The Associated Press screams out KB Homes earnings gain:
That's good new I guess. And since most people (we were taught this in Journalism classes) read only the headline and maybe the first paragraph: a writer or editor had to put all the power and truth of the story in the headline and first paragraph.KB Home Posts $100.7M Profit for Q4
Apparently American home builders were turning around the 2 1/2 year decline. A profit is good. Clearly shareholders should view this as a good sign.
The first paragraph starts to change, but just a bit:
We start to get to the real truth with the addendum to the news: 'benefitted from a new tax rule that allowed it to offset past losses'.LOS ANGELES (NYSE:AP) -- KB Home said Tuesday it turned a profit in its fiscal fourth quarter, the first time since early 2007, as the homebuilder benefited from a new tax rule that allowed it to offset past losses.
Why didn't the headline show this illumination of the truth?
This headline would have no doubt been more truthful. But the financial press is now involved in the game of pretending that everything is returning to normal. Their job is to make Americans feel good, so they will go out and spend and borrow, as if nothing out of the ordinary was happening in their economy. This pretend game has been going on for some time now -- because of the underlying belief among the positivists that lower interest rates (Inflationism) and positive thinking will cure everything that ails the economy -- refusing to deal with the rational understanding that insolvency is the problem and that too much debt is not cured by more debt. This seems quite simple to some of us. But it is furiously denied by those desperate to BELIEVE (this is an act of FAITH, not reason) that the American Dream has not ended. Faith (and a twisitng of reality associated with a denial of a dark reality) apparently will keep the American Dream from sinking into a state of Nightmare.KB Home Posts $91M Loss But Benefits from New Tax
The second paragraph tells even more of the truth:
The third paragraph adds a fragment more of the truth.
The company earned $100.7 million, or $1.31 a share, in the three months ended Nov. 30. That included a tax gain of $191.7 million. On a pretax basis, KB Home lost $91 million as it abandoned land contracts and wrote down the value of joint ventures and inventory. In the fourth quarter of 2008, the builder lost $307.3 million, or $3.96 a share.
How bad was the news really? Street expectations were for a loss of 42 cents a share; and on a pre-tax basis KBH lost $3.96 a share. That's a pretty hefty loss. But the headline led a fast reader to believe all was suddenlyRevenue dropped to $674.6 million from $919 million in the prior year.
Analysts polled by Thomson Reuters expected a loss of 42 cents a share on revenue of $577.8 million.
The final paragraph of the story tells another part of the ugly truth:
Not exactly what the headline said it was. Writing headlines is a conscious editorial decision -- and, in this case, it looks like the decision was a conscious attempt to mislead.Yearly revenue dropped to $1.82 billion from $3.03 billion in 2008.
It becomes clearer day by day that large and powerful American (and International) media companies support the illusion of economic recovery more than they support the investigative search for the truth. A failure of capitalism threatens the existence of corporate rule in America and in the world. The Rupert Murdochs of the world know which side their bread is buttered on.
I guess Quantative Easing and Qualitative Easing (the relaxing of standards of quality) are related in this instance. The fear of losing one's privilege and power generate a terror that manifests itself in the rationale that lying for the good of society is, in fact, an act of virtue.
Disclosure: Author does not own any issues mentioned in this article.