Sarcasm from Dean Baker

Poor Dean Baker. He is like Sysyphus trying to roll that rock up a hill only to watch it tumble down and have to start over.

Here is a posting by him that tries to shame big media -- Washington Post -- into doing some serious economics reporting. But it is a fruitless task. The Washington Post isn't interested in journalism or truth or informing readers. As Brad DeLong puts it, the Washington Post is in the fishwrap business, you know, selling the stuff that people use in the fish market to wrap up smelly old fish...

Crashing House Prices Cause Foreclosures

--Dean Baker

The Washington Post, which could not see an $8 trillion housing bubble, still can't understand the simple arithmetic. It had an article today on the impact that high unemployment is having on foreclosures and just mentions plunging prices in passing.

Yes, unemployment makes things work, but in normal time, a short spell of unemployment will not cause most people to lose their home. We can see this by a quick use of an obscure methodology known as "arithmetic." Let's say that someone bought a home four years ago for $300k and had a down payment of $30k or 10 percent. If we had a moderate 2.5 percent inflation rate, then this home would now be worth about $330k. With a 30-year fixed rate mortgage, this homeowner would have paid about $15k in principle over 4 years, which means that this homeowner would now have $75k in equity.

Suppose that this person loses their job. If the monthly mortgage and tax payment comes to around $2,400, then it would take a bit less than $30k to cover the house payments through a 12-month spell of unemployment. In ordinary times, there should be little problem borrowing $30k against the $75k in equity in the home. Therefore, there would be no reason for a person to be losing their home.

Maybe they should try teaching arithmetic at the Post. It would help its reporting immensely.

What I find funny is that newspapers are moaning about the "loss of readership". If they would simply look at the crap they sell they might understand why people aren't willing to pay for it.

A democracy needs a vibrant press. But as best I can tell, the elite doesn't want an educated public and certainly not a politically savvy public. So the real power holders in society are quite happy to have the newspaper put out schlock. They are genuinely unhappy that people are no longer willing to pay good money for the schlock, but that could be easily fixed. Just as Dean Baker points out that the above "news article" could be easily fixed. But, folks, it isn't going to happen.