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Monday, December 09, 2019 {{ new Date().getDay() }}

Finance

New York Daily News building

Photo by felibrilu is licensed under CC BY-NC 2.0

If Hollywood wanted to make a gritty movie about the work of dig-it-out newspaper reporters who uncover big local stories of government doings and corporate misdeeds, it couldn't have chosen a more picture-perfect location than the boisterous newsroom of New York's Daily News. Once the largest-circulation paper in America, the Daily News embodied the rich history of brawny tabloid journalism, even serving as the model for DC Comics' Daily Planet, workplace of Clark Kent and Lois Lane in Superman.

But there'd be a problem with filming at the Daily News now: Its owners have eliminated the newsroom, leaving reporters, editors, photographers, et al. with no shared workplace. Yes, today, it's a newspaper without a newsroom.

This once-proud publication is now owned and run by Alden Global Capital, a multibillion-dollar hedge fund with a long record of buying papers on the cheap, selling off their assets and slashing pay and jobs. Media watchers have labeled these vulture capitalists the "ruthless corporate strip-miners" of local journalism. And sure enough, in the past couple of years Alden's profiteers have steadily plundered the paper, eliminating half of its newsroom staff. Then, last August, they told the remaining journalists they would no longer have a physical place to work.

To be clear, this closure was not a temporary measure to protect staff from COVID-19. Nor was the newsroom abandoned in favor of relocation to a less expensive office (an increasingly common cost-saving decision). Indeed, real newspaper publishers realize that the collective hive vitality of a newsroom, with its camaraderie and reportorial cross-fertilization, enriches the journalism.

But Alden is in the business of making money, not journalism. The Wall Street bosses emailed staff that they weren't selling the offices — just leasing them to other businesses, creating a new revenue stream to fatten the profits of the fund's investors.

Unfortunately, such crass corporate calculations are typical of the new model of a nationalized, "conglomeratized," and financialized "local" journalism that has already taken over thousands of papers in big cities, suburbs, and rural areas across America.

The scale and speed of that transformation have been breathtaking.

Alden's high-flying hedge funders have amalgamated the second biggest newspaper conglomerate in the country, having swallowed up more than 200 papers, including metro dailies in Baltimore; Boston; Boulder, Colorado; Chicago; Denver; Hartford, Connecticut; Norfolk, Virginia; Orange County, California; Orlando, Florida; San Jose, California, and St. Paul, Minnesota.

Last August, in one blow, the 30 papers owned by the venerable McClatchy family fell to yet another multibillion-dollar hedge fund, Chatham Asset Management (led by a former Wall Street junk-bond dealer). With this buyout, Chatham's clique of global speculators grabbed the major dailies in Charlotte, North Carolina; Fort Worth, Texas; Kansas City, Missouri; Lexington, Kentucky; Miami; Sacramento, California, and Seattle.

Then there's the colossal Gannett conglomerate, now owned by Japan's SoftBank Group. It runs USA Today, as well as more than 1,000 local papers across the U.S., including the main dailies in Austin, Texas; Burlington, Vermont; Cincinnati; Detroit; Des Moines, Iowa; Indianapolis; Louisville, Kentucky; Milwaukee, Wisconsin; Nashville, Tennessee; Oklahoma City, Oklahoma; Phoenix; Providence, Rhode Island; Reno, Nevada; and Springfield, Missouri.

The operational mandate of newspaper hedge funds is absolute: Sacrifice local newsgathering and community interest to squeeze out every bit of profit and siphon it off to unknown investors in WhoKnowsWhereLand. The papers Alden acquired were reportedly profitable, with annual margins of around ten percent. But the hedge fund sharpies demanded that all their papers deliver 20 percent or more — a level at which the squeeze becomes deadly to quality journalism.

Community life cannot thrive without community news, which in turn depends on reporters and editors who are of the community and have the know-how, time, and resources to investigate, educate, expose, inform, entertain, and generally enlighten the citizenry. But what does some obscure, aloof money manipulator know or care about your community or its democratic vitality? Zilch, that's what.

To find out more about Jim Hightower and read features by other Creators Syndicate writers and cartoonists, visit the Creators webpage at www.creators.com.

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For a long time, inflation has been the phantom of the American economy: often expected but never seen. But the latest Consumer Price Index, which showed that prices rose by five percent from May of last year to May of this year, raises fears that it is breaking down the front door and taking over the guest room.

The price jump was the biggest one-month increase since 2008. It appears to support the warning of former Treasury Secretary Larry Summers, who wrote in February that President Joe Biden's budget binge could "set off inflationary pressures of a kind we have not seen in a generation." Senate Republican leader Mitch McConnell charged last month that the administration has already produced "raging inflation."

For anyone who lived through the turbulence of the 1970s, when the CPI climbed year after year, peaking at a rate of more than 13 percent, the specter of inflation is enough to induce night terrors. One of the great governmental marvels of the past 40 years was the Federal Reserve's complete conquest of this malady. To let it return would be a grievous setback.

There are reasons to think that could happen. The Fed has pumped huge sums of money into the economy to offset the effects of the pandemic, and the Biden administration got Congress to approve a huge economic relief package. Americans saved a lot over the past year, and if they decide to burn through all that cash, they could push prices still higher.

At this point, though, watchful concern is a more appropriate attitude than outright alarm. For now, I'm not worried — not very worried, anyway — about inflation.

Why not? One reason is that a spike in prices is not inflation any more than a stretch of rain is Noah's flood. It's no surprise that prices in May were appreciably higher than a year earlier — when much of the economy was shut down because of the pandemic.

Prices will keep going up as life continues to return to normal and Americans rush to spend money on all the things they missed because of COVID-19. Lingering supply chain snarls will put additional pressure on prices. But this should be a one-time phenomenon. Inflation is not inflation unless it persists over months and years.

Another reason for optimism is that even when it was trying to raise the inflation rate, during and after the Great Recession, the Federal Reserve found it remained stubbornly low. The central bank's monetary expansion should have brought about the higher inflation it sought. But it didn't — suggesting that something has changed about the connection between the money supply and consumer prices.

Back then, conservative critics forecast an outbreak of inflation caused by easy money and excessive federal spending. In 2009, economist Arthur Laffer wrote, "We can expect rapidly rising prices and much, much higher interest rates over the next four or five years." Sen. Rand Paul (R-KY) said Americans should be "prepared to carry money to the grocery store in a wheelbarrow."

Let's hope their hallucinations have subsided. If those policies didn't cause inflation then, they may not cause it now. Stable prices have become the intractable norm over the past quarter-century, for reasons we don't fully understand. Loose fiscal and monetary policies don't seem to matter the way they once did.

One danger is that the recent price increases will fuel inflationary expectations, prompting businesses to raise prices and workers to demand higher wages, setting off a self-perpetuating upward spiral. But what inflationary expectations are we talking about?

Data compiled by the Federal Reserve Bank of St. Louis indicate that, as of June 10, the expected inflation rate over the next five years is just 2.23 percent. Interest rates on 30-year mortgages have fallen below three percent, compared with nearly five percent in 2018.

Given their performance over the past 13 years, it's not unreasonable to believe that the Federal Reserve officials who set monetary policy actually know what they're doing. When the pandemic hit, the economy was well into the longest peacetime expansion ever — and inflation was still subdued.

Fed Chairman Jerome Powell and his colleagues have earned the benefit of the doubt. They haven't forgotten the trauma of the 1970s, and they don't want to go down in history as the people who brought it back.

When prices jump, vigilance against inflation is entirely justified. But we should also watch out for false alarms.

Steve Chapman blogs at http://www.chicagotribune.com/news/opinion/chapman. Follow him on Twitter @SteveChapman13 or at https://www.facebook.com/stevechapman13. To find out more about Steve Chapman and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.