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Wednesday, November 18, 2009

Journalism Courses Still Hot

You would think that with all of the dire news about the future of journalism and journalists flying around that journalism schools would be feeling the pinch.


Not so.


In fact, demand for journalism courses has never been higher. According to a recent survey by The Chronicle of Higher Education, enrollments are up in almost all of the nation's journalism schools.


I am not surprised by this finding. For one thing, most journalism schools have adapted to the changing media landscape and are offering courses that combine the fundamentals of good journalistic practice with new and emerging delivery platforms: blogs, twitter, online broadcasting, etc.


While I was dean of the College of Media at the University of Illinois, I watched our student population double from 550 to more than 1,100 in less than two years once we moved from a two-year to a four-year program. Demand was so great for our courses that we had to turn away students.


That reflects a national trend. During the past 10 years enrollment in undergraduate journalism programs has increased 35 percent, to 201,477, according to The Chronicle. This is a time when some 30,000 journalists were either laid off or bought out since 2008.


One reason students are flocking to journalism schools at a time when the industry is undergoing such severe changes is a desire to learn the basics of writing. Knowing the basic skills of journalism will provide students with openings into many careers--not just classic newsroom journalism.


In fact, of some 90 programs, six of 10 graduates had jobs in the industry. The rest were engaged in some other form of communication--public relations, corporate communications, blogging, etc.


As I have often said in these blogs, journalism schools cannot nor should not emphasize technology and all new communications gadgetry currently available over fundamental journalistic skills. Teaching students the importance of accuracy, fairness, clear writing, as well as compelling storytelling and presentation are still critical elements to any journalism education.


Or as I always emphasized in my classes: "Kontent is still King." Just look at some of the horrendous blogs out there today. It doesn't take long to see how insipid so many are. You still need to provide substance in addition to the technological bling if you are going to hold reader or viewer attention.


Journalism, in the final analysis, is a "people" business. It is not a job you can do sitting in the comfort of your home in front of a computer screen. Journalists are not poets.


You need to get out and talk to people. You need to be, as I often say, a "professional intruder"--someone who is not afraid to ask tough or embarrassing questions, who can "see" a story and track down the necessary sources for it.


While traditional mainstream media changes and adapts to the new delivery platforms and business models, many new graduates are coming together to create their own news organizations. These are entities that are smaller, more nimble and flexible and more targeted than the old lumbering dailies or classic broadcast organizations. These are media that are linking up with advertisers in ways that are beneficial to both. They are finding readers and viewers that have abandoned traditional media and are looking for a more interactive media experience.


In short, today's journalism graduates have an opportunity I never had when I joined the Chicago Tribune right of college back in 1970. They can remake and reinvent journalism in ways that make it relevant to new audiences.


They will be successful doing this as long as they don't forget the most fundamental lessons that good journalism programs should be teaching: make sure content drives technology and not the other way around.

Wednesday, September 30, 2009

Writing Again! Hope You Will Take a Look!

After a multi-month hiatus I am back at the computer working on a couple of books and trying to keep my blog updated. Just moved from Illinois to the Southern California wine country and if I can keep my hands on the keyboard and off the wine bottles, I will actually get some serious writing done. That is something I was unable to do as the Dean of the College of Media for the past six years (I stepped down August 15).

The focus of my blog is the media in general--and the area of international news and events in particular. I spent about 25 years as a foreign correspondent for the Chicago Tribune (in an era when the Tribune ACTUALLY had foreign correspondents). I was posted in Asia and Latin America, so much of what I write about focuses on those regions, however, I also look at other parts of the world.

So hope you will stop by and let me know what you think!

Thanks,

Ron Yates

Should the Govt Bail out Newspapers?

Just finished doing an interview on the Sandy Rios Show. The topic? Should the government bail out newspapers? My answer to that is a resounding: "No!"

Newspapers are just one arm of the professional news business--or journalism, if you will. There is also television--the networks and cable. Once upon a time there was also radio, and while it still does some journalism, it is not what it used to be. If newspapers take a handout from government, how long will it be before the network news, which is also hurting, does. And what about cable and radio? It is a slippery slope. Soon the government will control all of the so-called "mainstream media."

Then there is the Internet, the blogosphere, Twitter and an ever changing landscape of new media platforms. How long will it be before the government attempts to control those delivery platforms? Granted, that could be difficult to do. Most governments--even today--are having a tough time censoring the Internet or keeping their people from accessing it.

Let's face it, government money always comes with strings attached. Look at NPR and PBS. They get about 15% of their budget from the government. The result is that it has made NPR and PBS the target of many threats--from both the right and the left. One accuses them of having a liberal bias and the other calls them elitist.

But let's look at newspapers.

To understand what has happened with newspapers you need to understand the newspaper business. And that is what it is--a business. In my journalism classes I often pose this question to students:

What is the most important thing any news organization needs to do? The answers range from "tell the truth" to "be accurate and responsible." Those, I agree, are critical for any professional news organization.

However, the answer I was looking for (and I NEVER got it from all the years I posed the question) is this: The most important thing a news organization needs to do is make a profit. To do that they need to sell trust--to be a trusted and reliable provider of accurate information.

Unfortunately, too many newspapers have liquidated that trust by gutting newsrooms and jacking up advertising rates. That has opened traditional newspapers up to competition from new media that are not bound by up-front capital costs of starting a newspaper.

Most people think subscription and newstand sales are primary profit centers for newspapers. That is not true. In fact, subscription and newstand sales accound for only about 15% of a newspaper's revenues. About 80 percent comes from advertising--and when you break that down is looks like this: Retail 37%; General, 19%; Classified, 44%.

And there you see the crux of the problem. For the past 10 years or so, Internet companies such as Craigslist and eBay have been eating away at newspapers' primary profit center: Classified advertising. I recently moved from Illinois to California and I discovered just how effective internet advertising can be. I wanted to sell some furniture and other items we didn't want to take with us. I posted an ad on Craigslist and within an hour or so I had people e-mailing and calling about the items. Newpapers can't compete with that and saavy newspaper companies began some time ago to launch their own internet classified advertising sites...

The best thing about journalism--and newspapers--is that in the U.S. they are separated from government and protected by the First Amendment:

"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."

It is that kind separation which makes the press the "4th Estate." British politician Edmund Burke said there were "Three Estates in Parliament; but, in the Reporters' Gallery yonder, there sat a Fourth Estate more important far than they all." FYI, the other three estates are those of the church, the nobility and the commoners.

It is patently dangerous for any newspaper to take anything from the government. Most newspapers have ethics policies that prohibit reporters from taking money or any kind of gift from anybody--including government. The reason for that is clear. They want to remain independent.

What happens to that independence once newspapers take government money. We have a nation of state run media--a nation of Pravdas.

Beyond that, however, is the fact that bailing out industries that suffer because of technological change or increased competition is not a wise choice in the long run.

It is hard to say what will happen to newspapers down the road--but I am optimistic about the future of professional journalism--the kind of journalism that produces original reporting rather than the flurry of banal and plagiarized blather than infects the blogosphere today.

Tuesday, April 28, 2009

Writing for Nonreaders in the Post-Print Era

Recently a friend sent me a tongue-in-cheek outline for a new course called “Writing for Nonreaders in the Post-Print Era.”

The course carried the following description:

“As print takes its place alongside smoke signals, cuneiform, and hollering, there has emerged a new literary age, one in which writers no longer need to feel encumbered by the paper cuts, reading, and excessive use of words traditionally associated with the writing trade. Writing for Nonreaders in the Postprint Era focuses on the creation of short-form prose that is not intended to be reproduced on pulp fibers.

“Instant messaging. Twittering. Facebook updates. These 21st-century literary genres are defining a new "Lost Generation" of minimalists who would much rather watch Lost on their iPhones than toil over long-winded articles and short stories. Students will acquire the tools needed to make their tweets glimmer with a complete lack of forethought, their Facebook updates ring with self-importance, and their blog entries shimmer with literary pithiness. All without the restraints of writing in complete sentences. w00t! w00t! Throughout the course, a further paring down of the Hemingway/Stein school of minimalism will be emphasized, limiting the superfluous use of nouns, verbs, adverbs, adjectives, conjunctions, gerunds, and other literary pitfalls.”

At first, this seems humorous. But then as you look at the prerequisites, you begin to wonder.

Prerequisites

Students must have completed at least two of the following.:

ENG: 232WR—Advanced Tweeting: The Elements of Droll
LIT: 223—Early-21st-Century Literature: 140 Characters or Less
ENG: 102—Staring Blankly at Handheld Devices While Others Are Talking
ENG: 301—Advanced Blog and Book Skimming
ENG: 231WR—Facebook Wall Alliteration and Assonance
LIT: 202—The Literary Merits of Lolcats
LIT: 209—Internet-Age Surrealistic Narcissism and Self-Absorption

There is obviously some truth at work here. When one talks to editors in the world of book publishing it is apparent that we are definitely entering the post-print era. Few students I talk with tell me they actually read a book for pleasure. It is always for a class.

When I ask students about John Steinbeck, William Faulkner, Thomas Wolfe, F. Scott Fitzgerald, Lillian Hellman, Dorothy Parker—even Earnest Hemmingway, only a few can tell me much about these authors and what they wrote. If they have read these writers at all it is because some American Literature teacher in high school assigned them to read one of their books or essays.

Take some time over a weekend to read a good book—one that tells a story, not some self-absorbed treatise on how to find your spiritual center or why you are so important, I tell students. You might actually enjoy it—and without a doubt you will learn something.

When I discuss writing with journalism students, who should have a keen interest in writing well, I tell them that the best way to learn to write well is to read good writing. They should then learn to imitate that writing—not copy or plagiarize it—but imitate it. Eventually, they will develop their own style of writing, but most important, they will become better writers simply because they have developed a life-long romance with and respect for the English language.

So while Facebook and MySpace may be places to chat and hook up; while the blogosphere is a place where tedious pontificators can congregate with little if any accountability for truth; and while twittering is the latest e-rage, they are all poor substitutes for substantive literature, fine journalism or intelligent conversation.

The university is the place where an appreciation for good literature, fine journalism and intelligent conversation should be cultivated and enjoyed. It is, after all, one of the few times when students will actually have the time to take pleasure in these things. Once they enter the world of gainful employment, their focus will shift to one of survival, meeting deadlines and accumulating “stuff.”

Reading well will be considerably more challenging. And one can only hope that they will not find themselves “Writing for Nonreaders in the Post-Print Era.”

Wednesday, February 25, 2009

American Newspapers: Do They Have A Future?


What does the landscape of journalism look like today—or more specifically, the world of newspaper journalism?

In one of the most famous quotes about newspapers, Thomas Jefferson once said: “…were it left to me to decide whether we should have a government without newspapers or newspapers without a government, I should not hesitate to prefer the latter.”

Today we are dangerously close to having a government without newspapers. At least that is what some people believe.

Think about it: The Tribune Company (my old employer for 25 years) which operates The Chicago Tribune, the L.A. Times, the Baltimore Sun and five other daily papers, has filed for bankruptcy protection.

Average profit margins at the Washington Post in the past five years have been 25% less than what they had been in the previous 15 years. At the New York Times, the decline was 50%.

Last week brought more news of impending doom. The Minneapolis Star-Tribune filed for bankruptcy protection, the Hearst Corporation announced it would close the 146-year-old Seattle Post-Intelligencer unless a very unlikely buyer is found, and a few weeks earlier, E.W. Scripps made the same announcement about the Rocky Mountain News.

Newspapers from coast to coast are struggling to refinance debt, issue equity and dispose of nonessential assets—all short term solutions to a long term problem.

Most major newspapers have trimmed their staffs resulting in the loss of some 20,000 jobs last year and the number of American correspondents reporting from abroad (something I did for 17 years at the Chicago Tribune), fell by 25% between 2002 to 2006 and only a handful of newspapers operate foreign bureaus.

Incredibly, the Tribune Company has even entered discussions aimed at “outsourcing” its foreign coverage at all of its papers.

A recent story in Time Magazine offered up the following dire analysis of the media landscape:

“During the past few months the crisis in journalism has reached meltdown proportions. It is now possible to contemplate a time when some major cities will no longer have a newspaper and when magazines and network-news operations will employ no more than a handful of reporters.”

There is, however, a striking and somewhat odd fact about this crisis. Newspapers are still the best-staffed news organizations and remain journalism’s brightest hope.

Newspapers have more readers than ever. Their content, as well as that of newsmagazines and other producers of traditional journalism, is more popular than ever — even (in fact, especially) among young people.

The problem is that fewer of these consumers are paying. Instead, news organizations are merrily giving away their news. According to a Pew Research Center study, a tipping point occurred last year: more people in the U.S. got their news online for free than paid for it by buying newspapers and magazines.


Who can blame them? Many old print junkies have stopped subscribing to newspapers, because if they don’t see fit to charge for their content, they feel like fools paying for it.

This is not a business model that makes sense. Perhaps it appeared to when Web advertising was booming. But when Web advertising declined in the fourth quarter of 2008 all that changed.

It has been pointed out that newspapers and magazines traditionally have had three revenue sources: newsstand sales, subscriptions and advertising. The new business model relies only on the last of these. That makes for a wobbly stool even when the one leg is strong. When it weakens — as countless publishers have seen happen as a result of the recession — the stool can't possibly stand.

So, given that rather gloomy picture what are the prospects for the printed newspaper we all have come to know and love? Is it doomed to go the way of hot type, telex machines and green eye shades? Are newspaper newsrooms as we have known them on the verge of extinction?

Most industry observers tend to agree on what is killing US newspapers. Print advertising revenue is steadily declining and circulation is falling as readers go online to get news for free. Online advertising revenue has been rising but is not keeping pace with the drop in print advertising revenue.

What they do not agree on is the solution.

(NEXT TIME: WHAT ARE THE SOLUTIONS?)

Monday, February 2, 2009

OUTSOURCING FOREIGN CORRESPONDENCE: SAY IT AIN’T SO, SAM

By Ronald E. Yates


The other day I came across a story that really disturbed me. The headline read: “Newspapers Move to Outsource Foreign Coverage.”

“Outsource foreign coverage?” What does that mean?

As I read further I was horrified to discover that my old employer, the Chicago Tribune, was one of those organizations contemplating this drastic move. And Sam Zell, the paper's owner, was apparently behind this scheme.

I had spent most of my 25 years at the Tribune as a foreign correspondent, covering stories all over Asia and Latin America—from the fall of Saigon in April 1975 to the guerilla wars in El Salvador and Guatemala.

The Tribune had a long tradition of fielding some of the best foreign correspondents in the history of American journalism. There was Floyd Gibbons who lost an eye covering World War I and Stanley Johnston, who was aboard the U.S.S. Lexington when she was sank by Japanese planes and earned the respect of American sailors by helping to save several who had been blown into the water.

There was William Shirer, who covered the birth of Nazi Germany for the Tribune and who later would write the seminal book: “The Rise and Fall of the Third Reich,” and Sigrid Schultz, one of the finest women correspondents to cover World War II.

These were legendary correspondents who served as an inspiration to a young and eager correspondent like me when I was posted to Tokyo for the Tribune in 1974.

I wonder what it must feel like today to be working for a paper whose leadership is on the verge of shutting down its foreign bureaus and eradicating its international news staff?

While I fully understand the traditional business model of the American newspaper is changing almost daily and that the print version of many of these organizations may have a short horizon, it seems incredibly myopic to jettison a critical area of journalism at a time when the American public needs to know as much as possible about the rest of the world—and how it relates to their communities and lives.

If the Tribune and its 7 sister newspapers outsource their coverage to the Washington Post, which is what it is considering, it will lose a critical connection between the local communities the papers serve and the broader global landscape.

While I have the upmost respect for the Washington Post and its international reporting staff, asking it to make complex international stories understandable and relevant to a local audience in Chicago or Naperville is asking a lot.

Maintaining an informed public during tough economic times is difficult and unrewarding work. No doubt it impacts the bottom line significantly because foreign reporting is the most expensive of all reporting.

When I was based in Tokyo in the 1990s it was costing the Tribune about $300,000 per year to keep me there. Today, I suspect that annual outlay is more like $500,000. If you are the publisher and you have 10 bureaus around the world, you are talking about $5 million per annum—and probably more like $15 million by the time you factor in the cost of travel, hotels, food, editorial assistants, translators, technology costs, etc.

In an era of ever-shrinking bottom lines, that is not chump change. Nevertheless, running a newspaper carries with it more responsibility than fattening the bottom line for stockholders.

In the 21st Century when governments and their leaders are already exercising immense power to justify national interests, thoughtful foreign correspondents with insight and expertise will be needed to help promote critical comprehension between disparate populations by finding and delivering more meaningful news between nations.

Often it is the information gathered and provided by foreign correspondents that makes all the difference between a world at war or a world at peace.

Wednesday, January 14, 2009

What will happen in 2009 on the various news fronts? For example, whither the economy—both national and global? What about international events? Where will the news come from? Where will the hot spots be? What will be the major national stories? I have shaken the bones and cast them upon the sands. Here’s what they say.

By Ronald E. Yates

The World

Without a doubt the big story in 2009 will continue to be the global economy. As the U.S. economy goes, so goes the world. There is a wonderful saying in Mexico: “Mi Pobre Mexico! Tan lejos de Dios, y tan cerca de los Estados Unidos!” Translation: Poor Mexico, so far from God, so close to the United States.”

Much of the world will feel the same when it comes to the U.S. in 2009. Geographic distance will not protect the economies of other nations. The global economy is too intrinsically linked to American financial institutions, policies and markets.

With the global economy contracting, the river of capital that provided life for so many developing nations will dry up significantly thereby exacerbating already fragile and damaged political systems. That in turn will lead to more unrest in regions already suffering from violence, instability and economic depression.

Sorry to be so gloomy, but this is reality as 2009 begins. Perhaps—but don’t count on it—things will be a bit better by the end of 2009.

Those expecting a miracle from newly elected President Barak Obama will be sorely disappointed. When it comes to the economy, he is faced with an almost impossible task. It’s a bit like trying to turn an aircraft carrier around in the Panama canal. It is possible, but in order to do you will have to destroy a large section of the canal.

Because so much of the U.S. economy has already disintegrated, much of the destruction has already happened. But Obama must still get the ship turned around. And while he is working on that, he will be faced with a litany of global challenges, not the least of which will be America’s military adventures in Afghanistan.

I covered Afghanistan back in the late 1980s when I was the Chicago Tribune’s Chief Asia Correspondent. I can tell you this is a place that repels invaders like a duck repels water. We may not view ourselves as invaders, but believe me, the Afghanis do—even those who actually like us. True, they consider us “benign” invaders as opposed to the Russians who were anything but benign. But we are still the hated foreign presence. Why do you think the Taliban—who were almost as brutal to their people as the Khmer Rouge were in Cambodia—have actually grown in power and population?

Ultimately, the Afghani people are always motivated to drive away the foreign invader—benign or not. It’s been that way since Alexander the Great sent his army into the Hindu Kush mountains and through the 33-mile Khyber Pass almost 2,500 years ago.

Nevertheless, President Obama has already said he plans to at least double the number of American troops currently on the ground in Afghanistan. As a result, I predict that Afghanistan will be to Obama what Iraq was to President Bush—a perilous liability.

What else can we expect in 2009?

  • The conflict between Israel and Hamas will not go away and the Gaza Strip will continue to be a blood-soaked reminder that Jews and Muslims simply cannot co-exist under current political arrangements. As a result the existing rift between the United States and the Muslim world will continue to widen.
  • Iraq will continue to suck billions of dollars from the U.S. treasury while the U.S. military will sink deeper into the shifting sands of Iraq’s fractured political center. Iran will continue to exert some kind of influence over the Shia regime in Baghdad and over the physical region of eastern Iraq.
  • Pakistan and India will continue their dangerous nuclear faceoff over the Kashmir where three major wars/conflicts have been waged since partition in 1947. The recent tragedy in Mumbai, most likely carried out by Kashmiri separatists, was an indication of just how tense and unstable this region is.
  • Russia will remain under the iron grip of Vladimir Putin and as a result, its relationship with Europe and the U.S. will likely grow even more irritable. NATO’s idea of bringing the Ukraine and Georgia into the alliance will likely lose some traction, but the damage—at least in the eyes of Moscow, has been done. Look for Russia to try to pull both politically unstable countries back under its influence.
  • Iran will be high on the radar screen as it continues push ahead with its nuclear program—and the ability to make weapons. This will continue to be a concern to Israel and it is not unlikely that Israel might engage Iran in some kind of military operation. That scenario could be disastrous for the U.S. because it will then likely be pulled into the conflict creating a situation where the nation has combat troops in three Middle Eastern nations.
  • The world will not be able to ignore the crises in Africa—specifically Dafur, Somalia and Zimbabwe where hundreds of thousands are either starving or being killed in some of the worst genocide the world has ever seen. Some expect British and possibly U.S. military intervention in one or all of these nations.
  • China has ridden the global economic boom into new and uncharted territory with annual double-digit growth. But the express train that has been the Chinese economy has already begun to slow down considerably as China feels the impact of global recession. The engine if the Chinese economy is its enormous growth in exports. With the world no longer buying what China makes, this will create more and more pressure on the Chinese government to keep the domestic economy humming. When it becomes obvious that it can not do that—despite the many infrastructure projects it has on tap—the Chinese people will be restive if not downright riotous.


Not a pretty picture to be sure. And I am not a pessimist by nature. In fact, I am normally wildly optimistic. But of course, as someone once said: “An optimist is someone who thinks the future is uncertain.”



Tuesday, January 6, 2009

What’s Ahead in 2009?

By Ronald E. Yates

What will happen in 2009 on the various news fronts? For example, whither the economy—both national and global? What about international events? Where will the news come from? Where will the hot spots be? What will be the major national stories? I have shaken the bones and cast them upon the sands. Here’s what they say.


The Economy

In the mid 1980s and early 1990s when I was covering Japan for the Chicago Tribune, much of the world had written off the United States as the planet’s leading economic power.

Japan had assumed that position, went the conventional wisdom. Its automobile, electronics, computer and high tech industries had left Uncle Sam in the dust. It’s financial and stock markets were more robust, it’s people more industrious and productive, it’s government more in tune with business—hence, the appellation: Japan, Inc.

“America should stop making things all together,” a Japanese businessman told me one day. “Let Japan make all America needs and the U.S. should provide Japan with the resources it needs and concentrate on being a service economy. You can’t make things as well as we can.”

At first glance, he seemed to be correct. American companies such as machine tool manufacturers, steel producers, ship builders, consumer electronics, automobile manufacturers, etc. were simply not able to compete with their Japanese competitors. Indeed, America’s manufacturing base was woefully inept, poorly run and out of touch.

Those were pretty dismal times.

Then, something happened. American industries began to turn themselves around. They did it by improving the quality of their products. They listened to such quality and management gurus as W. Edwards Deming, Joseph Juran and Peter Drucker and in a few years American companies were competitive with their Japanese counterparts—at least up to a point.

Japanese automakers continued to produce better vehicles than Detroit—both in Japan and here on American soil. But American companies were mostly competitive again—and that’s the way things stayed until the past couple of years.

Then, beginning in 2007 and continuing into 2008 came one financial crisis after another—the subprime loan crisis, the credit crisis, bank failures, the real estate market collapse, bailouts, etc. While we were intently focused on making things better, we allowed financial hucksters to enrich themselves at the nation’s expense. There was too little oversight and governance.

Now, with the U.S. economy in the worst shape it has been since the Great Depression, many American businesses are back where they were in the late 1980s. Only this time, they are not alone.

Japanese companies are right there with them—and so are German, British, French, Italian and Chinese companies. In fact, the once mighty U.S. economy has pulled the rest of the world into the same economic abyss it has fallen into.
So what’s ahead for 2009? Don’t look for a miraculous turn-around simply because somebody named Obama has taken possession of the White House.

There isn’t a messiah on the planet—human or otherwise—who can turn this mess around overnight.

In early December the
National Bureau of Economic Research officially declared the U.S. to be in a recession—something that is likely to be with us for at least another year, if not longer.

Unemployment is running at close to 7 percent and is likely to hit 9 percent in 2009. The housing market will take at least two years to begin its upward tick. (Hint: watch California closely. It is usually a bell weather (good or bad) for the national housing market).

The liquidity crisis is far from fixed—even by all the bailouts. Banks will slowly begin to loosen sealed purse strings but not at the rate we would all like. After all, once burned twice cautious.

By the end of 2008 some 91 public corporations had filed for bankruptcy and Lehman Brothers became the largest bankruptcy in U.S. history. To make matters worse, venture capital funding has dried up and that will in turn lead to slower job creation and higher unemployment.

It is estimated that the new loans, purchases, and liabilities of the Federal Reserve, the US Treasury, and FDIC that were brought on by the financial crisis now total more than $5 trillion. That includes $1 trillion in loans by the Fed to broker-dealers through the emergency discount window; $1.8 trillion in loans by the Fed through the Term Auction Facility; $700 billion to be raised by the Treasury for the Troubled Assets Relief Program; $200 billion insurance for the GSEs by the Treasury; and $1.5 trillion insurance for unsecured bank debt by the FDIC.

Not a rosy picture for 2009. So what to do? My predictions:

· Unemployment will hit 9%--if not double-digits be the end of 2009 and nervous Americans will start saving--possibly as much as 10 per cent of their incomes. (Increased saving is often a reaction to tough economic times).

· The housing market will continue to tank in 2009 and into 2010—simply because it was a bubble market to begin with and because there is so much inventory on the books. New housing starts will be flat and prices will drop another 25% nationwide.

· Obama will implement new fiscal policies and (much to the chagrin of many fellow Democrats) will provide tax cuts—the quickest way to jump start any comatose economy.

· The administration will look to stimulate the economy through new public works projects—inflation be damned. 2009 will not be a time to worry about inflation because the government is pumping billions and billions of dollars into new public works projects such as improved interstates, bridges, rail and air networks, etc. In spite of all those dollars the nation’s $14 trillion bubble economy will continue to deflate.

· Spending—especially on large ticket items (houses, automobiles, major appliances, etc.) will continue to decline and enter negative territory, thereby further exacerbating the economic downturn. For example, automakers will not be able to find money to build cars and consumers won’t be able to borrow money to buy cars.

Proof of that final bullet came this week in the form of bleak sales figures from auto manufacturers in the US. According to General Motor's, its December sales fell 31 percent to a 49-year low—fueling fears that the company may be on the verge of total collapse. Other automakers are no better off. Chrysler's sales last month fell a shocking 53 percent and Ford Motor Co.'s sales were down 32 percent.

A retrenchment in the critical US market is also creating financial pain for foreign automakers.

According to a recent report from Forex Capital Markets, Toyota Motor's deliveries fell 37 percent while Honda Motor sales were curbed 35 percent. If figures like these continue, the US government's bailout efforts may fall well short of the basic need to keep these firms solvent. And, should this sector fail, it could easily send the world's largest economy to a far deeper recession than policy officials and Americans are ready to consider.

So where’s the good news in all of this? Well, there could be a lot of great buying opportunities in undervalued stocks in 2009. Houses that were 60 and 70 higher in value just two or three years ago, will be bargains.

And of course with the economy at the bottom of the trough, there is really only one way to go, and that is up.

(Next: What will be the major international issues in 2009?)

Monday, January 5, 2009

Note To Loyal ForeignCorrespondent Followers

I promised in this blog to write about areas of international interest in general and the work of foreign correspondents in particular. If you have followed the blog thus far you have been treated to some pieces I wrote while a foreign correspondent for the Chicago Tribune. While these may be interesting stories they were meant to provide some content while I geared up to begin writing in earnest about current issues, international affairs and the people who cover them.

In the next few days I will finally follow through on the stated purpose of my blog: ”This is a blog for those interested in international news and affairs. It is produced by a former foreign correspondent, who is now a dean and professor teaching journalism.”

So thank you for your patience and stay tuned!

Ron Yates