The Audubon Society, the Ku Klux Klan, criminals in prison, children at summer camp, elderly people, etc. Each of us our own journalist.

What would happen? At first, I expect citizens would tend to rely on the most legitimate public officials for news, trusting especially what the White House sent their way. The President, as the single most symbolically potent, and legitimate source of authority, would gain even greater power… Other sources would be too difficult to evaluate. Congress for instance, would be more cacophonous than ever. Lines of authority that today give Congressional leaders more of a place in the public eye.

At that point, even social critics who now long for more public dialogue, more democratic discourse, more voices in the public sphere, would have had enough. People would want to sort through the endless information available. What is most important?…Demand would arise not only for indexers and abstracters, but for interpreters, reporters, and editors. Some people would seek partisan abstracts and analysis, but others, less confident in that existing parties, cults or sects represent their own views, would want independent observers—people wise to the ways of politics, but without strong commitments to either party, people able to read politicians well, to know them intimately, to see them and see through them.

Journalism, of some sort, would be reinvented. A professional press corps would reappear.

Official Secrets of the Financial Crisis

Huge public money changing hands in deals that remain undisclosed; part of a widening shroud over government

By Dean Starkman   Jun 4, 2013 at 07:05 AM

Jon Weil’s column the other day was one you really did not want to miss and points to wider ways in which the government’s relationship to the public has changed since, and partly because of, the financial crisis.

Weil points with incredulity to the quiet move by the conservator for Fannie Mae and Freddie Mac, which in 2011 had loudly sued 17 megabanks and other financial institutions for mortgage era predations, to settle with one of the worst of them, Citigroup, for (drumroll) … an undisclosed amount?

The conservator, Federal Housing Finance Agency, had claimed that Citigroup, the subprime and bailout leader and perennial train wreck, had sold the now-bankrupt government-sponsored enterprises $3.5 billion in mortgage-backed securities after providing information that was “materially false.”

The complaint is well worth reading, containing as it does, something of a greatest-hits of evidence of fraud and wrongdoing by the bailed-before-it-failed megabank. For instance, we learn that Clayton Holdings, the due diligence firm-turned state’s witness, which had been hired to scrub mortgages before they are allowed into MBS pools, rejected fully 42 percent of loans from the first quarter of 2006 to the second quarter of 2007—only to have a third of those put in the pools anyway. And then there is Richard Bowen, one of Citi’s top underwriters, who found a stunning 60 percent defect rate in mortgages under his purview in 2006, a figure rising to 80 percent in 2007.

And so on. None of this, it goes without saying, was disclosed to the GSEs.

FHFA, as it says in its own press releases, acts entirely “on behalf of taxpayers.” And yet they aren’t let in on the basic terms of the deal made in their behalf.

And while the $3.5 billion in dispute here is large enough, the total involved in the suits against the 17 institutions is $196 billion.

As Weil notes, this is the conservator’s second such secret settlement. The first, involving General Electric Co., an underappreciate player, came in January, as part of which the conservator’s suit was dropped.

GE, crisis aficionados will recall, took a star turn in post-crisis literature when This American Life’s “Giant Pool of Money” quoted Glen Pizzolorusso, a broker at its giant WMC mortgage unit, to memorable effect:

What is that movie? Boiler Room? That’s what it’s like. I mean, it’s the [coolest] thing ever. Cubicle, cubicle, cubicle for 150,000 square feet. The ceilings were probably 25 or 30 feet high. The elevator had a big graffiti painting. Big open space. And it was awesome. We lived mortgage. That’s all we did. This deal, that deal. How we gonna get it funded? What’s the problem with this one? That’s all everyone’s talking about … .

We looked at loans. These people didn’t have a pot to piss in. They can barely make car payments and we’re giving them a 300, 400 thousand dollar house

I mean, remember the $400 hammer and $600 toilet seat from the ’80s? Even if some of was partly myth, the idea was that the public treasury was something not to be monkeyed with. My point only is that transparency about public money is written into the very fabric of the Constitution.

If the FHFA settlements were unusual, that would be one thing. But of course, they are of a piece with the government secrecy that has shrouded the financial crisis bailouts and resolutions from the beginning.

Remember, the Fed and Treasury refused even to identify the beneficiaries of the American International Group bailout—never mind how much they received. It was only the reporting of The New York Times and Bloomberg that revealed that the recipients were, in fact, Goldman, Merrill, and other Wall Street and foreign banks, like Société Générale and Deutsche Bank.

It’s hard to forget the insouciance of the spokespeople for the government agencies at the time. From a Bloomberg story by Mark Pittman:

“What AIG did with its money, you should call AIG,” said Fed spokesman Calvin Mitchell. “I doubt that we will be talking about AIG’s CDO portfolio.”

Those stories ran in September 2008. AIG only officially released the names of its beneficiaries in March 2009. And does anyone have any confidence that the counterparties would have been revealed even then had not virtually all the relevant information already been in public domain, thanks to journalistic efforts?

And it was only through the historic lawsuit brought by Bloomberg (with Pittman as named plaintiff)—at great effort and expense—that taxpayers were even allowed to know even, again, the identities of the recipients of emergency lending programs that numbered in the trillions.

Of course, the government has arguments to make to defend such secrecy. Concealing Citi’s settlement might strengthen the government’s position versus the other banks, we’re told. The fragility of the financial system, the fact that it is based on confidence, makes disclosing recipients of government aid problematic.

But it should go without saying that in a democracy, that’s just too bad. You have to disclose it anyway.

But of course, even the massive secrecy surrounding the financial crisis is part of a larger and widening shroud of secrecy that increasingly is becoming the new normal in Washington, just one symptom of a weakened press corps

As Steve Coll says in another context, the First Amemdment is based “the self-evident truth that secrecy and concentrated power are inherently corrupting.”

Nowhere is that more true than in secrecy that still surrounds the financial crisis

Exclusive excerpts: ‘The Gestation Period of Llama (Or why I quit The Wall Street Journal)’

In an new essay, a former investigative reporter explains how a Murdoch-ized operation led her to leave journalism and reinvent herself

By Dean Starkman   Jun 3, 2013 at 06:49 AM

Once, dissent was common in American newsrooms. Today, it’s rare for reporters, or even former reporters, to speak up about what’s happening within their organizations, even if it’s about a simple disagreement over editorial choices.

Well, now one has. And not just any reporter.

Ann Davis Vaughan is a former Wall Street and investigative reporter for The Wall Street Journal, winner of a Loeb Award in 2007 for coverage of the Amaranth crackup, and was named a “business journalist of the year” by the World Leadership Forum in London (now the Leadership Forum) in 2005 (and she was a colleague of mine in the paper’s Law Group back in the ’90s). She was also one of the paper’s more productive reporters, hustling for scoops as well as longform exposés. Her Loeb, for instance, was for deadline reporting. Three years ago, she left the paper, and her “dream job,” to start her own independent research firm, Reservoir Research Partners. (ADDING: I refer to her below by her married name, Vaughan, but during her entire Journal career she was “Ann Davis” and wrote under that byline.)

In a thoughtful and soberly worded essay that becomes available ($$) today, Vaughan pulls the curtain back on the inner life of The Wall Street Journal’s newsroom since Rupert Murdoch’s News Corp. took over the paper’s parent in early 2008.

Vaughan describes a drip-drip of internal changes in management attitudes and priorities that overtook the paper and that add up to a remaking of an American institution from the inside out. This essay is about as far from a screed as you can get; she goes out of her way to be fair and dwells to considerable degree on her decision to leave newspapers altogether and apply her skills in a new way for people who will pay a pretty penny for them. But it’s all the more convincing for the reasonable way it describes how newsroom priorities at the Journal tilted away from longform narratives, in-depth investigations, and close corporate coverage in favor of more commoditized, general, scoop-oriented news.

Vaughan writes:

Three years ago, I gave up my “dream” job as a senior writer at one of the most storied institutions in journalism, The Wall Street Journal. My job was no longer a dream job, at least not for me.

The changes sweeping the newspaper business, and our new owners’ approachto the Journal, led me to make a major professional shift: I started my own independent research firm, where I now serve as an investigative reporter for a few elite investors, rather than an investigative reporter whose work is read by millions…

Not long after Rupert Murdoch’s News Corp. closed a staggering $5.6 billion takeover of our parent company, Dow Jones, in 2007, he and his deputies began publicly disparaging the investigative reporting culture that had drawn me to the Journal…The first change I noticed was that editors I respected and had worked with for years—those still standing after a purge—came under heavy pressure to simplify stories that were premised on nuanced points.

The excerpts are taken from Vaughan’s contribution to Ink Stained: Essays By the Columbia University Graduate Journalism Class of 1992, edited by JJ Hornblass, Michele Turk, and Tom Vogel. The book is self-published and on sale today at this link.

I’d encourage anyone to buy the book, which offers fascinating observations from the class that entered the work force just in time for the Internet to become mainstream and upend media, in general, in journalism, in particular. Among the highlights: “The Gutting,” by Adrienne Johnson Martin, who chronicles the many rounds of lay-offs at Raleigh’s News & Observer; Ann Belser’s story, “The Risk of Eater’s Block,” a riveting account of trying to raise a family on a newspaper reporter’s shrinking salary; Savannah Blackwell, “The End of Smash-Mouth Journalism,” discusses why, after 14 years, she left the field altogether. Okay, it sounds grim. But it’s not. These are well-written, lively, sometimes funny, very absorbing essays.

Vaughan’s story is of a piece with the experience of the Class of ‘92 in the sense that the digital transformation crashed business models industrywide, eroding support for in-depth, investigative reporting and leaving fewer places for people like Vaughan to go. But her departure has as much to do with an older story of the culture shock that occurs when a newspaper changes hands, in this case, from a family that, for a few generations at least, upheld public-service journalism values, to Murdoch, who doesn’t, and doesn’t pretend to. The title of her essay, for instance, refers to a line by Robert Thomson, the Murdoch-installed publisher, in April 2008, when in at talk to the newsroom he pointedly asserted that some Journal stories seemed to have “the gestation period of a llama,” that is nearly a year. The aggressive joke would resonate.

Vaughan describes the profound affects on the newsroom of Murdoch-imposed priorities, including shifting the Journal from its focus on business and economic news to general news, that is to say, news already covered by others. Sound defensible? Sure. Until you see what kinds of stories are given up in the name of chasing commodity stories. It’s always about resource allocation and editorial priorities:

News Corp.’s decision to prioritize general news over business news —despite our identity as the global business paper of record—was another reason to soul-search….Editors had begun asking seasoned business reporters to defer coverage of developments on their beats in order to track “general news” developments on hurricanes, regional crime and tabloid scandals…essentially, anything but business.

To be fair, no one asked us to ignore major news, like multibillion-dollar deals. But for lots of news that we, the staff reporters, deemed significant, the news desk argued that our Dow Jones Newswires colleagues should cover the story instead. General news had shrunk the corporate “news hole,” and these were likely to be cut to un-bylined briefs anyway, New York argued. Here was the result: a CEO might make headlines—say, revealing a downsizing or a new strategic direction at a press conference—and the wires reporter would be the only one seeking the follow-up interview, rather than a group of reporters.

One thing I learned from my Journal mentors over the years was that a beat reporter dominates her beat by closely watching news and taking every opportunity to interview multiple actors who might play a role and say something newsworthy.

And here’s more:

I do not deny for a minute that the Journal is News Corp.’s paper to run, and that the business model must change for newspapers to survive. Good for them for trying. I also still believe the Journal is a quality business publication with terrific journalists, and it will continue to be one of the few papers with long-term staying power. But it is debatable whether subscribers to a flagship business newspaper like the Journal really want less financial and corporate news. Murdoch and Thomson love talking about how journalists at establishment papers feel entitled and presumptuous. I will concede this is sometimes true. But I would turn their point around: News Corp. feels entitled to ask highly skilled journalists to produce commodity journalism, in return for a relatively low salary in a dying industry.

If talented business journalists care at all about the long-term portability of their skills in a shrinking media world, succumbing to pack journalism in the crowded general news category is no way out. It makes senior, expensive reporters expendable. That was not the direction I wanted my career to be heading…

My career shift is not necessarily good for business journalism or Main Street investing. Increasingly, investors are paying investigative reporters like me to go digging exclusively on their behalf rather than publish our findings for a wider audience. But the exodus is inevitable as newspapers offer less space, time and money for investigative reporting. At least the investment world, which is infamous for missing red flags and failing to ask painfully obvious questions, is now getting more of it.

A couple things:

When News Corp. made its unsolicited bid for Dow Jones & Co., the Journal’s floundering parent in the summer of 2007, many protested, including us here at The Audit, for various reasons. One was News Corp.’s long record of not playing by the rules, which made it an especially bad choice to own what was then still the leading monitor of corporate behavior. What’s more, some argued, the Journal might be tarnished by association with News Corp.’s other units. And what do you know?

But mostly it was that Murdoch’s conception of journalism—banalized, commoditized, tamed—would do irreparable harm to what made the Journal great, its ability to combine comprehensive business news coverage—including world-beating scoops—with literate, sophisticated, in-depth narratives, twice a day, every day, five, then six days a week.

As I wrote at the time, it’s about the stories.

Those of us on the outside looking in could only note the big changes occurring internally and try to connect them to the big changes visible on Page One and throughout the paper.

Within a short time, for instance, Thomson would push out the holdover managing editor, Marcus Brauchli, in a newsroom coup that was ignored by an editorial integrity panel set up before the deal closed specifically to prevent such an occurrence.

Then came the internal memos and discourse that shifted career incentives at the paper from longform narratives—public-interest journalism’s natural habitat—to short-form incremental scoops. The implication of Thomson’s “llama” speech—and a preposterous one, in my view—was that somehow Journal reporters didn’t hustle. Thomson and fellow News Corp. managers also sought to pose a conflict between long-form investigations and market-moving scoops—a false choice if there ever was one. It’s well known that the former often flows from latter, and vice verse. That’s the very definition of great beat reporting. Plus, the notion doesn’t fit with the fact that, when it came to scoops, particularly M&A, the Journal was dominant.

A 2009 memo by Thomson made the new priorities explicit, a Murdochian emphasis driven home again with another memo this year, with, if anything, with even greater force in case the staff didn’t get the message the first time.

Sure enough, the result has been visible.

That’s the number of published stories over 2,500 words.

Here is where we say that, of course, the Journal still produces great work. Whether the paper is as great and as great as often as it used be is a debate for another day. But, in my view, those who think so are dreaming.

Many fine reporters and editors have left the Journal since Murdoch took over. In fact, they could fill the top editorial ranks of a couple of newsrooms—and basically do at Reuters and Bloomberg.

Only, one, however, has spoken up. That’s Vaughan, who has nothing to gain but a dose of Internet grief.

She deserves credit. The smart response is to give her some.

And to buy the book.

Audit Notes: Goldman dissembles, Corporate taxes, Silicon Valley

Bloomberg View shreds the bank’s too-big-to-fail apology

By Ryan Chittum   May 31, 2013 at 11:00 AM

Goldman Sachs issued a report recently claiming to debunk the fact that too-big-to-fail banks like itself get implicit taxpayer subsidies worth tens of billions of dollars a year.

But Goldman’s dissembling gets methodically disassembled by Bloomberg View’s Mark Whitehouse. It’s something to behold:

Before getting into the details, it’s important to note that the Goldman analysts are posing the question in an imprecise — and perhaps convenient — way. They’re asking whether big banks borrow at lower rates than small banks. The salient question is whether big banks, thanks to government support, are borrowing at rates lower than they otherwise would…

The Goldman analysts compare the yields on bonds issued by two groups of banks — the six largest U.S. institutions, and a few dozen smaller ones. They find that the bigger institutions’ cost of borrowing was, on average, 0.31 percentage point lower from 1999 through early 2013, but has lately been about 0.10 percentage point higher.

The analysis ignores a crucial distinction: The biggest banks are riskier because they use a lot more borrowed money, or leverage.

Read the whole thing.

— Michael Hiltzik of the Los Angeles Times is worth reading on why calls to end the corporate income tax—in part because companies like Apple dodge them— are just silly:

Unsurprisingly, about 40% of the profits of U.S. multinationals are reported in such countries as Bermuda, Ireland, Luxembourg and Switzerland, where taxes are minuscule or nonexistent for foreign firms, according to the Congressional Research Service. The phenomenon supposedly bolsters a common rationale you’ll hear for abolishing the corporate income tax, which is that it distorts corporate decision-making…

This argument is popular among economists. What it leaves out is that government in the real world requires revenue. Since all taxation imposes economic distortion in one way or another, the question boils down to how to do that in a fair, sensible and efficient way. Having a corporate income tax probably meets those requirements better than not having one…

So what should we do about loophole jockeys like Apple? The easiest remedy is to abolish the overseas income loophole: impose a single rate on all income earned by U.S. multinationals, with a credit for taxes paid to foreign countries.

— Dean Baker, writing about George Packer’s recent piece in The New Yorker on Silicon Valley, drops some common sense on the tech industry’s image machine and its enablers in the press and politics:

The piece basically shows that Silicon Valley fast lane is filled with self-absorbed twits who don’t have a clue about what the rest of the country looks like. So?

Seriously, who did we think was making big bucks in high tech, great philanthropists? As a general rule it is reasonable to assume that people who make lots of money in any industry, whether it finance, manufacturing, entertainment, or anything else, are primarily concerned with making money in that industry. I don’t know whether we should blame them for that fact, but we certainly should blame policy types who then imagine that these people’s success at money making gives them great insight into how we should run society.

Bill Gates got incredibly rich because he has sharp elbows and perhaps was willing to bend the law more than his competitors. The same applies to Mark Zuckerberg. That doesn’t mean that both are not smart and hard working people, but it does mean that they may not be the best people to determine our education policy or how best to lift the world’s poor out of poverty.

No, it’s not another housing bubble

Hysteria in pockets of the press over a long-awaited recovery

By Ryan Chittum   May 30, 2013 at 11:00 AM

The top story in all the major papers on Wednesday was news that home prices jumped 11 percent in the first quarter from a year ago, further confirmation that the housing recovery is underway in earnest.

The double-digit home-price increases and return of bidding wars have led to an awful lot of “bubble” talk lately.

Gawker declared yesterday that “The Next Housing Bubble Is About To Pop All Over You.” Gawker doesn’t quite grasp that soaring prices in Silicon Valley and San Francisco are being driven by a flood of newly minted tech millionaires chasing after a constrained supply of higher-end homes, and that’s not a bubble. Bay Area transactions are still 16 percent below average levels over the last 25 years and half the level seen at the peak in the mid-2000s. Prices would have to skyrocket, as we’ll see below, to get back to peak levels.

Yahoo Finance also declared last week that “The Housing Market Gets Bubbly Again” in a confused piece largely based on one anecdote involving the author, who buries a second anecdote that contradicts his thesis.

Bloomberg headlined a story two weeks ago, “From Brooklyn to California, Housing Bubble Threat Grows.”

Bloomberg’s first anecdotal evidence of the bubble threat? “An open house for a five-bedroom brownstone in Brooklyn, New York, priced at $949,000 drew 300 visitors and brought in 50 offers.”

A five-bedroom brownstone in Brooklyn for under a million bucks—and it only drew 50 offers?

Its second anecdote is about an all-cash deal for a $2 million house in Menlo Park, aka Facebook headquarters.

Its third anecdote is no more impressive:

In south Florida, ground zero for the last building boom and bust, 3,300 new condominium units are under way, the most since 2007.

Does 3,300 sound like a lot of condos to you? In 2005, there were 50,000 condos in the pipeline in downtown Miami alone.

The BBC throws in with a terrible package on “Concerns over potential housing bubble in the US” in which the reporter explains bubble economics with this head-slapper:

The worry is: If prices are rising too high too fast, people will drop out of the market altogether, creating a bubble.

I know screaming “housing bubble” draws clicks and viewers, but no, we are not in another housing bubble.

First, prices, as measured by Case-Shiller, are still down 27 percent from their peak seven years ago. But Case-Shiller calculates nominal prices, not real ones. And the consumer price index (inflation) is up 15 percent since 2006. So real house prices are about 37 percent below 2006 levels and are just now returning to where they were 13 years ago. Here’s a chart from the excellent Bill McBride of Calculated Risk showing real house prices going back a few decades:

Click here for a CR chart from last year that showed housing prices at about 1979 levels, by Robert Shiller’s measure, anyway.

And here’s a tip for the math-challenged out there: It takes a larger percentage increase to offset a percentage decline. Take a $100,000 house at the peak. If it fell the real national average 42 percent in the bust, it would have been worth $58,000 at the bottom early last year. But to get back to $100,000, it would take a 72 percent increase from the trough.

Even now, after the sharp bump off the bottom, prices would have to jump 60 percent to get back to their bubble-era peak.

It’s not just the national market, either. The bubble stories tend to focus on markets like Los Angeles and San Francisco. But both those markets, for instance, are just now getting back to 2003 and 2000 prices, respectively.

To get back to peak levels, San Francisco’s home prices would have to jump 60 percent, by my calculations (using Case-Shiller data). LA would have to jump 66 percent, Phoenix 99 percent, and Miami 105 percent. Las Vegas’s house prices would have to skyrocket 149 percent to reach record levels.

Not coincidentally, those markets are the ones where prices fell furthest. You also have to remember that some land-constrained individual markets are prone to booms and busts and probably always will be. Take LA. Its house prices crashed 40 percent in real terms from 1990 to 1997, soared 192 percent from 1997 to 2006, and then crashed 48 percent from 2006 to 2012. While individual regional bubbles aren’t fun, they’re not going to threaten the entire financial system like the more-or-less nationwide subprime bubble did between 2007 and 2009.

Now, you could argue that the bubble of the 2000s was so insane that we don’t have to get back to those levels to have another bubble. And that’s true, but there are plenty of other indicators that say we aren’t in one.

For instance, is it better to rent or to buy? It’s still better to buy, according to S&P Indices calculations:

The essential question regarding any bubble is: Does the investment make sense? Can homebuyers actually afford their mortgages?

Here’s a WSJ chart showing how historically cheap houses are (this goes through the third quarter of last year)

And S&P:

Homeowners are spending a historically low amount of their income on their mortgages—just 13 percent, according to Zillow. From 1985 to 1999, that number was 20 percent. In the bubble it was nearly twice what it is now. In 1979 it approached three times today’s levels.

You also have to ask about lending standards. Nobody cares if rich people are buying $2 million houses with cash. There are only so many of them, and if they lose their shirts, it affects them and, maybe, the help. The systemic problems come when banks lend to people who can’t afford to pay them back. Even Bloomberg’s bubble-threat story notes in its too-be-sure paragraph that “in contrast to the easy lending of the boom years, mortgage standards are strict.”

For instance, the average borrower closing a house in March had a 743 FICO score, according to Ellie Mae. The average denied applicant had a 702 score, just four points lower than the average approved applicant in 2007.

The Cassandras say the Fed is blowing bubbles with its easy-money policy. But the whole point of quantitative easing and extremely low interest rates is to fight the massive deflationary bias caused by trillions of dollars of bad debt incurred during the bubble. The economy can’t get back on its feet until housing starts really moving again. Low interest rates make it possible for buyers to afford higher prices. As interest rates start to rise in the next year or two, that will counterbalance the surge in prices, as will an increase in inventory, as underwater homeowners are able to sell their houses without losing money.

To really have a housing bubble, you have to have lots and lots of transactions. And while sales are up (remember, that’s a good thing!) they’re still at 1999 levels, even though we have 10 percent more households since then. Transactions of new and existing homes would have to pop 55 percent to reach peak bubble levels—roughly 3 million more deals a year.

That’s not happening anytime soon.

Bear markets don’t last forever, and not every recovery is a bubble.

Promiscuous media

Publishing content where it fits best

By Felix Salmon   May 29, 2013 at 06:50 AM

Two years ago, when I wrote about the death of blogging, I contrasted the decline of old-fashioned reverse-chronological blogs with the huge success of Twitter and, especially, Tumblr. Since then, of course, Tumblr has been sold to Yahoo for more than $1 billion, while Twitter is reportedly valued at some 10 times that amount. Clearly there’s a lot of value in becoming a successful publishing platform.

One big reason for the success of Twitter and Tumblr is that they have a very clear idea of what their product is, and they focus on making that product great rather than on being all things to all people. Blogging was historically thought of as a one-stop shop: the place where people would post a series of things, and where those things would appear in reverse chronological order. Every so often, a blogger would write something elsewhere, usually for money, and then link to that piece from their blog. But when Twitter came along, something changed: Bloggers would write some things on their blogs, and other things on Twitter.

After I realized that Twitter had powers that no individual blog could ever have, I started thinking increasingly about the best platform for any given thing that I wanted to do. Photos of my friends and family of course are easy: they go on Facebook. Less personal photos go on Instagram. And if something could be distilled into 140 characters or less, there’s a good chance that it belonged on Twitter. But Tumblr was great too, for certain things: I’ve now posted to my Tumblr 1,159 times, and have 36,475 followers there. I haven’t spent much time making it pretty or coherent, but shortform content, especially if it’s visual and doesn’t work on Twitter, is often perfect for Tumblr.

There are lots of other platforms too: I’ve seen people like Jerry Saltz get really good at Facebook, although I’ve largely shunned it as a publishing tool. Bloomberg’s Tom Keene is very active on LinkedIn. I had a YouTube channel for a while; that was a lot of fun, and allowed me to do things which don’t necessarily work in print very well. For conversations, podcasts can be wonderful, as can live events. And if I need it, there’s always my own personal blog. Basically, different types of communication require different platforms, and it’s silly to expect everything to fit into one template.

This morning, I posted some thoughts about CitiBike on Medium — which is also the place I chose to publish my big piece on bitcoin. I like how clean Medium is, and it’s quite well suited to content which is longer than a Tumblr post but also maybe not the kind of thing which I’ve started to concentrate on here at my Reuters blog. Don’t ask me to define exactly what I put where: A lot of these decisions are spur-of-the-moment things, and sometimes I change my mind at the last minute. (This post, for instance, was drafted in Medium before I decided to move it over to Reuters.) But I really do love the ability to create and present the stuff I create in the format which puts it in the best possible light.

The new Reuters site is based around the concept of streams, and the Felix Salmon stream on the site, which will appear at some point in the coming months, is by its nature going to be a different animal, on a different platform, than the current Felix Salmon blog on Reuters.com. I don’t know exactly how it’s going to work — there will be a lot of trial and error involved, for sure — but right now the way I’m thinking about it is as a place where the various things I do on various platforms can be brought together in a single place. If I write something on Medium, or if I write an article for Wired, or if I post something on Tumblr, or if I create a video on YouTube, that thing can live in its own natural habitat while still being aggregated on my own Reuters platform. And of course I’ll always be writing a lot of original content right here — content which in turn will end up being linked to from Twitter, or syndicated on Seeking Alpha, or otherwise shared around the social Web.

To put it another way: The death of the blog was really just the death of a single template into which all of a certain person’s output had to be able to fit. Now we have a multiplicity of options, and it’s silly not to take advantage of them. Media organizations have generally embraced their journalists publishing ultra-short pieces on Twitter; the future, I think, is going to be ever further in that direction. Certain journalists will be wonderfully active on Pinterest; others will develop huge followings on LinkedIn. As they do, their employers will be gifted with a brand-new way to extend their brand out to people they never reached before, in what feels like a very personal manner.

I remember having drinks with one editor in chief, a couple of years ago, after anNYT op-ed I had written received wide attention. He said that he would be furious if one of his writers had done such a thing; he had a clear expectation that his own publication would be the only place that his writers published pretty much anything longer than 140 characters. That expectation didn’t make much sense to me in 2011, and it just seems silly now. The same NYT op-ed, published as a Reuters blog post, would have been a very different animal: the medium helps create the message, as well as the audience that it reaches. Media companies should be in the business of curating and publishing what works best on their own platforms, rather than becoming jealous of what appears elsewhere. Indeed, many of them publish too much, and would be well advised to publish much less than they do.

Everybody is a curator, these days: Publishers design platforms for certain types of content, editors shape publications by deciding what to leave out; journalists try to make sure that the stuff they’re doing is expressed to its best possible effect on the best possible platform. The result is a more fluid media ecosystem than we’ve been used to, but also a more effective one. Let content live where it works best; that way, the publishers of that content will be able to present something with maximal coherence and a minimum of feeling that they’re trying to do something they’re not particularly good at. The publishers who win are going to be the ones with addictive, compelling, distinctive content. Rather than the ones who are constantly flailing around, trying to copy everything that’s good somewhere else.

Fortune goes long on Amazon and taxes

How the retailer manipulated a broken government system to get an unfair advantage

By Ryan Chittum   May 24, 2013 at 06:50 AM

I’ve been following the Amazon tax-avoidance story for years now, and I haven’t seen it better-told than it is on the cover of the new Fortune.

Peter Elkind and Doris Burke get nearly 6,000 words to tell the story, and though it’s a bit of a clip job, it’s a very good clip job (ADDING: I should say “clip job” wasn’t the right term to use here. There clearly was a lot of original reporting that went into this story). Sometimes a story is out there in dribs and drabs over years and needs to be synthesized. That’s what we have here.

Fortune really gets at how tax-avoidance is part of Amazon’s DNA, from Jeff Bezos (Fortune latest “Businessperson of the Year”) plotting to start Amazon on an Indian reservation to avoid collecting taxes, to the company’s aggressively disingenuous lobbying to preserve its unfair price advantage, to its eventual capitulation.

There are people who defend this kind of corporate behavior on the grounds that Amazon is simply using the law to save its customers money and to make money for its shareholders. But surely we can all agree that competition should be about who can come up with the best products and services, not who can dream up the best tax-dodging scheme. The simple fact is that it’s companies like Amazon that turn the law into what it is and/or keep it from being changed.

Amazon is expert at many things, but not least among them is exploiting the federalist system. The Supreme Court’s Quill ruling enabled it to get a 5 to 10 percent price advantage on its bricks-and-mortar competitors for the better part of two decades, and federalism also enabled the company to play states off each other for tens of millions of dollars in corporate welfare.

The problem is, our government is too broken to deal with these kinds of practices. It basically only moves against big corporate interests when other equally powerful corporate interests come into opposition.

So the society-wide problem of debit-card swipe fees, which had been abused for years by the financial industry to the detriment of consumers and retailers, only gets quasi-addressed when the giant retailers organize to take on the banks (read The Huffington Post’s “Swiped: Banks, Merchants And Why Washington Doesn’t Work For You,” a Best Business Writing 2012 entry).

And the Marketplace Fairness Act, which would finally allow states to force online retailers to collect sales taxes, only gets traction not because so many states support it and it’s the right and fair thing to do, but because it has the backing of goliaths like Walmart, Home Depot, the rest of the National Retail Federation, plus Amazon too.

That’s right. Now that Amazon has to collect taxes in so many big states because it has physical nexus in the state, it wants to make sure its online competitors do.

As Fortune shows, Amazon has also been a dishonest bully and, let’s not mince words, a tax cheat. The Texas tax story, which was uncovered by The Dallas Morning News five years ago and which serves as Fortune’s lede anecdote, shows that.

In August 2010, Cheryl Lenkowsky, an auditor for the Texas state comptroller, sent a letter to a top tax executive at Amazon.com’s Seattle headquarters. At that point, Amazon had been selling a wide array of merchandise to Texans for 15 years without collecting a penny of sales tax from them. Tax-free shopping was a delight for customers, a vital competitive edge for the company—and a hemorrhaging wound for state government.

Now, Lenkowsky informed the company, all that was about to end. Texas’s audit, which had gone back four years, had resulted in an “adjustment”: a bill for uncollected taxes, plus penalties and ­interest—$268,809,246.36 in all. Added Lenkowsky helpfully: “We have included a pre-addressed envelope for your payment convenience.”

Amazon responded fiercely. It appealed the assessment. It sued the comptroller for her audit records. It lobbied Rick Perry, Texas’s business-friendly governor. Most of all, Amazon insisted it had no “physical presence” in Texas—the basis for the tax claim—despite owning and operating a 630,800-square-foot distribution center (with an Amazon.com flag in front of it) in a Dallas suburb. When all that didn’t work, the company shuttered the facility and threw its 119 employees out of work, vowing to abandon the Lone Star State.

As it threw its fit, Amazon said it had to leave Texas—Texas!—because of its “unfavorable regulatory environment.” Fortune makes a fairly big deal of how the state called Amazon’s bluff on the extortion and ended up getting the company to collect Texas sales last summer along with a pledge of 2,500 jobs and $200 million in investment.

But it’s a mark of the out-of-whack relationship between state and (powerful, out-of-state) corporation that Texas didn’t prosecute Amazon for brazenly breaking the law. Texas didn’t even bother to collect on Amazon’s overdue tax bill. It wrote off the $269 million in uncollected taxes owed as part of the 2012 tax deal with the Seattle company.

With all this background the notion of the company’s policy chief, Paul Misener, wrapping Amazon in the flag is nausea-inducing:

With his cheerful demeanor and gleaming smile, Misener conveys the impression that what cynics might view as resisting taxes is in fact a noble quest to spread jobs and opportunity. Who could be against that? Indeed, Amazon says it’s driven strictly by principle. “Far from an e-commerce loophole,” Misener testified in Congress last August, “the constitutional limitation on states’ authority to collect sales tax is at the core of our nation’s founding principles.” As Misener puts it in an interview with Fortune, “We feel very good about our position because it’s a constitutional right.”

Our modern-day “robber barons in chinos” are so much better at PR than the sharper-dressed originals. But at base, the Silicon Valley ethos is Randian libertarianism dressed up in gee-whiz utopianism and TED-talk guruspeak.

That Amazon is not physically of Silicon Valley because Jeff Bezos wouldn’t collect taxes in California.

Audit Notes: The IRS story in context, Silicon Valley oligarchs

Necessary context from ProPublica and the NYT on the overblown scandal

By Ryan Chittum   May 23, 2013 at 06:50 AM

The bulk of the IRS scandal press coverage has been seriously devoid of the kind of context that tells readers how and why the targeting of Tea Party groups was almost certainly not a Nixonian plot from the Oval Office to intimidate political opponents.

So it’s great to see ProPublica’s excellent piece showing why the scandal is way, way over-hyped (emphasis mine):

With all the furor over applications being flagged from conservative groups — particularly groups with “Tea Party,” “Patriot” or “9/12” in their names — it’s worth remembering that a social welfare nonprofit doesn’t even have to apply to the IRS in the first place.

Unlike charities, which are supposed to apply for recognition, social welfare nonprofits can simply incorporate and start raising and spending money, without ever applying to the IRS…

Of the more than $256 million spent by social welfare nonprofits on ads in the 2012 elections, at least 80 percent came from conservative groups, according to FEC figures tallied by the Center for Responsive Politics.

None came from the Tea Party groups with applications flagged by the IRS. Instead, a few big conservative groups were largely responsible.

And the kind of targeting done by the IRS’s Cincinnati office was hardly limited to Tea Party groups. Also, read Dick Tofel on why ProPublica’s receipt of conservative-groups’ tax records is almost surely no scandal either (it was likely inadvertent).

— The New York Times also had a solid effort on the IRS story a few days ago, examining the Cincinnati office at the root of the uproar:

Overseen by a revolving cast of midlevel managers, stalled by miscommunication with I.R.S. lawyers and executives in Washington and confused about the rules they were enforcing, the Cincinnati specialists flagged virtually every application with Tea Party in its name. But their review went beyond conservative groups: more than 400 organizations came under scrutiny, including at least two dozen liberal-leaning ones and some that were seemingly apolitical.

Over three years, as the office struggled with a growing caseload of advocacy groups seeking tax exemptions, responsibility for the cases moved from one group of specialists to another, and the Determinations Unit, which handles all nonprofit applications, was reorganized. One batch of cases sat ignored for months. Few if any of the employees were experts on tax law, contributing to waves of questionnaires about groups’ political activity and donors that top officials acknowledge were improper…

It is not unusual for I.R.S. specialists to search for patterns in applications, in part for clues toward fraud and scams — a single tax preparer employing the same tax gambit for multiple clients, for example — and in part to ensure that similar groups are treated in a consistent way, the former officials said.

It’s Occam’s razor: An evil administration out to squelch its opposition, except the ones who actually had the money to oppose them? Or low-level bureaucrats doing what they always do?

— Quote of the day goes to Robert Levine on Twitter for this sharp insight:

Tech companies’ biggest costs are content, bandwidth, and programmers. They’ve made political causes out of reducing the cost of all three.

Silicon Valley has cloaked itself in the language of revolution and liberty, but it does seem that more people are beginning to seeing through that. Read Evgeny Morozov’s epic Baffler takedown Tim O’Reilly and the Randian underpinnings of the tech evangelists.

Here’s Larry Elliott in The Guardian writing about Google Chairman Eric Schmidt in the corporate-tax row going on in the UK right now:

He likes to portray himself as the new sort of boss of a new sort of company, the ones that boast of their non-hierarchical structures, their dress-down policies and their chill-out zones. But the row about tax has shown that the people running these new-wave behemoths are not hippy capitalists, they are robber barons in chinos.

And here’s Joel Kotkin, no lefty he, writing in The Daily Beast:

What we have then is something at once familiar and new: the rise of a new ruling class, arrogant and self-assured, with a growing interest in shaping how we are governed and how we live. Former oligarchs controlled railway freight, energy prices, agricultural markets, and other vital resources to the detriment of other sectors of the economy, individuals, and families. Only grassroots opposition stopped, or at least limited, their depredations.

But today’s new autocrats seek not only market control but the right to sell access to our most private details, and employ that technology to elect candidates who will do their bidding. Their claque in the media may allow them to market their ascendency as “progressive” and even liberating, but the new world being ushered into existence by the new oligarchs promises to be neither of those things.

Bloggers for hire on a penny-stock pump and dump

The Motley Fool digs into a brazen and successful scheme to manipulate share prices

By Ryan Chittum   May 22, 2013 at 06:50 AM

The Motley Fool’s Brian Richards posts a fascinating look inside the pump and dump world of penny-stock promoters, reporting how the hype machine worked in the case of a shell company called Goff Corporation.

Richards describes Goff as “a social recruiting-company-turned-Colombian-gold miner,” which should have been enough to scare off any investor with a light on upstairs. Fortunately for penny-stock scammers, there are lots of dopes out there.

Lots.

Richards reports that investors have traded more Goff shares every day since it IPO’d in March than they have Apple and Exxon, two of the most valuable and liquid stocks on the market. Yahoo Finance puts Goff’s average volume at a whopping 29.3 million shares a day. Exxon’s daily volume was 13 million over the last three months.

Before collapsing 97 percent to 2 pennies apiece, Goff hit 65 cents a share at one point last month. How? It was helped by a flurry of glowing blog posts about this virtually unknown stock’s prospects, and it was boosted by a rent-an-analyst report that initiated coverage with a $4 price target. The analyst was paid to initiate coverage (and tells Richards he got $5,500 and that “the reader should assume the covered company is funding the report directly or indirectly”), and so were at least some of the bloggers.

On April 2, just as the hype game was getting going, a Motley Fool blogger was asked privately about writing a blog post on Goff.

A person calling himself “John O’Connell,” purportedly representing “Investor Associates, LLC,” contacted the blogger via LinkedIn. O’Connell offered “four-figure” compensation to write a positive article about the company — and when our blogger declined the offer, O’Connell even offered to write it for him, if the blogger would simply post under his own byline.

The blogger still declined, and immediately thereafter brought it to our attention. When I spoke with O’Connell by phone, he told me he had only reached out to two people, neither one taking him up on the offer. He ceased such blogger outreach once realizing it was against Fool rules, he said.

And yet, in a stroke of incredible good fortune and unbelievable coincidence for the stock promoters, somehow blogs got written — glowing blogs, each writing optimistically about a company that, to recap, (1) has never made a single cent and (2) went through a wholesale management and business-model change less than 90 days prior.

Richards reports the site “has banned four bloggers because they submitted suspiciously glowing posts on Goff.” He also notes that SeekingAlpha, a competitor stock-blogging site, published four positive Goff posts during the pump.

And hats off to the blogger, whom Motley Fool doesn’t name, for having the integrity to turn down the bribe. Because others didn’t think anything of it. Here’s one of the banned Motley Fool bloggers:

When we questioned the nature of his Goff post, he said it wasn’t a big deal: “I am on a regular basis offered compensation to write about multiple firms.”

The obvious question here is: How prevalent is corrupt user-generated content like this on the financial blogs? And since the answer to that question is unknowable, how can you trust any of it? Richards reports that Motley Fool has “strict rules against publishing stories on micro-cap companies with limited liquidity and/or low share prices to avoid manipulation of stock price, intentional or not,” but it clearly didn’t work here, at least until it was too late.

But give Motley Fool a lot of credit here for simply doing the story, much less diving into it. Richards doesn’t shy away from reporting how his site’s own blogging platform got abused in the matter. It would have been much easier for Motley Fool to let this story slide. The transparency is refreshing, particularly compared to how ABC, say, has reacted this week after it became clear that anonymous sources manipulated its Jonathan Karl into misleading and false coverage of the Benghazi story (read Jay Rosen’s great piece on that).

The micro-cap underworld is a brutal, scam-ridden area, and there are very few reporters keeping an eye on it. If Motley Fool hadn’t reported on it, there’s a good chance this scam wouldn’t have gotten reported. You can bet there are many, many of them that never do.

OKC’s TV news excels in another disaster

Life-saving information before the tornado, essential reporting afterward

By Ryan Chittum   May 21, 2013 at 06:50 AM

In Oklahoma, particularly in the springtime, dangerous weather is a part of life. And so are the local TV news stations in my home state.

Chances are good that the bottom corner of your TV screen come May has the familiar map of the state covered with red, yellow, and green Doppler radar images on loop denoting the severity of the latest thunderstorm, flash flood, or tornado warning in your area.

Weather is routinely a matter of life and death in the state, and meteorologists rank somewhere between football coaches and pastors on the authority spectrum. If there’s anyone left in journalism with the fabled stature of a Walter Cronkite, it’s probably an Oklahoma weatherman, and probably Gary England, whom OKC blog The Lost Ogle calls “our Severe Weather Savior” (only half in jest).

Yesterday’s tornado was the second catastrophic twister to hit the Oklahoma City suburb of Moore in 14 years and as with the May 3, 1999, tornado, viewers got lots of advance warning from their local TV stations. As I write this, the death toll is at 91 and climbing (UPDATE: The medical examiner has dialed that back sharply to 24 so far this morning), but there’s no doubt that the OKC TV weather folks saved untold lives.

On KFOR, for one, meteorologist Mike Morgan told viewers ahead of time that the storm would be enormous and that if they couldn’t get underground to flee the area—astonishing advice to those of who grew up climbing in the bathtub with couch cushions or eying bridge underpasses in case we had to book it out of our cars (the whole lie-in-the-ditch advice never seemed sound to me).

He was right. Here’s hoping the people in this neighborhood heard him:

As important as the meteorologists are in warning people, the helicopter pilots/reporters chasing the storms are critical too. They beam back pictures to everyone in the metro that show how deadly serious a storm is. Back in 1999, I watched that series of tornadoes on local TV for two hours before it passed west of where I was in Norman. If I hadn’t been watching it live on TV, I probably would have gone ahead and tried to make a hockey game in downtown OKC, driving right into the path of a funnel with wind speeds measured at 318 mph.

In other words, this kind of journalism directly saves lives. It’s a real public service. And once the threat has passed on, these choppers become first-line reporters on what has happened.

Brian Stelter, who did great work from Joplin for The New York Times, quotes KFOR’s chopper pilot right after the storm had passed:

Once the tornado passed, the helicopter pilot, Jon Welsh, turned back to survey what had been lost. He pointed out a landmark for local viewers, Veterans Memorial Park, and said starkly, “It’s gone.” Nearby was a housing development. “Completely gone.” Mr. Welsh’s cameraman panned to the south, toward more homes. “Gone.”

Two minutes later he could see a school in the distance. “Oh, my God,” he said, grasping for words. Mr. Welsh called out for police while he tried to identify the cross streets for what turned out to be Plaza Towers Elementary School, one of at least two schools decimated by the storm. The cameraman’s close-up showed adults running toward the rubble.

It wasn’t just the meteorologists and helicopter teams doing outstanding work in Oklahoma City yesterday. I watched KFOR and News9, and the anchors’ tone was right, the reporting was excellent, the reporters were professional but human (I’m thinking of reporter Lance West breaking up on camera from the site of the Plaza Towers Elementary tragedy), and they were cautious but on top of breaking news. I saw no real missteps.

Jim Roberts, executive editor of Reuters Digital, noticed this too, writing on Twitter:

Worth repeating. Very impressed by thoughtful, professional, experienced local news reporters & anchors in Oklahoma today.

That is very, very difficult to pull off in a fast-moving, confusing story like this.

How technology redefines norms

Reasonable resistance to the upending of cultural mores is not “technopanic”

By Felix Salmon   May 20, 2013 at 12:40 PM

Jeff Jarvis reprints the clip above, in an article dismissing the privacy concerns surrounding Google Glass. The Victorian attitudes of Newport’s cottagers, he clearly implies, were misguided and misplaced. “Rest assured,” he writes. ” I will ask you whether it’s OK to take a picture of you in private.”

The key words, here — words which weren’t even part of the cottagers’ vocabulary — are “in private”. We now live in a world where we have public lives and private lives — and for over a century now, since roughly the point at which the above article appeared, the portion of our lives considered “public” has been expanding, while the portion of our lives we can consider “private” has been contracting. What’s more, Jarvis himself is a prominent proponent of the idea that we should maximize the speed at which we move our lives into the public realm; he also equates a desire for privacy with being “scared of the public” .

Never before have we faced so many opportunities to turn the formerly-private into the newly-public. As those opportunities arise, many people adopt them, and turn “public” into the new norm for such activities. Eventually, the norms become societally entrenched, to the point at which it is now utterly unobjectionable for those who once would have been labeled “kodak fiends” to take photographs outside a Newport tennis tournament.

My point here is that technology has a tendency to create its own norms. The classic example is the automobile — a technology which kills more than 30,000 Americans every year. From the 1930s through the 1990s, societal norms about who roads belonged to, and what people should do on them, were turned on their head thanks to the new technology. The dangerous new activity allowed by the new technology became the privileged norm, to the point at which just about all other road-based activity — and roads have been around for thousands of years, remember, since long before the automobile — essentially ceased to exist. Eventually, we reached the point at which elected representatives were happy saying that if a bicyclist gets killed by a car, it’s the bicyclist’s fault for being on the road in the first place.

If Google Glass — and wearable computing more generally — takes off and fulfills its potential, it will change society’s norms about what is public and what is private. It is therefore entirely rational, whatever you think of the set of norms we have right now, to assume that they will end up moving towards something more well disposed towards the new technology.

Jeff Jarvis will welcome that move, and can come up with dozens of reasons why it would be a good thing rather than a bad thing. “There’s no need to panic,” he writes. “We’ll figure it out, just as we have with many technologies—from camera to cameraphone—that came before.” But let’s be clear here about how much weight is carried by that “we’ll figure it out”. Realistically, “figuring it out” means, in large part, changing norms: irrevocably moving the line between what is private and what is public. That might be a good thing, it might be a bad thing. But if you like the norms we have right now — or if you think they’ve already gone too far in terms of robbing individuals of their privacy — then you have every reason to worry about what the onset of wearable computing might portend.

Update: Noah Brier points me to a quote from Daniel Mendelsohn, who goes back further still than the Victorians:

I am amused by the fact our word idiot comes from the Greek word idiotes, which means a private person. It’s from the word idios, which means private as opposed to public. So the Athenians, or the Greeks in general who had such a highly developed sense of the radical distinction between what went on in public and what went on in private, thought that a person that brought his private life into public spaces, who confused public and private, was an idiote, was an idiot. Of course, now everybody does this. We are in a culture of idiots in the Greek sense.