Thoughts

Over the course of the past few months, I've been increasingly asked for my thoughts on several econo-political topics, including, but not limited to "the bailout(s)," industry-specific solutions, regulatory overhaul, and others.

Those of you who've read my work over the course of the past year may also be wondering where or how I weigh in on these issues, and/or why I've remained relatively silent on issues which one would expect I'd be quite vocal.

To be honest, the only quasi-explanation I have to offer is that I just don't know.

Unlike professional writers, analysts, and pundits who depend on their words for sustenance, I have the convenience of not saying anything if/when I don't have anything good/useful/interesting to say.  The events that have transpired over the past year or two (including those preceding events over decades past) have been a bit overwhelming, in terms of the time and knowledge required to not only stay abreast of, but more importantly to understand.  While I'm hardly disappointed to still remain otherwise employed (knock on wood), I simply haven't had time to wrap my head around much of this information, at least not to the point where I would risk what little (if any) reputation I've managed to nurture by spouting off some uninformed nonsense the likes of which I've previously accused others. 

Thus, while I haven't yet developed a comprehensive solution to our various ills, there is a slightly smaller issue into which I've put some time and effort.

Like many people, as I see the news scroll by on my monitor, I'm often overcome by feelings of anger and disappointment.  I'm particularly enraged (although unsurprised) with the constant interference of pandering politicians and poorly-informed punditry presenting opinion as fact or careful analysis.  That every Joe and Jane Schmo with a keyboard gets to voice their often similarly uninformed opinions reminds me of Steve Carrell's character in Anchorman when he declares "I DON'T KNOW WHAT WE'RE YELLING ABOUT...LOUD NOISES!"  The complex, interrelated issues at hand seem to be way beyond the knowledge, experience, and understanding of virtually everyone, and yet everyone still has an opinion, everyone knows who was at fault, who we need to blame, and how we'll magically "fix the economy," whatever that means.

Various media participants and outlets have done their part to contribute to the hype and hysteria, often inciting outrage and chaos, when there is often little-to-no reason for doing so, other than to sell papers/eyeballs.  To be sure, much of my ire has been focused on the media, specifically, the part that  covers (or attempts to, as it were) business, finance, and economic happenings.  Even to those of us who are actually trained, experienced, and possibly still work in such fields, there is much disagreement over what/how/why things happened as they did, and perhaps more importantly, how to "fix it."  Yet we've seen the same sort of behaviour from virtually every media outlet that I described in the above paragraph, speaking very loudly and authoritatively on topics of which they don't appear to have the slightest understanding.  Just pick up any daily Newspaper or click on over to Fox News or CNN to see some of the ridiculous crap being peddled by the "fair and balanced" media.  (Just to be sure, the previous sentence applies to both sides, and everyone in-between.)

Despite a keen awareness that most reporting these days is unfortunately nothing but filler between advertisements, I've found it difficult to contain my immense dissapointment with the way inherently complicated concepts have been grossly over-simplified, mis-interpreted, and mangled over-and-over in popular media, of both the new- and main-steam varieties.  To be sure, its altogether unsurprising to witness such a non-phenomenon when sensationalism and incendiary "reporting" are - or are perceived to be - the largest drivers of revenue for most media outlets.  Contrarily, when there is - or there is perceived to be - little/no incentive to present  balanced, well-argued/researched, and transparent information, it comes as no surprise that such things are few and far between. 

In fairness, there are several media outlets who have found a way (not necessarily a profitable one perhaps) to practise what I'd call "responsible reporting" when it comes to these matters, and I applaud them for their efforts.  These are the outlets I visit on a regular basis, and its little secret who they are.  However, such outlets unfortunately represent a disproportionate minority, and are thus not nearly as popular as their sensationalist, more irresponsible brethren.  

Of course this is hardly the biggest problem at stake, but it is perhaps one of the few that we have any ability to affect.  Especially in such turbulent times, we should be extremely cognizant of the material presented to the general public, and the light in which this information is presented. 

I say this because frankly, I'm not quite sure how to properly enunciate my fear that the various braintrusts  (legislatures, the SEC, FDIC, Board of Directors of most banks, the general populace, etc) will, in trying to "stabilize" the economy, actually send us further into the abyss.  If there were an ETF or other instrument to short the testicular fortitude of our Congressional and other "leaders" tasked with addressing our economic woes, I would be into that trade in serious size.  I have little-to-no faith in their ability to understand the issues in front of them, and even less faith that the group as a whole will make the tough choices conducive to long-term sustainability and economic health.  If what we've seen from both sides is any indication, we should expect more of the same short-term "solutions" which have generally failed to address any underlying issues, and quite likely prolonged the pain, and simply delayed confronting the real issues until a later date.

Showering the masses or individual companies with money (the exact faucet, pressure, and distribution pattern used is irrelevant here) may seem like the most politically expedient option, but as many others far more informed than I have argued, is actually counter-productive at a certain point.  Eventually, we have to pay the piper and reduce leverage across the board to sustainable levels.  (I'll leave it to 1-2 to discuss this in greater detail if he feels compelled to do so, since going down that path is a far-longer discussion than I'm interested in having here.)

So, perhaps if we can find a way to incentivize the media to be more careful about what information they present, and how it is presented, perhaps we can affect public opinion, and thereby affect the decisions made by the powers that be. 

I realize that this is far easier said than done, but to oversimplify, I believe that those of us who "know" have a civic duty to share that knowledge with those who do not, especially when it just so happens that doing so may very well be critical to ensuring our future employment. 

Some have argued that trying to improve the quality of business reporting is a fools errand, a futile effort.  One follower on Twitter pointed out that if one possesses a functional understanding (or even capacity to understand) the material, they one will most likely pursue a more-lucrative career in the field rather than reporting on it.  This may be true for many people for whom money is the primary motivator, however I know several people who forgo financial gain to report upon and analyze business and business news (for example, I don't do this for the money).  Some of these people even have undergraduate or even advanced degrees in the fields which they cover, as shocking as that might seem.  

The other solid criticism seems to be that news outlets and reporters wouldn't have much, if any incentive to comply with our requests.  Judging from traditional media's well-documented aversion to change, this is a legitimate criticism for which I don't have a fantastic response.  It would seem that any concerted effort to affect change would have to first gain sufficient visibility and popularity so as to make our stamp of approval an important sales/marketing tactic, or on the other hand, such that not having our support was perceived to be sufficiently detrimental to that outfit's credibility that they comply out of perceived necessity.  This is a bit of a catch-22, as 1-2 was quick to point out when we spoke about this a few days ago, but one that I don't think is insurmountable.

I envision a largely-volunteer Non-Profit, at the core of which is a proprietary, secure database of business professionals and academics willing to make themselves available to whatever degree they're comfortable with to reporters and journalists.  There are enough of us who make our thoughts, opinions, and analysis available for free already that I don't think this is asking too much.  Think of something along the lines of Linkedin, except with the added ability of anonymity for those who need to remain so for professional concerns.  These volunteers would be able to create a profile with whatever level of detail on their background, knowledge, experience, etc they feel comfortable providing.  Reporters and journalist members would then be able to search the database for those with knowledge/experience on the subject matter they're covering. 

Additionally, the website would allow volunteer members (like FT Alphaville's Long Room) to post corrections, criticisms, etc, on poor business/financial/economic reporting.  This could even be extended to a ranking of various media outlets.  In turn, this could be used to present awards each year for the best, most improved, etc ones, and also highlight repeat offenders so that the general public could be made aware which outlets they should avoid or take with a grain of salt.

Perhaps I'm delusional, perhaps I'm insane, but to me, this seems like a worthwhile cause.  There's virtually no overhead besides maintaining the website, plenty of business professionals with newfound time on their hands, and a general politico-economic state of affairs that makes today a more important time than ever to put our knowledge and experience to good use.

Let me know what you think. 

Good idea?  Bad Idea?  I'm a stupid schmuck?  Whatever, just let me know.  If this turns out to be a horriffic idea, then so be it, however if enough of you are with me then I stand ready to make this (or something like it) happen.  Lets see how it goes.

 

Comments

[thoth]

I love the idea, but one other thing to consider is the length of the content written/spoken by journalists. Sometimes I feel that they might have the capacity to grasp the whole issue, but don't because they are limited to 20 seconds or 250 words. They are (frequently) catering to short attention spans, so nuance and depth don't make it into the product. It's funny that you quote a journo from Twitter, because isn't that limited to 200 or 300 characters? Maybe your network could also help support longer articles that actually cover the entire issue?

TV in particular should also stop using its so-called "experts" - Susie Orman might work for talking about personal finance (or not), but in no way is she qualified to discuss CDO's of ABS. So let's set up a fund/pool of actual experts who the major networks can call upon.

I do like your thought about a website for corrections/comments, I just wonder a) how you get your typical reader/viewer to go to it (maybe Twitter helps there) and b) how you keep it from being like the comments section of NYT or WSJ or Yahoo.

[Kid Dynamite]

everyone just talks their book - and if they don't have a book, they talk anyway, because it's a freeroll - if they're right, maybe they can gain some fame.

for months after Art Hogan RIDICULOUSLY called the "bottom" in November, CNBC referred to "The Art Hogan Bottom." oh really? hey Art - how's your bottom?

if you're really lucky, you can become a self fulfilling prophecy, and make money selling your opinions (see: recent fame of Roubini and Meredith Whitney - both of whom APPEAR to know exactly what they're talking about)

now, i happen to like Roubini and Whitney, but I've also read "Fooled By Randomness".... take 1000 or 10,000 commentators, and you'll always get a couple who get it exactly right just out of dumb luck. unless you're looking at economists. then they're always wrong.

there is a segue here into something related to StockTwits (or whatever it's called) - twitter's stock touting service... i cannot in a million years see how a service like this could ever be monetize. You've heard the one about the sportspick service that starts with 10,000 clients, and each week, they give 1/2 their clients each side of a game, so that by week 7 they have a handful of clients left who've had SIX STRAIGHT WINNING WEEKS! guaranteed! then they charge them for the next pick.

[Anal_yst]

@ Thoth

The goal is to get not only the mostly well-intentioned reporters themselves on-board, but their editors and publishers (i.e. "the powers that be."). Again, easier said than done, but baby steps and all, baby steps.

Another part of that same twitter back/forth was the obvious revelation that all news is over-simplified in 95% of media outlets, but tackling the macro issue just isn't pragmatic; we can, I believe, focus on one small microcosm - business/finance/econ/etc - and make a difference.

If you've ever seen FT Alphaville's "Long Room," that's something what I envision. Only volunteer ("expert") members would have authorization to post on the blog, which itself would be moderated to some extent. "Yahoo's" would have the ability to view, just likely not to comment or post, while the media-members would likely have some ability to comment and/or respond.

Also, to clarify, the purpose is not to replace reporter/journalist's "sources"; if an individual volunteer/expert-member feels comfortable carrying on a personal relationship with a particular reporter that is his/her business and beyond the scope of this mission.

As I see it, the goal is to provide a service to match those who want/need to know (reporters, etc) with those who do (business professionals, academics, etc).

The other services I mentioned like keeping profiles/"ratings" of various media outlets I think would help boost the publicity of the effort. No one wants to be called out, especially by the industry they claim to cover, for being worse than their peers.

[Anal_yst]

@ Kid Dynamite

Obviously agree with all your points, and its been a goal of mine since University to expose all the various "money making" services as shams, but whatever, a fool and his money or something, right?

I do think though that business professionals have a vested interest in helping business reporters do much better than most do today. While it'll probably be a steep uphill battle to convince them, I think its a win-win situation, no?

[The Reformed Broker]

fantastic post

that said, are talking about correcting facts that people get wrong, or calling BS when someone has real facts but twisted them for their own purposes? It would be very refreshing to have a forum where one could call someone out for being disingenuous with actual facts

then, are we talking about policing people's opinions? thats much trickier...

The Reformed Broker

[thoth]

@ Anal_yst - your points make lots of sense. Ironically, when I got home last night my wife was watching CNN and they were running a special about the economy on Larry King Live (no idea why she was watching it). The guest experts were Ben Stein, Ali V (a CNN talking head on business I guess) and a radio talk show host named Ed Shultz. Incredible, no? I am sure millions of people are watching a talk show guy who has no background in the subject and thinking that he must be right if he's on CNN. Who cares what Shultz thinks about CDS (does he even know how they work)?

@ Reformed Banker - I agree that it could be considered policing opinions, but I consider it more putting a quality filter on the news. When Ed Shultz or Susie Orman become "experts", there is clearly a need for filtering. By the same token, I think a real debate between experts a la Anal_yst's website would be highly educational for the average person, because they might then get a better sense for how complicated the situation really is.

[Dave]

I like your proposals a lot and would be very happy to see some version of them implemented.

Allow me, however, to play devil's advocate: many of the media sources you cite are reeling from declining subscriptions/viewership, etc. They are instructed by their management to increase these numbers or at least keep them flat year over year.

Sensationalism sells. If it bleeds, it leads.

The irritating fact about people is that, on average, they do not want to think. They don't want to be presented with truly "fair and balanced" reporting because, as you suggest, the issues involved are extremely complex and hard to think about--even for those of us trained in finance or economics.

[The Reformed Broker]

dave and thoth, let's also keep in mind that most people dont watch programs like larry king or fox news to learn anything, the watch to have their preconceived notions and opinions CONFIRMED.

then when a pundit makes a more vivid or erudite argument for what they already believe, they can say to themselves, "you see! i knew it!"

so taking these people to task for propaganda and spin may not be as well received as it should be

[Anal_yst]

@ TRB, Dave, Thoth

All very good comments, unsurprisingly.

While I desperately hate, HATE the finger-pointing shame game, it seems to me one of the only ways to get these media outlets on-board. That is, we'd need to find/develop some sort of mechanism to get our message heard by many ears (eyes), such to the point where publishers/editors are actually afraid of being on our shit list.

I had a very educational and informative back-and-forth today with a well-known Financial journalist, who brought several items to my attention I hadn't spent much (if any) time/thought on when I wrote this post.

I'll get into the details at another time, but the million-dollar question, so-to-speak, is how the hell do we get anyone to give a crap what we say, especially when those with the greatest reach are more often than not the worst offenders (non-financial MSM, for example)?

This is still in the brainstorming stage, but frankly, I'd like to find a way to make this work, one way or another. I think there is no better time than the present to start, but quite clearly, there is much to be ironed out before then.

While I'd like to keep this discussion in the comments section here, I'm open to email, or potentially even in-person if there is enough interest.

[We Are Beyond Fucked]

Totally agree with Dave re: media. Let us remember why no average jo-schmo consumer pays for AP/Reuters related-news, but picks up the post/daily for the sensationalized details *with pictures!*. You'll never get "fair and balanced," just as you'll never enjoy plain yogurt.

Regarding a solution...I'm sorry, there is none. Our biggest problem right now is time. It takes time to wind down these assets, while not letting the banks crumble to the ground. It takes time to re-adjust real estate pricing without dropping it to it's actual level (causing absolute panic). It takes time to price most securities that have been floating through the system (in heavy rotation) for the last 12 years. We can let everything price at what it's worth (i.e., letting everything crumble), or we can *buy* time and let it occur gradually (hoping some new solution occurs).

*Please note I in no way, shape, or form support what our government has done thus far*

When we all realize most of everything was priced over 70% its actual value in the last decade, then we'll reach a bottom. Welcome to the new world where people like their reality spoon-fed to them via television sets with dance routines, singing auditions, and dating clusterfucks. You try telling the mortgage broker/RE IB/construction worker his/her job was a farce for the last 10 years. Try that.

[ExcessEC]

I think something like the non-profit LinkedIn-type database is in development over at Minyanville. The Minyanville Underground Railroad. It's in its early stages, and doesn't seem to be press-oriented, but if it takes off it could potentially be a platform for your vision.

[reverse cell phone lookup]

nice coments