About That Silver Lining, Erin

Here's Erin Burnett this morning at 9:23 EDT on CNBC:

"An interesting thought for those of you watching. Obviously, prices are back to levels where they were four years ago. But in 19 of the 20 cities Case-Shiller tracks, prices are higher than they were eight and a half years ago. That's proof that if you were a long-term homebuyer, you're probably still up a whole heck of a lot."

Where to begin with this. First, it's "proof" of no such thing. Every market behaves differently, so these sorts of generalizations are inherently imprecise (to put it mildly).

Second, eight and a half years ago? Even to the extent that Burnett's claim holds up, that's pretty thin gruel, no?

Third, given the levels of equity withdrawal, even nominally higher prices don't necessarily connote higher levels of wealth. In fact, many "homeowners" are now so brutally leveraged that the problem is more one of cash flow than wealth levels.

But there's Erin, always looking for the silver lining. Let's be clear here: There's nothing wrong with looking for good news in financial or economic data. We'd very much like to see more of it ourselves. But we think it's more important to be dispassionate, to let the data make the case, and to approach numbers such as this morning's Case-Shiller release without prejudice one way or the other.

Straining to put any kind of spin on the numbers isn't journalism. It's hackery.

Comments

[Charlie Str...:]

Kevin, you should seriously consider firing yourself for watching crappy TV instead of working !-)

2008 Jul 29 02:58 PM

[22thoroughbred:]

WOW, attacking the one person on CNBC (beside Cramer) who actually researches her stuff and talks passionately about the information she disseminates WITHOUT being a cheerleader, if you want to attack a hack attack Maria POM-POM Bartiromo, now that heffer makes everything rosey, and she's not even good at it.

2008 Jul 29 02:58 PM

[Alpo:]

I wonder how far ahead those people are if you subtracted interest paid on the debt, homeowners insurance premiums, maintenance and upkeep, and whatever costs incurred for that nice yard we all put in.

2008 Jul 29 03:37 PM

[valueinvest...:]

Does anyone even listen to her on the issues? I am also sick of people holding her up as being attractive. She is not that attractive on an absolute basis. She is just attractive relative to those who report financial news.

2008 Jul 29 04:27 PM

[Malkiel:]

Because they put on the veneer of objectivity by having guests with competing viewpoints appear in various segments, and because they are less bluntly ideological than their fox counterparts (though lately much more so), we forget just how biased these people are toward the right-wing pro-capitalist view. Any economist worth their phd will tell you that the public sector, including "government" as the right wing likes to call it, is a permanent and integral part of any economy whose actions and motives and constituencies need to be understood and incorporated into any analysis of markets, not treated like an aberration that will go away someday if we only evolve further (the opposite is more likely by a long shot). The talking heads at cnbc, particularly the women, seem to have been indoctrinated into the pro-capitalist view in business school and never think to question any of its assumptions, including the assumption that markets are in any way "free" or that capitalism can exist without a parasitic relationship to government...

2008 Jul 29 05:26 PM

[hollowman:]

My 'where to begin' is when do the 'pundits' finally realize that home is NOT an investment. Who cares if you are up, down, or sideways, as long as you bought it because it was a home, get it? A H-O-M-E, not a house.

2008 Jul 29 10:17 PM

[bearfund:]

Alpo, you wonder? Surely not. For starters, if you bought an asset for $100k in 2000 and could now sell it for $100k, you have lost somewhere between 25 and 40% of your purchasing power to debasement and inflation. You have also gained some of that back; any debt you still owe has also lost value. But then the one-way costs get factored in, as you mention, and it's all over. Owner-occupied housing is simply not an investment. Over the long term, you at best break even. If you time your purchase and/or sale poorly, you will lose a fortune. The smart move is to buy low with expensive money, refinance when interest rates fall, and never move out. Consider the interest, fees, taxes, insurance premiums, and other costs you do not recover through lower taxes to be rent paid. If anything is left after that, it is likely to have been inflated away. If the rent you paid to own was lower than the rent you'd have paid to lease, you got a good deal. If not, you probably didn't. Most people who bought in the last 15 years and did not sell before 2006 will lose huge. Sorry.

2008 Jul 30 12:19 AM

[tomyris:]

Haynes and Burnett are a modern day Tracey and Hepburn.

2008 Jul 30 04:42 AM

[xsuddensam:]

The talking heads on CNBC lead by Larry Kudlow and Jim Cramer are a disgrace. Listening to these crackpots, one would never think that there are difficult and potentially disasterous problems facing our nation.

Who ever tagged these self-serving stock market touts as the "don't worry, be happy" crowd certainly got it right.

2008 Jul 30 11:35 AM

[wpdragon:]

I put the mute on Burnett last year after her "If we enforce safety regulations for toys from China, people will have to pay more for their childrens' toys at Walmart, and that will put a burden on them" lament, followed by her almost tearful "The Chinese are our friends" comment on the same issue. Yeah, Erin, keep those pom-poms whirling. As for Kudlow, he's got his nose so far up the RNC's butt all you can see are the soles of his feet... that's when he's not getting trotted down to Washington to hear Cheney tell him what an important little man he is and keep up the good work for us. As for Cramer, can you say Goldman Sachs just called and asked you for a favor. Here's the thing... the ticker is the only thing that tells it straight on CNBC, and even that's iffy what with the manipulation and intervention our government is doing to the "free" markets. MUTE rocks.

2008 Jul 30 08:10 PM