Journal needs to Take Econ 101

I teach history, economics and the media. Our media leave many issues "untold," so I have started this e-list, going to 500+ leaders, citizens and media. It is devoted to "untold stories"--information and viewpoints which are important, but covered inconsequentially in our media.

This week's example: For a year I asked the Albuquerque Journal to explore hedge funds. Friday, it finally gave front page attention to this topic with a woefully inadequate article.

Hedge funds are new and huge, probably the most powerful force on Wall Street, bigger than most global banks. Some days they comprise half of NYSE shares traded. They own about 40% of U.S. business.

They are profitable! The average salary of the top 25 hedge fund managers last year was $900 million; that's right -- almost a billion dollars for one year's work.

Warren Buffet, arguably the world's greatest investor, complains that most of these men are taxed at a lower rate than their secretaries.

Due to a legal loophole, hedge funds are completely unregulated (no hyperbole--completely!). According to George W. Bush's former SEC chairman, William Donaldson, this is a dangerous situation. Bush fired Donaldson for insisting that hedge funds, like banks, be regulated by the SEC.

Hedge funds take huge risks, sometimes with disastrous results. Much of our cascading subprime mortgage crisis involves hedge funds and speculators like Bear Stearns and the Carlysle group. It would be wise to remember the prime lesson of the Great Depression--unregulated speculation almost destroyed our economy.

How does this hurt you? Experts hired by CBS News have estimated that one third of today's oil price is the result of speculation, not supply and demand, causing inflation and higher prices for food, clothes and many other products.

Do you think gas will go to $5/gallon? If hedge fund managers and speculators can make money pushing the price that far, they will.

How could hedge funds hurt New Mexico? Corporations increasingly demand taxpayer subsidies as the price of doing business (Verde, Forest Covington, SunCal -- even local shopping center developers). The potential of a hedge fund takeover of these corporations could be a threat to New Mexico communities who give them tax money and bond guarantees.

To avoid responsibility, hedge funds often employ armies of lawyers to hide their ownership in interminable "layers" of fiscal instruments. Bill Moyers reported that hundreds of Florida nursing homes were taken over by hedge funds who reduced services to jack up profits, hurting many residents, killing some. The occupants' lawyers oftentimes cannot even find out who owns the nursing homes!

Note: none of the aforementioned information was in the Journal article!

Hedge funds are just one of many issues that the corporate media refuse to cover in any depth. The Journal did a series of detailed front page articles on beautifying the Big I interchange. Why not a series on TIDDS and SunCal? Why indeed?

One reason is that big corporations buy advertising and politicians. Ads pay the salaries of newspeople. Legislators' campaigns are financed by corporations. Politicians influence the content of the news.

This is nothing new. American history is replete with examples of business and politics buying media coverage.

Nonetheless, citizens need depth, context, and non-corporatized points of view, and now we have this new electronic tool that can provide such.