I was thinking of buying a newspaper this morning, but decided against the investment because it didn't make economic sense. So I bought a new house instead. A joke? Not according to Newsosaur Alan Mutter who argues that short selling is now hotter in the newspaper business than in the mortage sector:
Investor bets against Lee Enterprises and McClatchy were more thantwice as big last month as those against the shares of Fannie Mae, one of the mortgage giants whose perceived instability jolted the financial markets.
Mutter wrote this last week, before yesterday's dreadful economic news from the New York Times. It was bad enough that company profits were down to $21.1 million for Q2 of this year, compared to profits of $118.4 for Q2 2007 -- particularly given the significant jobs cuts at the company over the last year. Worse still, however, the Times announced a rise in the newsstand price of the paper of 25 cents to $1.50
So, my decision to buy real estate rather than a newspaper wasn't a joke. This morning, I had my $1.25 all ready to hand over to the nice lady in Berkeley newsstand that I usually buy my morning papers. But, on my way to the store, I walked past a lovely house for sale that I can buy for $1.25 million (it's come down in price from $1.5 million). For a poorly paid amateur blogger like me, $1.25 million represents a lot of quarters, so I figured that I need to make some economies elsewhere. And what better place to begin than newspapers. After all, I can get the Times online for free. So why pay real money for it -- money that I can invest in more substantial brick and mortar?
Two industries in crisis with opposite pricing mechanisms. Why, I wonder, is real estate dramatically dropping in price while the Times is significantly putting up its newsstand price? Krugman owes us a column on this. Does this make economics more or less of an (ir)rational science? Or might we conclude that the suits at The Times have gone insane and, in order to save themselves, they are committing a very public suicide?