The latest manufactured outrage to fill the media and blogosphere is that Social Security will not have a cost of living adjustment in 2011. This is only the second time this has happened in the 35 years that cost of living adjustments (COLAs) have been in place. The other time was in 2010.
The AP led off its reporting on this tragedy with:
More than 58 million retirees and disabled Americans will have to go another year without an increase in their Social Security benefits, the government is expected to announce this week.
The blog WalletPop, always a little more colorful, started its post thusly:
The prediction from scholars that the Social Security Administration will announce zero cost-of-living adjustment, or COLA, to Social Security recipients in 2011 is a blow that many older and disabled Americans can ill-afford.
I think that they meant that the lack of a COLA, not the prediction of one, is an ill-affordable blow. But apparently, it is an even wider problem.
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The other day The Wall Street Journal introduced me to a new word. From German, it is fremdschämen, meaning “a feeling of cringing embarrassment for the actions of others.” If only to discuss reality TV shows, English really needs 
to adopt this one. We can spell it without the umlauts. It is pronounced something like FREM-shame-in.
I bring this up because there is a minor scandal brewing that has just inspired fremdschamen in me. The Consumerist has taken to calling it the Foreclosure Fracas. Wednesday’s update on it in The New York Times began:
The uproar over bad conduct by mortgage lenders intensified Tuesday, as lawmakers in Washington requested a federal investigation and the attorney general in Texas joined a chorus of state law enforcement figures calling for freezes on all foreclosures.
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Earlier this week The Wall Street Journal ran a piece on, of all things, the importance of the correlation coefficients between the returns of investments. I have mixed feelings about it.
On the one hand, correlation between asset returns is a neglected subject of great importance. The mid-Twentieth Century realization of its central role was the start of modern financial theory as we now know it. A professional level understanding of risk begins and ends with correlations, so it would make some sense for amateur investors to know at least the basics.
On the other hand, the article serves as a good reminder of why they know so little. Despite being called Why the Math of Correlation Matters, it contains no math. This might be because the author worried that her readers would find the math scary and hard, but I fear it is because the author herself finds it scary and hard.
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I guess I should start out by stating that I do not find anything in this bit of junk mail to be the least confusing or misleading. Do you?
In case you can’t read it, it is a postcard from ING pitching their “ING DIRECT 5/1 Orange Mortgage.” It lays out what the loan would cost as compared to an average 30 year fixed. Although it does not use the term “adjustable rate mortgage” or “ARM” it gives the reader plenty of clues, including calling it a 5/1 and breaking out the numbers into two periods, with the interest rate for the second (Year 6-30) period labeled as “projected.”
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Just for fun, today let’s play journalist and headline writer.
Here are the morning’s facts that we have to work with: 1) For the month of July 2010, the Case-Shiller 20-City Home Price Index was up 0.6% and the 10-City was up 0.8%. 2) For the year to July, the indexes are up 3.2% and 4.1%, respectively. 3) House prices are now at the level they were in fall 2003, but are still about 50% higher than they were in January 2000.
Okay, so what’s the headline you would use for your story reporting this news? Here are some I think would be appropriate:
“July Brought More Modest House Price Increases”
“S&P Case-Shiller at Highest Level Since ‘08”
“House Prices Continue Recovery Despite Tax Credit Expiration”
Or, taking more of a big picture approach:
“With Dust Settling, House Prices Hold on to Half of Boom Gains”
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The latest manufactured outrage to fill the media and blogosphere is that Social Security will not have a cost of living adjustment in 2011. This is only the second time this has happened in the 35 years that cost of living adjustments (COLAs) have been in place. The other time was in 2010.
Government, Media, PF Blogs | Frank Curmudgeon | 
October 12, 2010 12:29 pm | 
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