Monday, July 10, 2006


This weekend the Los Angeles Times had a front page expose on Lance Armstrong. Hugh Hewitt rightly named it a "hit" piece. Both Hewitt and Power Line concluded that "Big MSM has really lost its way, concluding that anything "secret" is in fact wrongfully hidden from public view, and that its function is to act as a conveyer belt to the front page for whatever a party or person doesn't want revealed," as Hewitt put it.

I respect their opinions.   But that's if that's the case, how come the Los Angeles Times and the rest of the MSM never attempt to gleam details about, say, the private life and lawsuits of Oprah Winfrey that might embarrass the Liberal diva? Nor do the MSM crave the details of lawsuits that involve Michael Jackson or other pop culture icons. If the MSM was avid about exposing secrets why not explore Paul McCartney's pending divorce, the lurid details or which would sell newspapers for weeks.   How come they don't actually want to see John Kerry's service records?   Or Bill Clinton's medical records?   Or find out what was really in those memos Sandy Berger stole from the National Archives?

No. The "secrets" the MSM want to reveal are always a package deal. They involve the elements of "ta da" journalism, coupled with agenda promotion, and invariably include anti-Americanism as a theme. In the case of Lance Armstrong, France is reeling from urban riots, a humiliating climbdown on a youth labor law, the Clearstream scandal (If you want to have your eyebrows raise to your hairline, see "The republic of deceit" The Sunday Times Magazine, Times of London, July 9, 2006 and bear in mind that libel laws are onerous in the U.K.) Then there are more doping scandals in the Tour de France so pervasive that it "borders on farce", the conviction last week of 38 for corruption in Paris city hall when Jacques Chirac was mayor, and the ever-widening Airbus scandal, termed "strife" by the BBC.

Airbus (80% owned by EADS) and the future of the rest of the multinational consortium that is unraveling is clearly an issue for the New York Times if you read this cheerleading article in the International Herald Tribune. The "you can do it!" pom pom journalism is at variance with the more balanced report in the Chicago Tribune that chronicles the abject failure of the A-380 Airbus, a plane "one-third larger than the Boeing 747" and the announced delays in production that will put the plane back one year and will cost billions in lost revenue.   (This, after a $10 billion investment.)   Partners DaimlerChrysler and Lagardere, the French media company, which hold a combined 37.5% stake in EADS both sold 7.5% of their shares in early April, reducing their losses early in the game, just weeks before the delays were publicly acknowledged.   (They were, perhaps, following the lead of Noel Forgeard, the CEO of Airbus, who reportedly sold his options and stocks in his childrens' names in March.   Forgeard, a former aide to Jacques Chirac, along with four EADS managers are under investigation by the French stock market regulator, Financial Markets Authority.   The Paris headquarters of EADS was raided as they gather evidence of insider trading.)  

Immediately after the public announcement of production problems and a 6-month delay (following a 6-month delay announced last year), EADS (the European Aeronautic Defense and Space Company), the parent company of Airbus, saw their stock fall 26% wiping out ¤5.5 billion of its value (June 14).   Worse news followed when BAE, the British partner in the consortium, announced plans to sell their 20% stake in Airbus.   Hampered by a provision that they can only sell to EADS and had to notify EADS a year before a sale, they were slow off the mark and then worse disaster struck when negotiations failed to produce a selling price, they contracted Rothschild investment bank to value their holding. Rothschild found it was valued at less than half what they had expected, a shock the market had not expected. Speculation immediately flared about what Rothschild discovered to come in with such a low estimation.   The BAE investment thought to be worth €5 billion, is estimated to be, after the payback of loans and transaction costs, considerably less -- €1.65 [£1.9bn] billion.  

As FT wryly noted, "almost everyone reduced exposure to Airbus: Lagardère and DaimlerChrysler and even senior managers at parent EADS.  BAE Systems' exit only stalled after Rothschild, an independent arbitrator, reached an unexpectedly low valuation for BAE's one-fifth stake."  

The stakes in the failure of Airbus are high. (Newsweek, July 17, 2006)
Founded in 2000, EADS was supposed to demonstrate the potential of a united Europe to compete with the United States and its aerospace industry. Investors were always skeptical, saying that co-CEO posts, shared by the French and Germans, were a typically European political compromise, and no way to run a business.
Of course not.   It's the French way to run a business.

Which is why the Lance Armstrong story was 9 pages long, perhaps the only story that might distract the French from the slow collapse of their government, the abject failure of the delusional A-380 -- itself a reprise of the commercially unviable Concorde -- unassimilated immigration problems, and the ongoing corruption scandals that just keep roiling.

The Lance Armstrong story was never intended for domestic consumption.   With the globalization of news, the audience, as well as the stage managed news are distant from the source, which is why you never read a lot either about 15,000 elderly French who died in the summer heat and why, oddly, wierdly no picture appeared of a single funeral and there was no expression of national grief, no anger.   No moral outrage.   The much more experienced and cynical French might suspect that the 15,000 were strikeoffs of the rolls of fictional French who were expendable in a budget crisis.  After all, the elderly could be reinvented again before another election called or when party coffers were empty.   But neither the French, nor we, would ever read of the possibility in the Los Angeles Times.  

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