Monthly Archives: September 2008
David Cay Johnston, the former New York Times busienss reporter, writes on The New Republic Web site that some recent media coverage of the markets borders on instilling fear in consumers.
Johnston writes, “Stock indexes matter in terms of percentage changes, not point changes, because the base changes all the time. How many points an index like the Dow or the broader Standard and Poor’s 500 went up or down compared to the day before, or over a week, or over another contracted time period is a legitimate measure when trying to figure out the short-term direction of the market. But when you are comparing it to trading from say 2001 or 1987 or 1929, counting points, instead of percentages, is absurd.
“My first thought when scanning the nightly news programs was that this was just another example of how journalists, broadly speaking, are innumerate and so errors pop up when it comes to numbers. But the subsequent words in the ABC and NBC reports made it clear that someone on the writing and producing staff knew just what they were doing. This was not an error; this was fear mongering.
“Williams, for example, reported in the first story segment that ‘stocks fell off a cliff, the largest single point drop in history.’ If someone knew enough to write ‘point drop,’ and later the correspondent Tom Costello used the right measure–the percentage drop–it suggests the writer of Williams’ intro was more interested in hype than sober facts.”
Read more here.
James Poniewozik of Time magazine writes Tuesday that the business media should shoulder some of the blame on the failure of the Congressional bailout to pass because of its inability to explain the gravity of the situation.
Poniewozik writes, “It’s not like the financial press has swept the story under the rug, certainly. But what we’ve generally seen are either dire â€” but very vague â€” warnings, or the general argument that, if credit dries up, that affects loans to businesses and little guys, and people start to lose jobs.
“That’s all well and good as far as it goes. But it doesn’t get to the question of degree. Businesses will be hurt â€” OK. But businesses are hurt in a lot of economic downturns, some of them mild, some of them so catastrophic they threaten our civilization. Which is this? How badly will business be hit? Like in a typical recession? Or like in 1929?
“That’s not a small consideration â€” especially when you’re looking at a $700 billion rescue package. If your mechanic tells you it will cost thousands to fix your car, you reasonably want to know: if I don’t make the repair, could I die? Or will the wheel just keep making a funny noise?
“Likewise: $700 billion to avert the collapse of the world economy and a new Great Depression? Sure. $700 billion to avert a recession? People are reasonably going to doubt that. Economies have recessions; you don’t necessarily go into hock and restructure the economy every time that happens.”
Read more here.
Jos Strupp of Editor & Publisher writes Tuesday that Washington Post executive editor Marcus Brauchli, previously the top editor at The Wall Street Journal, believes the business media provided ample warning to readers about the current economic upheaval.
Strupp writes, “‘There was a lot of coverage over many years about the underlying problems in the financial system and the economy,’ said Brauchli, who joined the Post just weeks ago after more than two decades at the Journal — including a year in the top editor’s post. ‘If you go back and look at the big American newspapers, you will see it, going back to 1996 when Alan Greenspan coined the phrase ‘irrational exuberance.”
“Brauchli’s comments come as several major financial institutions have either been taken over or filed for bankruptcy — along with Monday’s 777-point Dow Jones drop. Some observers have pointed to news outlets and asked if they properly covered the coming problems, while others wondered how much was predictable.
“‘There were good stories throughout, good stories about the risks,’ Brauchli added. ‘The truth is, there was always skeptical coverage by the major newspapers. The Washington Post, the Wall Street Journal, New York Times, Financial Times, all have written about these issues. The scale of derivatives, the rapid growth of unregulated, over-the-counter securities, the risk in financial institutions.’”
Read more here.
TALKING BIZ NEWS EXCLUSIVE
Joe Tartakoff has been named the new Microsoft reporter at the Seattle Post-Intelligencer, according to sources at the paper. He’s expected to start on Wednesday.
Tartakoff, who worked for the P-I as part of his Hearst fellowship, is leaving the fellowship early to take over the beat. He replaces Todd Bishop, who left the paper earlier this month to go work at the Puget Sound Business Journal.
A 2007 graduate of Harvard College, he was an executive editor at the Harvard Crimson and interned at the Miami Herald and the Palm Beach Post.
He worked as business and technology reporter at the Post-Intelligencer during his fellowship, launching a biotech blog. He lives on Capitol Hill with four plants and cares for undesired cats.
His fellowship then took him to the San Francisco Chronicle for a few weeks, until he got the Microsoft job.
Aaron Kremer launched RichmondBizSense.com at the beginning of the year, and he’s nowÂ reaching more than 1,300Â readers a day through his Web site and via an e-mail service.
A former intern on the Richmond Times-Dispatch business desk, Kremer attended graduate school at the University of North Carolina at Chapel Hill School of Journalism and Mass Communication for a year, but left without completing his degree. (Disclosure: Kremer is one of my former Business Reporting students.)
After freelancing for a while in the Richmond market, the Willamsburg native decided to launch his own Web site. It helped, he noted, that there was no business weekly in Richmond competing against the daily.
Kremer talked about launching a business news Web site with Talking Biz News. What follows is an edited transcript.
1. How did you first become interested in creating a local business news Web site?
I started writing for the business desk at the Times-Dispatch, the daily in Richmond. I wasnâ€™t there very long, but after my third month I had some ideas about how to make the weekly Metro Business section — which is supposed to imitate the weekly business magazine most other cities have –Â more dynamic. I told a few editors and they thought the ideas were good and told me to write a proposal. That sort of killed my mojo. Plus they didnâ€™t hire me on full-time. So then I was freelancing and still thought there wasnâ€™t enough business news coverage in town. I talked to one small business owner whom I trusted and she said a business news website was a great idea.
2. What went into the planning of the site?
It sort of developed ad hoc. At first I tried Word Press blog, but it didnâ€™t match what I had in mind. So I scrapped that and hired a web developer in April 2007 and started working on designs with him. We were both just doing it on the side, so it took a while. We launched that first version on Jan. 1, 2008. I quit freelancing a few months later except for a few stories for Virginia Business magazine.
3. What features did you decide were most important?
The idea is to be the homepage for business news, which means ideally our readers donâ€™t have to go anywhere else. Step one was to provide a solid newsfeed of all the stories from around the web that a Richmond business professional ought to know. I donâ€™t use RSS. Instead I check all the sites every morning. Weâ€™ve gotten loads of compliments from readers who say they like having a personal guide for what stories to read from Inc. or the Washington Post, or the open part of the Wall Street Journal.
But weâ€™re not just an aggregator. We also write the sort of local stories readers need. At first I was writing lengthy business features intended for business owners and entrepreneurs, but I quickly realized the content had to address running a business in Richmond with more actionable news. As much as possible we try to do so in an entertaining way. Weâ€™re publishing around 3 stories a day now.
4. How did you find funding?
I spent almost every penny I have. I didnâ€™t intend to put so much into it, but I didnâ€™t want to pull the plug, either. I also have a few side contracts that I work on that I use to help funnel money into the business. The good news is weâ€™re just working out the final kinks now for a private investor. I met him while I was still writing for the Times-Dispatch.
When I started an LLC, he gave me some quick advice and told me to write a business plan and come talk to him again if I needed money. I did, but he couldnâ€™t find any Richmonders who wanted to invest, so he invested. Itâ€™s not much, but it should keep us alive for one more year. Iâ€™d like to do another round of funding and partner with an established business media company that can bring in some of the sales expertise.
5. Your site has advertising. How did you first attract advertisers?
By giving it away free as long as the company provided a really attractive ad. Now we have a for-real rate card. We charge significantly less than anyone else in town, so some of the established companies have trouble saying no. That gives us some street cred, so to speak, and in six months the idea is to go back to them with solid stats and prove what a great buy it is.
But lining up advertisers is still a challenge. Itâ€™s not an easy product to sell. Thatâ€™s why we built a pay-for-placement business wire. Thatâ€™s a lot easier to sell because companies can see all the people who read their story, and itâ€™s cost effective. We funnel those funds into the news operation.
6. So, when did you launch, and what were the kinks at the beginning?
We launched Jan. 1, 2008. I felt weird freelancing for the paperÂ and trying to build a competing product. The website itself was also a huge kink. Each version of the website is also like a haunted house. You know itâ€™s creaky and scary, but you try to just look straight ahead. (more…)
CNBC “Mad Money” host Jim Cramer apologized on his show Monday night for recommending Wachovia stock and for comments made two weeks ago by company CEO Robert Steel, who said everything was fine with the bank, writes Andrew Ross Sorkin of the New York Times.
Sorkin writes, “It didnâ€™t help that Mr. Cramer later told his TV audience to buy Wachovia, calling it one of only a few potential ‘winners’ in the $700 billion bailout being proposed, and said that Mr. Steelâ€™s background as the former Treasury under secretary meant he had ‘a better handle on how this process works than anyone else.’
“On Mr. Cramerâ€™s show Monday night, he spent an entire segment apologizing to his viewers about having Mr. Steel on the program and for his own bullish call on Wachoviaâ€™s stock. ‘I screwed up,’ he said, referring at one point to Mr. Steel as a friend for 25 years. ‘I believed in the guy. Did he take advantage of me? Perhaps yes.’
“A spokeswoman for Mr. Steel defended his appearance, saying, ‘The environment we were operating in dramatically changed’ between then and now. She added, ‘If you look at his comments, he tempered them by saying ‘We always do whatâ€™s right for shareholders.” In fairness, sheâ€™s right about that. Mr. Steel said on the same program that, ‘Weâ€™re a public company. So weâ€™re going to do whatâ€™s right for shareholders, I can promise you that.’ And at times, he seemed to show some self-restraint, resisting talking directly about Wachovia, instead spending much of the program talking in generalities about the troubles in the market.”
Read more here.
Brimelow writes, “How did I become rich and famous while toiling as a wage slave in the impecunious trade of financial journalism? When my grandchildren ask this question, I will be able to reply: by writing two articles that prevented the financial meltdown, and likely recession, of 2008.
“I really did co-write the first one, for Forbes magazine on Jan. 4, 1993. The Federal Reserve Bank of Boston had just published a study purporting to prove definitively that mortgage lenders were discriminating against minorities, the hot cause of the day.
“But when my brilliant co-author, Leslie Spencer, asked the Boston Fed’s research director, Alicia H. Munnell, what minority default rates were, she said proudly that census tract data showed that they were equal to whites. When Leslie pointed out that this actually proved there was no discrimination, because the lenders had somehow weeded out the credit risks down to the same acceptable level, Munnell was dumbfounded and had to concede (on tape) that she did not, in fact, have definitive proof of discrimination at all.
“We had discovered a fundamental technical flaw. We sat back and waited for our Pulitzer Prizes.”
Read more here.
Stephanie Smith of Women’s Wear Daily talked to Andrew Ross Sorkin of the New York Times about his plans to write a book on the current Wall Street turmoil.
Smith writes, “In Sorkinâ€™s case, he admits ‘the hardest part about this book is to figure out where the story begins and where it ends. Itâ€™s still a moving target and weâ€™re still seeing how it plays out,’ he told WWD in a 10 p.m. interview Thursday, just after he filed the breaking news of J.P. Morgan Chase buying the assets of Washington Mutual, a firm now considered to be the largest bank failure in U.S. history.
“At the least, Sorkin knew two weeks ago there was enough drama in the news for a longer form treatment. ‘There was a momentâ€¦where I remember going home at about 2 a.m. and Lehman had gone bankrupt, Merrill Lynch had just been sold to Bank of America and AIG was on the precipice of bankruptcy. And I remember thinking, Holy s–t this is a book, or a movie or something.’ It wasnâ€™t until last Monday that he ‘got remotely serious’ about putting pen to paper, though. His proposal, Sorkin described, ‘was pages, it wasnâ€™t really much of a proposal. A couple of scenes, a sense of characterâ€¦[enough to] give a sense that there are rich characters and plot points that can be [flushed out].’ Sorkin said heâ€™d be writing the book himself, but didnâ€™t say if heâ€™d be taking time off from daily reporting to complete it.”
Read more here.
Dean Starkman of the Columbia Journalism Review writes that with the current upheaval on Wall Street and the business world, there are now 10 fundamentals that the business press must understand and address.
Here are a few:
1. Your beat just blew up.
From a journalistic standpoint, what we are experiencing today is the equivalent of the city hall reporter arriving for work one day to find the mayor and city council being led out in handcuffs. If the business press were, say, a nuclear industry reporter, this is having most of the reactors on your beat melting down to China. What to tell the boss?
The business press purports to cover business and nothing so closely as it does Wall Street. This is the area business reporters claim to understand. This knowledge is what separates a business reporter from other kinds of reporters. It is why there is a business press. So the beat covered by many publications and thousands of reporters and editors has collapsed.
2. To say, â€œyour beat just blew upâ€? is not to assign blame. It isnâ€™t the end of the discussion but only the beginning.
Read more here.
The San Francisco Chronicle will launch a new business column called “The Bottom Line” next week that will run Monday through Friday.
The writer will be Andrew S. Ross, currently interactive editor at the paper who has also contributed to the paper’s Tech Chronicles blog.
“Our goal is to make The Bottom Line must-reading for anyone doing business in the Bay Area,” said business editor Alan Saracevic in an e-mail. “It will be an items column, driven by news featuring people and companies in the Bay Area’s wildly diverse business community.”
Ross has also been the Chronicle’s executive foreign & national editor since 2001. Prior to joining the Chronicle, Ross was a co-founder of the award-winning web site Salon.com, held a variety of editorial positions at the Hearst-owned San Francisco Examiner and at public and commercial radio and television stations; and has reported from, among other places, the Middle East, Mexico and Central America, Eastern Europe and Northern Ireland.
In addition to writing and reporting on economic-related issues, his own business experience includes serving as executive vice president for business development at Salon, and heading his own advertising and public relations agency.