Jackson Jambalaya

While markets collapse and 401k plans disappear, one must wonder why the financial press failed to warn us about Wall Street's house of cards. Commercials blared how well they understood the markets, how they looked out for your money, and gave you the information you needed to make the right decisions. As the markets and economy implode, they still merrily chirp away on tv as if nothing ever happened with no accountability for their sloppy reporting as the last few years.

The old video (Its a classic on Youtube) of Peter Schiff is Cassandra-like in nature as his predictions of doom and gloom for the markets are ridiculed by the gurus and stock babes who didn't want to hear anything that might upset the applecart. The same stock babes and gurus who forgot everything and learned nothing from the subprime mortgage implosion and the bursting of the tech bubble in the late 1990's. The business media missed it then as they acted as cheerleaders instead of journalists. Sound familiar? Who can forget Herera and Haines gushing over the "new economy" as tech stocks suddenly sold for hundreds of dollars every day on the Squawk Box? So busy were they marveling over this "new economy" they forgot to ask some old questions such as how these internet companies were going to turn a profit. Its sooooo much easier to cover a first downs and yards per rush, oops, I meant stock price, than it is to read a balance sheet or income statement that at times CNBC became ESPN. The Nasdaq crash, blindsided them as they never seemed to think that they might actually be witnesseing the creation of a bubble.

A network reporting financial news is one thing, a network advertising every hour "In Cramer We Trust" and "Fast Money" (Or is it Easy Money, Mo Money, or My Money, they all run together after awhile.) is something entirely different. If CNBC and others are going to go down that road, then they better not write checks their asses can't cash when the you-know-what hits the fan. Its rather insulting for a Cramer to claim as he did last week "No one could have seen this coming" or "This was a once in a lifetime event" when hard-nosed research would have provided them with the real story. Anyone who read the balance sheets, actually learned what was taking place on Wall Street, and just asked simple yet critical questions could have figured out something wasn't right.

A mere blogger like me warned nearly 18 months ago Fannie and Freddie had ticking time bombs on their balance sheets. Schiff warned on any show that would give him a microphone what was coming down the river. Karl Denninger, a trader, predicted with deadly accuracy in 2006 everything that has taken place in the economy for the last two years. When he dared to point out on Donnie Deutsch the emperor had no clothes, Cramer went ballistic and could not believe someone would dare challenge the CNBC media octapus as it was more important to CNBC and others to promote their insider-friendly agenda.
While they BS'ed on Power Lunch with a CEO, the Mish's and Schiff's were actually sitting down and reading balance sheets, studying charts, asking questions, and knocking on the wood panel on the wall, listening for the hollow sound (Sorry, I just read All the King's Men and have been looking for a chance to work that passage into a post.).

None of these reporters questioned the SEC's 2004 decision removing leverage limits on investment banks and other institutions in 2004. They just reported "The SEC voted today to remove leverage limits, a move supporters say will allow them to make more efficient use of capital." They never asked "Is this a good idea" or "won't this leave our financial system heavily exposed if the investment banks over-leverage themselves?" or "What will the effect be if they go under?" No one asked questions when Fannie Mae was busted for fraud. They didn't see anything wrong with investments leveraging themselves at 30:1 ratios. When OFHEO reported in 2006 Fannie was making too many risky loans, CNBC and Bloomberg yawned. However, Cramer and Kudlow had a good food fight that day that got high ratings.

Even today, despite the fact housing crisis is one of the biggest problems today, the business networks still do not have any reporters with mortgage or real estate experience. Staurt Varney wails how the the government has done everything it can and its not fair consumers aren't responding while I'm reading a post on Naked Capitalism reporting in detail why consumers are spooked and why the economy is contracting. The money honeys ask if every uptick in the Dow means we have reached the bottom when no one ever knows whether a bottom has been reached until several months after it has been reached. They also report that this bottom should behave like other market bottoms when the conditions that created this crisis are much different than past crashes. Few of them ask what effect Obama's deficit spending will have on the bond markets. The Money Honeys argue we need housing prices to stop falling while Glenn Beck accurately points out with his chart housing prices have a natural level, keeping them from reaching that price level will only mean more pain for the economy, and they still have to fall some more before they reach their natural levels. That would require actual research from the "experts" so naturally they don't discuss this little aspect of housing prices.

Perhaps its not the fault of the reporters for missing these stories as a qiuck review of their online profiles reveals something not really discussed in the media: most of the reporters on the business news channels are not really qualified to cover the markets and the economy. Most of the reporters are journalists. Many of them have won awards for their reporting and are considered by there peers in journalism to be top-notch reporters.

The problem is they are reporters and few have any background in finance or economics. At CNBC, 13 of the 23 anchors and reporters have NO business or finance experience. Two more have very light backgrounds in such fields: the Money Honey has a minor in economics and another one spent one year fresh out of college at Goldman Sachs (glorified gopher.). While several have very respectable journalism resumes, only 8 of the 23 have any finance or economic backgrounds of any substance (See below for names and histories). At Fox Business News where 11 of 24 had any business backgrounds of substance. There is nothing wrong with hiring reporters with no finance experience to work at CNBC, Bloomberg, or FBN. However, there is something wrong with a network touting itself as the expert on the markets and investing when a large portion of its anchors and reporters don't have any expertise in these fields.

The business networks need to decide what they want to be: true business news channels reporting on what makes the markets tick or an insider's club occasionally giving us a glimpse into their world. They have had it both ways for years and still seem surprised we would expect them to behave any differently. Was anyone nauseated as I was while listening to Cramer as he was gutted by Stewart on The Daily Show: "I trusted these guys." "He hired me. I trusted him." "I've known him for twenty years." "Our real sin was to believe it (the market) would keep going up."

Does anyone think Cramer is this naive or that he really thought the market would always go up? Cramer is no dummy and didn't make millions managing hedge funds by just believing what CEO's told him. Cramer probably saw CNBC as a way to make money and a name for himself so he decided to play the game while touting himself as a financial John the Baptist shouting the truth from Wall Street wilderness. Instead, Cramer treated as us fools for years then claimed he "trusted" these guys when he got caught by Stewart. Yet we should put our trust in Cramer.

Unfortunately we now live in a society that rewards failure and ignores accountability. The financial news networks play their games: abdicating their roles as our watchdogs of the business community while schmoozing with the people who caused our economy to melt down. There is still no investigative reporting, no calls for indictments or prosecutions, no serious analysis, just a gee whiz, its a shame we got here, how do we get out of this mess. The financial press is a complete disgrace but then again, so are many other things these days.

Note:

CNBC
Reporters with journalism-only backgrounds:
Sue Herera, Julia Boorstin, Mark Haines, Scott Cohn, Margaret Brennan, David Faber, Charles Gasparino, Bill Griffeth, Mike Hegedus, Mike Huckman, Dennis Kneale, Steve Liesman, Tyler Mathison, Christine Tan, Hampton Pearson, Becky Quick, Scott Wapner, Dianna Olick, Jane Wells, Brian Schactman,

Reporters with finance, business, or economics backgrounds:
Philipi Lebeau: Van Kampen, LeBeau held a Series 6 license.
Melissa Lee: consultant at Mercer Management Consulting. Her cases focused on the banking and credit card sectors
Joe Kernan: Ten year career as a stockbroker. Merrill Lynch, Vice-President at both EF Hutton and Smith Barney. Focusing on small-to-medium-sized corporations, Kernan managed corporate cash accounts and qualified retirement plans in addition to key employees’ personal assets
Rebecca Jarvis: an investment banker with Banc of America Securities. Analyzed and advised $6 billion in mergers and acquisitions, equity and debt transactions. Prior to that, she executed interest rate trades on Citigroup's foreign exchange desk in London.
Melissa Francis: B.A. in Eonomics from Harvard University. Executive editor of the Harvard College Economist Magazine
Erin Burnett: Began her career at Goldman, Sachs & Co. as an investment banking analyst- focused on mergers and acquisitions and corporate finance. (Gopher)
Michelle Caruso-Cabrera: bachelor's degree in economics from Wellesley College.
Ross Westgate: 6 years in London, trained as a stockbroker, working with private clients
Trish Regan: began her career working for Goldman, Sachs & Co. and D.E. Shaw & Co.
Bob Pisani: taught real estate at Wharton
Mary Thompson: worked at Fidelity Investments in Boston for four years where she held a variety of sales positions
Santelli: A veteran trader and financial executive, Santelli has provided live reports on the markets in print and on local and national radio and television. He joined CNBC from the Institutional Financial Futures and Options at Sanwa Futures, L.L.C. There, he was a vice president handling institutional trading and hedge accounts for a variety of futures related products.
Prior to that, Santelli worked as vice president of Institutional Futures and Options at Rand Financial Services, Inc., served as managing director at the Derivative Products Group of Geldermann, Inc., and was Vice President in charge of Interest Rate Futures and Options at the Chicago Board of Trade for Drexel, Burnham, Lambert. Santelli began his career in 1979 as a trader and order filler at the Chicago Mercantile Exchange in a variety of markets including gold, lumber, CD's, T-bills, foreign currencies and livestock. Santelli has been a member of both the Chicago Mercantile Exchange and the Chicago Board of Trade.

Fox Business News Channel:
Reporters with journalism-only backgrounds:
David Asman, Cheryl Casone, Adam Shapiro, Dagen McDowell, Jenna Lee, Nicole Petallides, Rebecca Diamond, Rich Edsen, Liz Clayman, Neal Cavuto, Connell McShane, Jeff Flock, Robert Gray, Elizabeth McDonald

Reporters with finance, business, or economics backgrounds:
Ashley Webster: Six years in London, banking sector for Bank of Montreal and Lloyds Bank
Eric Bolling: independent trader based out of the New York Mercantile Exchange. He specialized in trading a variety of commodities such as crude oil, gold and agricultural commodities. He served on the NYMEX’s Board of Directors for five years, and subsequently acted as a strategic advisor there.
Louise Pennell: Bachelor of Business degree
Peter Barnes: Wharton MBA
Shibani Joshi : MBA from Harvard Business School, completed the investment banking analyst program at Morgan Stanley, bachelor's degree in finance & accounting at the University of Oklahoma.
Tom Sullivan: He also has more than a decade of experience in financial services, serving as a founding partner of The Sullivan Group, an investment management firm that is now part of the Premier Client Group of Wachovia Securities. Sullivan holds degrees in business and accounting. He attended Seattle University, the University of Washington, and the Stanford University Graduate School of Business Executive Program
Stuart Varney: Graduated from London School of Economics.
Alexis Glick: Executive Director at Morgan Stanley, headed the New York Stock Exchange Floor Operations. A member of the New York Stock Exchange since 2002, she was the first and youngest woman to manage such an operation for a bulge bracket firm, and served as one of its top producers on the Listed Equity Trading Desk. She began her career as an analyst at Goldman Sachs in the equities division.
Brian Sullivan: Sullivan traded chemical commodities for Mitsubishi International
Cody Willard: Principal of an investment management company. Regular featured economist and stock picker on CNBC's ''Kudlow & Company." Willard earned a bachelor's degree in economics at the University of New Mexico.
Sandra Smith: Director of Institutional Sales and Trading at Terra Nova Institutional, handled investment management and hedge fund accounts. trader at Hermitage Capital.
Tracy Byrnes (Fox): Byrnes began her career at Ernst & Young LLP as a senior accountant. A graduate of Lehigh University with a B.A. in Economics and English She received her Master of Business Administration Degree in Accounting from Rutgers University Graduate School of Management.