The Good, the Bad & the Ugly
‘Good Morning America’ showcases 'glimmers of light' in lending industry; 'Nightly News': Increase in Spam sales indicates a bad economy; Former Wash. Post reporter: Blame everyone except borrowers for mortgage mess.

June 4, 2008

The Good
     It’s rare to find a positive economic story when the media are constantly downbeat, but ABC financial contributor Mellody Hobson shared some upbeat news on the June 3 “Good Morning America.”

      “Fifty percent of U.S. banks have tightened their lending standings over the last year so there’s no question it’s harder” to obtain a loan, Hobson told anchor Diane Sawyer. “On top of that, most small business owners use their homes as collateral to secure those loans and then fewer banks want to accept the homes as collateral.”

      But, she added, “There are some glimmers of light, one of which is that in really tough economies, fewer people actually start small businesses and that means that demand for loans is down. Actually nationwide demand is down about 15 percent, so that means that because there’s less demand there’s less competition for the loans that are out there, so if you’re really, really aggressive there is an opportunity.”

     Hobson provided perspective on home mortgage rates. Mortgages are another often-criticized element of the economic slowdown.

     “A 30-year fixed-rate mortgage can be had for 6 percent. That’s still at historic lows.”

     She also pointed out student loans are more readily available than any time in history.  “First and foremost, students can now borrow more money from the government than in times past.”

The Bad
     You've got to give the media credit for continuing to find new and innovative ways to make the U.S. economy look bad.

     This time an increase in Spam sales was touted as a sign people are suffering as they are being forced to trade in their fancy meats and poultries for something less expensive – a sign of "our times," according to "NBC Nightly News" anchor Brian Williams.

     "And in what may be a huge economic indicator, this may say more about our times than we realize," Williams said on the May 29 broadcast. "Spam, the canned luncheon meat product, not the junk e-mail but, Spam sales have surged, lifting profits for the maker Hormel by 14 percent in just the first quarter of this year."

     Spam sales were 10.6 percent higher in the second quarter of 2008 than the same period in 2007, according to an Associated Press article dated May 28. Its manufacturer, Hormel Foods (NYSE: HRL), has seen profits increase 14 percent. One factor contributing to the profit rise is the price of Spam, which has increased 17 cents, or nearly 7 percent, to $2.62 for a 12-ounce can. A rise in the price along with no decrease in demand has a positive impact on profits.

     Williams didn't note that many fresh meats are still cheaper than Spam, which sells for about 22 cents per ounce. According to the U.S. Department of Agriculture, ground beef (15 cents), boneless hams (20 cents), most chicken (10 cents) and whole frozen turkeys (7 cents) retail for less per ounce than Spam.

     "At $2.62 a can on average, Spam starts looking a little better to a lot of families who are strapped right now by the rising cost of food," Williams added.

The Ugly
     How does a former reporter for The Washington Post score a 2,200-word column on the mortgage mess in her former publication? Never mention personal responsibility.

     Kathleen Day took blame to a new level June 1 when she failed to mention personal responsibility even one time in her lengthy column. Day, now a spokeswoman for the left-wing Center for Responsible Lending, was a financial reporter for the Post until mid-2007.

     Day blamed just about everyone else – from Wall Street to banks to brokers, to the White House, to former Federal Reserve Chairman Alan Greenspan to Congress to credit-rating agencies – for the problems in the housing market. But she never hinted that borrowers might share some blame.

     In fact, Day stood up for borrowers who got in over their heads, claiming lenders "aggressively coaxed millions of borrowers to take out unaffordable mortgages," as if borrowers didn't know their financial situations and didn't have an opportunity to read mortgage documents before signing them.

     You might think somebody – anybody – at the Post would have noticed the failure to mention personality responsibility in the epic column and venture to suggest she might at least throw the concept a bone.

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.