The Good, the Bad & the Ugly
Honest ethanol reporting in the unlikeliest of places; ’60 Minutes’ attacks foreign investment from sovereign wealth funds; ‘World News’ broadcasts playbook for cheating on your mortgage payments.

 

April 9, 2008

The Good
     He’s not exactly a pro-free-market guy, but New York Times left-of-center columnist Paul Krugman showed he gets it when it comes to ethanol as a bad alternative energy source.

     In Krugman’s column, “Grains Gone Wild,” published in the April 7 Times, he explained how the artificial demand for “demon ethanol and other biofuels” is hurting people by causing food shortages throughout the world. However, he was more blunt in how he described it not living up to its supposed potential.

     “Where the effects of bad policy are clearest, however, is in the rise of demon ethanol and other biofuels,” Krugman wrote. “The subsidized conversion of crops into fuel was supposed to promote energy independence and help limit global warming. But this promise was, as Time magazine bluntly put it, a ‘scam.’ “

     Krugman said it was most apparent with corn ethanol.

     “This is especially true of corn ethanol: even on optimistic estimates, producing a gallon of ethanol from corn uses most of the energy the gallon contains. But it turns out that even seemingly ‘good’ biofuel policies, like Brazil’s use of ethanol from sugar cane, accelerate the pace of climate change by promoting deforestation.”

     CNN’s Ali Velshi explained on the April 4 “American Morning” that these energy policies have also made inflation worse for the consumer.

The Bad
     Panicky protectionists are predicting some unsavory possibilities for the U.S. economy, thanks to emerging foreign economies with newly created wealth to invest.

     CBS's April 6 "60 Minutes" delved into the potential threat one Chinese sovereign wealth fund might pose to the American economy.

     "All together, the sovereign wealth funds of countries like Abu Dhabi and Kuwait have spent over $30 billion bailing out our financial system, which has raised some troubling questions," CBS correspondent Lesley Stahl said. "Are these mostly undemocratic regimes saving Wall Street or invading it? One fund is of special concern – it's new, highly secretive and the fifth largest in the world."

     The fund Stahl referred to is China Investment Corp, a sovereign wealth fund with $200 billion to invest in the United States. Never mind that $200 billion is barely a drop in the bucket for a $13-trillion economy. That didn't stop Stahl from taking a stab at the fund's president.

     "This is the fund's president, Gao Xiqing. Yes, it rhymes with ‘ka-ching!' Stahl said. "Last year, he decided to pour some of those billions into investment houses on Wall Street."

     Stahl didn't disclose during the report that one of the economists she interviewed, Peter Navarro, is the author of an anti-Chinese trade book, "The Coming China Wars: Where They Will be Fought and How They Can be Won."

The Ugly
     Missed a few payments on your mortgage? About to be kicked out of that house you probably couldn't have afforded in the first place?

     Don't worry - ABC's "World News with Charles Gibson" has advice for you.

     The April 3 "World News" featured a Staten Island family who managed to purchase a $335,000 home, but with only an annual income of $30,000.

     "Karen and David Shearon, working people who made less than $30,000 a year at the time, refused to be intimidated and fought foreclosure – claiming the mortgage broker promised them a fixed-rate, low-interest loan on their $335,000 house, despite their income," ABC correspondent Jim Avila said.

     As one might expect, the home ended up being more than the Shearons could afford and they were looking at foreclosure. Even though there is a notification process in New York City, where a homeowner is given warning before a process server arrives, ABC's Avila likened the event to the unexpected arrival of the grim reaper.

     "It was a workday afternoon on Staten Island, when suddenly, the quiet of this blue-collar enclave was shattered by the frightening sounds of the dreaded process server," Avila said.

     But rather than warning homeowners to see this story and not to get in over their heads, "World News" championed the Shearons as underdogs for managing to keep their home and used them as an example of how the public should handle this situation.

     "[T]hey did know enough to take the first step to saving their home from foreclosure. Get outside help. Don't negotiate with the bank alone," Avila said. "Step two – the Shearons hired an attorney who looked at their loan documents and agreed that they had been victims of a bad loan."

     "[T]he little guys won," Avila said. "A New York State Court judge denied immediate foreclosure."

The Good, the Bad & the Ugly tracks the best and worst media coverage of business and economics. Readers are invited to submit suggestions or news tips to Staff Writer Jeff Poor at jpoor@mediaresearch.org.