Business Insider got hold of an AOL document laying out the company’s “master plan” for its content farm. I think I see smoke coming from the Hamster Wheel:
AOL asks its editors to decide whether to produce content based on “the profitability consideration”…
In-house AOL staffers are expected to write five to 10 stories per day.
Here’s how AOL editors are supposed to figure out whether to cover something or not—and this is the order in which AOL presents them:
Revenue/Profit
Turnaround Time
Editorial Integrity
Business Insider also gets what I’ll nominate for early Quote of the Year in media reporting. I’m taking the liberty of removing BI’s dashes and printing the full cuss:
“AOL is the most fucked up, bullshit company on earth,” says one (journo), who joined AOL in what he calls, “the worst career move I’ve ever made.”
Big wheel keep on turnin’:
Nice scoop by Biz Insider.
— Tom Adams and Yves Smith over at Naked Capitalism ask why the Financial Crisis Inquiry Commission didn’t ask why there was such demand for bad loans. Contrary to what the gubmint/poor people did it axis would have you believe, there was more demand for toxic mortgages than there were people to take them out.
So why, with the trouble obvious in the 2005 time frame, did the market create even worse loans in late 2005 through the beginning of the meltdown, in mid 2007, even as demand for better mortgage loans was waning? It’s critical to recognize that this is an unheard of pattern. Normally, when interest rates rise (and the Fed had begun tightening), appetite for the weakest loans falls first; the highest quality credits continue to be sought by lenders, albeit on somewhat less favorable terms to the borrowers than before.
In other words: who wanted bad loans?…
Yet the FCIC learned from Gregg Lippman of Deutsche Bank, who was arguably the single most important individual in developing the market for credit default swaps on asset backed securities (which allowed short bets to be placed on specific tranches of mortgage bonds) and related “innovations”, such as the synthetic CDO (a collateralized debt obligation consisting solely of CDS, nearly all of which were on mortgage bonds) that he helped over 50-100 hedge funds bet against bad mortgages. Didn’t it seem obvious to anyone at the commission that this information meant that a tremendous amount of money was invested in the market failing? What was the impact of this pile of money?
Dozens of warning signs, at every step of the process, should have created negative feedback. Instead, the financial incentives for bad lending and bad securitizing were so great that they overwhelmed normal caution. Lenders were being paid more for bad loans than good, securitizers were paid to generate deals as fast as possible even though normal controls were breaking down, CDO managers were paid huge fees despite have little skill or expertise, rating agencies were paid multiples of their normal MBS fees to create CDOs, and bond insurers were paid large amounts of money to insure deals that “had no risk” and virtually no capital requirements. All of this was created by ridiculously small investments by hedge funds shorting MBS mezzanine bonds through CDO structures.
Might have been something to check out.
— How about some good news?
The Wall Street Journal reports that state tax collections are up 7 percent from a year ago, which might help avoid some of those muni defaults Meredith Whitney is going on about.
State tax revenue grew at the fastest rate in nearly five years during the fourth quarter, as the steadily improving economy and higher taxes in some states propelled strong growth in income- and sales-tax collections.
Even better, income-tax collections are up even sharper, which bodes very well for the trajectory of the economy four years after the recession started.
And corporate income taxes jumped fastest, naturally, up 15 percent.
