The Daniel Gross article about Green shoots in Slate is a good example biz journalist malfeasance. Save for Michael Lewis, seemingly no journalist can, at the same time, write color and write sense. Take the comparison between NYC and Chicago, which is premised on the idea that the financial sector has taken a big hit while Chicago, diverse town that it is, hasn't. This is utterly bizarre, in that Chicago happens, according to the Bureau of Labor, to have an unemployment rate of 9.2, a point above NYC's rate of 8.1. But a narrative is a narrative, and once you start out doing color with the supposition that things are awefully bad in NYC, then - by the law of story - you have to contrast it - and not with Lafayette La, with 3.9 percent unemployment, either, cause that is too small. Seemingly, Gross hasn't seen that NYC has been lagging the recession, not leading it.
Here's Gross's idea about Chicago:
"Meanwhile, signs of a hopeful spring are evident in the region surrounding Chicago, a city that was never too full of itself during the boom and hasn't gotten too down on itself during the bust. Chicago has been holding up better, according to the Beige Book. The Second City's diversified economy is less reliant on finance than that of the First City. In March, the Fed reported, "consumer spending improved some and the pace of business spending was little changed." After a long winter, the locals are finally emerging into sunlight. "There are people on the streets again," said Bill Bennett, manager of the Omni Hotel, whose office overlooks the white-hot throbbing heart of Midwestern discretionary spending: the Apple store on Michigan Avenue. Each of the hotel's 347 suites was sold out for the weekend, although prices were as much as 20 percent lower than last year. Tourists at the Shedd Aquarium idled on a line longer than a right whale."
One notices the color here is a little haywired. There are people on the streets? Although this is supposed to be logically sequent, somehow, to Chicago doing better, it actually makes no sense at all. Until the depression cancels spring, people will be on the streets in warmer weather. This is about as subpar as you can get.
The other part has to do with everybody's friend, diversification. Gross is continuing that old chestnut of the financial advisor which advises diversification as though it were the philosopher's stone, rather than a hedge against volatility. On exactly that same mistake, our Pension office person under Bush started investing in equities last year.
Of course, because the narrative is about the pain that the financial sector is in, rather than what a fine hedge can be built against unemployment with two to three trillion dollars in Fed and Treasury money delivered pronto, along with the pizza and the free coke (cola, not the other type - this isn't the eighties!) Gross implies that the financial sector is really suffering from job losses. He is so sure of this that he doesn't need no stinkin' stats - rather, he feels it, being an extra sensitive guy, on a subway train. When a reporter starts feeling his facts, then you know - he's ready for the bigtime! Ready to go to D.C. to report on the groundswell of indignation that we haven't "reformed" social security, or maybe to Iraq to report on our victory there.
So of course his story misses what could be an interesting observation - that the green shoots might be green only for a very limited, elite group - their last bubble, so to speak.
This is from the economist, April 3, 2009:
"What may be unexpected is that unemployment in financial services is well below the national average—just 6.8%. The popular perception, at least outside of New York, is that there are no jobs in finance; Wall Street is clogged with people looking for work. The loose job market in finance is often used to justify the government's meddling with finance pay and the hopelessly misguided decision to make hiring workers who require H1-B visas more difficult. The unemployment rate suggests that finance has fewer people looking for work than most industries."
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