I love Time magazine; my parents were avid Time readers, and as a kid its arrival was a weekly gift from the gods of magazinedom. That was a long time ago. Despite a mass audience that long ago fragmented, the magazine continues to present itself as if it were 1955 and Henry Luce's American Century, with Time as its drum major, were still in progress. Time still knows how to dress itself up. But beneath the graphics and the photography is an emaciated body, held together with drug ads, and that slick writing style that races past any arguable fact like a fast car past a homeless person. There is to Time a sort of mannered populism, which befits the mass audience it once possessed. But of course the argument a Time story often generates falls apart if you poke at it too vigorously. Because, at the end of the day, Time a) doesn't believe its audience is very discerning and b) takes as faith that it has the attention span of a flea.
Case in point: a story in the Sept. 26 issue about the banks that declares with certainty, "Why Banks Are Still Failing Us," on the cover and "After Three Years and Trillions of Dollars, Our Banks Still Don't Work." (Trillions of dollars of what?) Certainty is part of the game, of course. Don't let the shadow of doubt cross the mind of any reader. The thesis of the Time story is that the banks have somehow failed us, first, in the financial crisis, which they perpetrated alone; then by their failure to lend, even though we had bailed them out and they were making lots of money; now because they never really cleaned themselves up and are about to do it to us again. This is a tricky argument to make. After all, the banks used TARP money and their revived profits to raise capital, which should be good, but to Time's view is somehow implicated in their refusal to lend, as if they were making profits but hoarding capital and using it for speculation. And so their profits were actually false, which means double trouble.
In a few cases, the magazine is shameless. To make its case that Bank of America is heading down, Time uses Business Insider Henry Blodget's "estimates," which he admitted to having cobbled together by reading blogs, that the bank had potential losses of $100 billion to $200 billion -- and thus would need new capital. Blodget's analysis was subsequently shredded, by BofA and more astute bank analysts. Time uses it anyway, citing the $200 billion -- as in, "as much as $200 billion" -- and never suggests that Blodget, once infamous for Internet stock hyping, may be a poor source of info.
It gets worse. First, Time claims evidence that there's no lending (none?) from "a recent survey" (no further details available) that says that 73 percent of "small business owners in the U.S. say they are still being affected by the credit crunch." That sounds impressive, but what are the real terms of comparison here? How do you define a "small-business owner?" Are they the same as, say, middle-market entrepreneurs? The vast middle market is an extremely differentiated arena, and "small business," while a ubiquitous talking point, is just a part of a much bigger whole. And what did a similar survey taken, say, in 2006 say? After all, small-business owners have always complained about their inability to get bank credit. How much worse is it today?
Second, it's nearly impossible to tell which kind of bank is not lending: the biggest, the smallest, the ones in the middle. There are thousands of American banks still, and while a BofA has a pretty sizable piece of the customer base, most of the lending to small businesses, like dry cleaners and restaurants, is going to occur at the local bank level, among banks that didn't get TARP and that played a relatively minor role (or none at all) in the subprime mess. Third, Time uses a giant graphic that claims that since the financial crisis, bank profits are up 136 percent and lending is down 6 percent. These, of course, are apples and oranges. Again: which banks? By starting to compare earnings in the depth of the crisis, the third quarter of 2008, nearly any return to normalcy, whatever that means, would show a big leap. As for the lending figure, it can tell many stories, though Time insists on offering just one: The banks are not lending because they're still trying to screw Main Street. This is less an argument than an implication. "Banks haven't fulfilled their part of a crucial bargain: bailouts for Wall Street in exchange for lending on Main Street." Are all banks on "Wall Street?"
The simplest explanation, of course, is one Time never explores: There's deficient demand out there. The crisis and recession revealed chronic over-leverage, in businesses, government and households. In working that down, whether through draconian mortgage restructurings and foreclosures or by paying off credit cards and slashing government expenditures, the economy limps along, as it will until the underlying situation improves (unless we mess it up even more). The stimulus is over; the Republicans won't countenance more. But rather than explore that -- and this is generally accepted by (to adopt a favorite Time expression) "most" economists -- it's simpler and easier to blame the banks, particularly now that the economic slowdown is hitting them again. In short, Time expects the banks to force money into an economy with deficient demand, as if they were a fiscal arm of the government. After all, we bailed them out, no? Now the fact is the banks have been regularly condemned for doing exactly that: throwing money out the door and losing it. Why would we want that to happen again? Regulators, as the magazine notes with a bewildered air, have been ratcheting up capital levels to insure that banks have a cushion against losses. This plays neatly into regulation-as-a-job-killer meme.
The real problem here is that Time is providing a glossy packaging for an argument that goes to the heart of both financial reform and to policies on stimulus versus austerity and job creation. Time is creating a scapegoat, to travel along with the Republican insistence that the administration and the large deficits have spawned low growth and stubbornly high unemployment. The darker side of the Time approach, with its selective data points and sourcing (by the way, Meredith Whitney is an analyst not an economist; and yes, she was spot on once, with Citigroup, but she is not omniscient), ultimately hinges on its ability to offer the simplest of all explanations in the face of an extremely complex reality. It is not your fault Main Street; it's completely the fault of those big banks. It's a conspiracy and a morality tale to make us all feel better.
The worst thing about Time magazine is that you always get the idea that the folks there are not that dumb, but they're writing to please an audience that they imagine (or worse, have market tested). This represents a kind of curdling of the long-ago notion that Time and Newsweek once embodied, of a large middlebrow, middle-class American audience. The fact is that the Internet has killed the news magazines; but they were hollowed out long before by the breakdown of the mass American middle class, beginning in the late '60s. Now they are trying to provide a mirror on complex events to a milling crowd looking for simplicity in the midst of complexity.
Robert Teitelman is editor in chief of The Deal.
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