Saturday, 26 January 2008

CNN: What Should be Reported

Since we're on the subject of how to make things better at CNN, here's what I would like to watch, much more than Golfing Minute or Mainsail or The Screening Room or Art of Life or Inside Africa:

1. A real analysis of the US sub-prime crisis
CNN is airing views of various experts and commentators, but we really don't see many hard statistics on the sub-prime mortgage market and the impending ALT-A market, which will be of much larger magnitude than the sub-prime market. I'd like to see a 5-10 minute segment with actual statistics, dealing with the following:

- Approximate loan volume of the sub-prime market
- This loan volume compared to the total mortgage loan market
- Examples of relative interest rate rises after the sub-prime market re-adjusts
- An explanation of loan securitisation and why it's important
- What role the Federal Reserve actually has in regulating bank lending
- Why nothing was done about this, since the problem has been visible for years
- What we should expect with the ALT-A market
- Statistics on the housing market: the Case-Shiller index, the National Association of Realtors statistics on the number of houses sold, new housing starts, number of foreclosures, etc.

All this can be fit into a quick and easy 10-minute segment, with a few slides showing numbers, not just commentary. This information readily available in the Financial Times or the websites of the Case-Schiller Index, the Realtors Association the Federal Reserve, and a few otthers.

We spend hours on the election, but nothing substantial on the economic disaster unfolding before our eyes, which affects millions of American families. Compare Katrina coverage to the real estate crisis. Why the difference?

2. A real analysis of consumer spending and GDP growth in 2008-2009
CNNi has been going wild about Davos, with arguments between CNN anchors and reporters on whether GDP growth in China and India can support world economy growth in the face of a US recession. Of course, no statistics are provided, but this is remarkably easy to compare. Check GDP sizes and growth estimates in 2008 and compare US, Chinese, Indian, and other regional statistics and growth. You can do this in either market rates or Purchasing Power Parity (PPP). Data is available on the World Bank and IMF sites.

You will quickly see that Chinese/Indian consumer spending is not enough to absorb surplus US output, which means trouble for the US and world economy. Given that US companies cannot export enough to China and India (remember the trade deficit?) it's difficult to see how consumer spending in these countries would make up for the US decline in the best case scenario.

Why isn’t this being reported in detail, on the basis of numbers? Why take the risk of potentially misleading the public through totally vague comments?

3. The impacts on the Fed's interest rate drop and the Administration's “stimulus package”
As usual, CNN focuses on the immediate effects of the interest rate drop: stock exchanges stabilise. It does not discuss potential (and probable) longer-term effects of this move:

a. Fewer foreclosures because mortgage rates must go down, since they are linked to the Fed rate. This will likely be the most positive result of the interest rate reduction, not a resumption of consumer spending;

b. A further decline in the US dollar, with lower international purchases of US Treasuries, leading to a worsening problem with funding the $ 7.5 trillion debt as the Treasury will have to offer a higher interest rate to offset declining currency values;

c. An impending shift of Asian and Middle Eastern central banks of their reserves from USD to EUR and other currencies. This will lead to further declines in the USD, and a rise in the EUR. In turn, this will make the EUR less competitive as a currency and damage European economies, which are export-dependent to a much greater extent than the American economy.

4. A real analysis of Republican and Democratic Candidate Health Care & Social Security Plans
Or, for that matter, a serious analysis of any platforms, such as Iraq, the economy, education, the environment, energy security, renewable energy…. anything instead of the campaign soundbites we are currently getting.

5. A serious look at what’s going on internationally
This week, there was a major bomb attack in Lebanon; a pre-announcement about Kosovo’s declaration of independence; a major Russian deal to buy out Serbia’s oil refineries and pipeline complex; major bombing attacks in Iraq (why isn’t Iraq being reported, by the way?); more Turkish incursions into northern Iraq; the resumption of Iranian gas exports via Turkey; Sudan has attacked a UN aid convoy in Darfur….

A lot has happened which is totally off the CNN radar screen. If Kosovo declares independence next week, before the Serbian election, you can bet this will be major news. Yet right now it is ignored, in favour of sensationalist reporting, mainly on the US election, or the Monte Carlo casino fire. This is supposed to be CNN International.

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