Monday, March 16, 2009

"I trusted these guys"

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.

5 comments:

Anonymous said...

The Cramer bashing is a waste of time.

Anonymous said...

Kingfish...

An excellent post and you are spot on. Many people take for granted that if it 'comes from the TV it must be true' attitude. How sad it is that the financial media has turned into a circus. Back in December of 2007 I wrote an editorial on a very similar subject, in this case it was an investment bank telling clients to 'don't worry'.. everything is fine type response. And back in 2007 I was warning of the impending storm and asked that investment bank for comment.. they never replied..

You have done a great job Kingfish.. We have to work hard to flush out the garbage that has done so much damage to peoples savings.

http://blog.rebeltraders.net/2007/12/02/close-your-eyes-and-cover-your-ears/

Anonymous said...

No Kudlow or Cramer?

Anonymous said...

Are you serious? You want Wall Street types--the very people you claim got us into this mess--reporting your financial news? That's exactly what you DON'T want, at least if you're hoping for objective and critical analysis. You claim you want more "investigative reporting," then take the business networks to task for hiring REPORTERS. I would submit that you don't really know what you want, other than to find someone to blame. And your representations about what was and was not reported are even more flawed than your spelling of people's names. That says a lot.
Are business journalists perfect? Of course not. Is there too much opinion and bloviating masquerading as factual reporting? You bet. And yet, here you are calling for MORE bloviating--with 20/20 hindsight.
I'll guarantee you one thing: If you keep looking for business reporters to hold your hand through the world of investing, you'll get burned in the next downturn, too. And it'll be your own damn fault.

Kingfish said...

No, I want reporters who know what the hell they are talking about and asking questions. Just as not all lawyers, cops, or used car salesmen are bad, neither are all wall street types.


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Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

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Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.


In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

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This is definitely a Beaver production.


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Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

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