Monday, January 5, 2009

The Judith Miller Effect

Aside from Collin Powell's address to the UN Security Council, my most vivid memory of the period prior to the Iraq invasion was the Judith Miller interview on CNN with Larry King. Judith Miller was the ex Times reporter who reported on whether Iraq had WMDs. I remember thinking at the time, wow, Judith Miller, a Pulitzer winning reporter from one of the most reputable newspapers, was saying that Iraq had WMDs, then there must be some truth to that. Of course, we found out later that what Judith Miller reported and said on CNN turned out to be untrue, and a lot was planted by the Administration to justify the war.

I bring up the Judith Miller Effect (on me) because of this Times article, which paints a gloomy picture of the commercial real estate sector and pretty much says CRE crash is spreading rapidly. I'm not going to dig into some of the questionable rationals like the Dirty Lawyer has done here. What I find interesting is some of the sources quoted in the article and the timing of it. To me, this is just another one of those articles planted by industry insiders and lobbyists, who have an interest in seeing the CRE sector getting a piece of the government bailout. To do so, a gloomy picture of the sector needs to be painted, the gloomier, the better. This is completely the opposite of what I saw when the housing bubble first started to burst in 2006, when industry pundits would get on CNBC and say there was no housing bubble and that real estate was local and everything was just fine. One of the sources quoted in the Times article, The Real Estate Round Table is a Washington, DC based industry lobbyist, who submitted this and this letter to Henry Paulson asking for government bail out and tax relief for commercial real estate. It's also no coincidence, that similar articles also appeared on AP, WSJ this past weekend, just after the Fed announced it expects to begin operations in early January under the previously announced program to purchase mortgage-backed securities (MBS).

How bad is the industry? Those working in the industry know and time will tell.


David Stejkowski on January 05, 2009 6:53 PM said...

Very interesting take on this. My other thought on this that I didn't say in my post is, "If it bleeds, it ledes."


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