Tag Archives: Commentary
by Chris Roush
Jason Zweig of The Wall Street Journal, who earlier this week won a Gerald Loeb Award for personal finance coverage, writes Friday about how he does his job.
Zweig writes, “But humans perceive reality in short bursts and streaks, making a long-term perspective almost impossible to sustain – and making most people prone to believing that every blip is the beginning of a durable opportunity.
“My role, therefore, is to bet on regression to the mean even as most investors, and financial journalists, are betting against it. I try to talk readers out of chasing whatever is hot and, instead, to think about investing in what is not hot. Instead of pandering to investors’ own worst tendencies, I try to push back. My role is also to remind them constantly that knowing what not to do is much more important than what to do. Approximately 99% of the time, the single most important thing investors should do is absolutely nothing.
“There’s no smugness or self-satisfaction in this sort of role. The competitive and psychological pressure to give bad advice is so intense, the demand to produce noise is so unremitting, that I often feel like a performer onstage before a hostile audience that is forever hissing and throwing rotten fruit at him. It’s hard for your head to swell when you spend so much of your time ducking.
“On the other hand, you can’t be a columnist for The Wall Street Journal without a thick skin. I have been called an ignoramus, an idiot and dozens of epithets unprintable in a family newspaper; accused of front-running or trading ahead of my own columns; assailed as being in the pockets of short-sellers betting against regular investors; described as being a close friend of a person I’ve never met in my entire life.”
Read more here.
by Loren Steffy
Perhaps the most stunning news to come from Jeff Skilling’s resentencing last week was that the fallen Enron executive had grown a salt-and-pepper beard. This wasn’t the shaggy face carpet that Ivan Boesky sported after years behind bars. Skilling — who has spent his time tutoring fellow inmates in Spanish and, rather disturbingly, business — has cultivated a respectable, close-cropped field of chin lettuce.
Skilling’s beard became top news on the Houston Chronicle’s web site, which teased the story with the headline: “See what Jeff Skilling looks like after six years in prison.”
Actually, he looks better than he did six years ago when his brother and wife drove him to the prison door in Waseca, Minn. I was there then, standing in a frozen corn field across a two-lane strip of black top as Skilling rolled up in a rental car. (In a touch of irony, he arrived at prison in a Jeep Liberty.) As a columnist for the Chronicle who had written extensively about Enron and the five-month trial that led to the convictions of Skilling and former Enron Chairman Ken Lay, the prison arrival was big news.
During the trial, the courtroom was packed daily with members of the national press corps. The overflow room where many of us watched the proceedings and blogged about them in real time was a crowed, frantic place in which dozens of reporters from around the world jockeyed to file stories, fought over electrical outlets and complained about the Wifi.
The Enron trial was one of the biggest business stories of the year, dealing with the consequences from the collapse of one of the country’s biggest corporations.
By comparison, Skilling’s resentencing seems a decidedly low key affair. I’m no longer working for the Chronicle, and I didn’t go to the hearing. Many of us who covered the trial are no longer in journalism, and even those who are found the culmination of the Enron story a non-event.
For one thing, Skilling’s endless appeals began to take on a dog-bites-man quality. For another, it was clear that his sentence would be reduced, and that the judge would probably do exactly what he did – shave a decade from Skilling’s prison term so that the former executive could be out in another four years or so.
But it isn’t just the predictability of the case or the slow decay of journalism that led to the disinterest. The world itself has moved on.
As I noted last week in my Forbes blog, Enron is a scandal from a different era, eclipsed by the far more egregious actions of Wall Street during the financial crisis.
Whatever lessons corporate America may have learned from Enron’s demise, they were lost on Wall Street, which used Enron as a test bed for some of the very financial shenanigans it later used to undermine the mortgage market.
Enron, for its legion of sins, was never too big to fail. Ken Lay’s unanswered calls to the Bush administration proved that.
But the mortgage machine – Wall Street, Fannie Mae, Freddie Mac, AIG and so forth – are far more deeply engrained in the monetary and political system.
In 2001, it seemed impossible that America’s seventh-largest company could implode in a few months. Today — after Bear Stearns, Lehman Brothers, Merrill Lynch, Countrywide and on and on – it seems almost commonplace. What’s more, unlike Skilling, the financial crisis came without legal consequence for the CEOs who orchestrated it.
As a legal story, Enron has become almost quaint. At the time, Skilling’s original 24-year sentence was welcomed by many who had suffered through Enron’s collapse. Now, his crimes pale compared with the unindicted conspiracy that took the world economy to the brink of the abyss.
Even in Houston, Skilling’s sentencing has become a loose end from an earlier time. The city has moved on, its economy soaring past its Enron-era heights, driven by the surge in domestic oil drilling. Enron is remembered the way you remember a particularly bad bout of pneumonia: it was painful at the time, but we’re doing better now, thanks.
It’s no wonder, then, that the media hoard had thinned for Skilling’s resentencing and that facial hair became the focal point of the story. Skilling, once the embodiment of all that was wrong with corporate America is today little more than a curiosity.
The waning interest in Skilling and the dwindling ranks of journalism raises a troubling question: By the time he gets out of prison in 2017, will there be any reporters there at all?
by Chris Roush
David Baines, who has had nearly 4,000 bylines in the Vancouver Sun in the past 25 years after working in banking, is retiring from the newspaper.
He says business editor Derrick Penner will be writing more about the investigative topics he covered.
Baines writes, “Over the past quarter century, The Sun has published 3,887 stories under my byline. Most of those stories are about people who, one way or another, tried to take unfair advantage of others. Having the voice to run interference with those people has been a great privilege and satisfaction for me.
“That all comes to an end today. When the Pacific Newspaper Group indicated it was willing to buy out employees, I put my hand up. I am 64 years old. It comes at a good time.
“Whenever I mention that I am retiring, people invariably say two things. The first is ‘congratulations.’ I am not sure why. I do not view retirement as slipping the surly bonds of servitude. Perhaps it is the mere fact that I have survived that many years without too many scars.”
Read more here.
by Chris Roush
Francesco Guerrera, the money & investing editor for The Wall Street Journal, posted the following announcement online on Thursday:
Today we’re excited to present the firs installment of a regular online column by one of the most distinguished voices in financial journalism, E.S. “Jim” Browning.
Jim’s column will provide MoneyBeat readers with a fresh take on market news, investing themes and financial analysis. It will offer insights from the investors and observers whose views you must know, placing developments in the broad context that only Jim can provide.
Few can match Jim’s depth and breadth of experience. He joined The Asian Wall Street Journal in Hong Kong in 1979. He was named Tokyo bureau chief for The Wall Street Journal in December 1983 and moved to Paris in 1986 as bureau chief for The Wall Street Journal Europe. Jim began writing for Money & Investing in February 1995 and has led our stock-market coverage.
Jim won an Overseas Press Club award for articles about U.S.-Japan trade tensions. He was one of a group of Journal reporters who were finalists for a 2009 Pulitzer Prize and who won the Institute for Political Journalism’s 2009 Excellence in Economics Reporting Award, for articles on the financial crisis. He has twice been a finalist for a Gerald Loeb Award.
Please join me in welcoming Jim to MoneyBeat and please let me know your thoughts.
During the last couple of weeks the number of headlines using the words crisis, scandal and shocker have increased tenfold. Political editors have had to dive deeply into their thesaurus’ to keep the text of one scandal story after another fresh for readers.
While I am no expert on governmental affairs or political public relations, the constant drumbeat of news has reminded me of times when a client finds itself in the media crosshairs.
These type of things can develop in all sorts of ways. The dreaded phone call from “60 Minutes,” a regulatory filing, a lawsuit, cops on the front door or even a facilities accident. What I want to emphasize here though, is that the type of crisis situation here has to do with something company did to itself. Company’s find themselves in crisis situations all the time for things that aren’t necessarily their fault. Handled well, these tend to fade fast. At the end of the day, the bottom line is that your client is thrust in the national spotlight and how you as the PR adviser help handle the next moves.
There are a number of different ways to approach a company’s communications approach in the midst of what I will call a “self-inflicted” crisis. The trick is that whatever prompted the initial news, the company recognizes that there is more to the story that has yet to come out. Most communications advisers would say that it’s best to just peal the band-aid off all at once and get all the news out so that the company can go back to operating the business. This is good advice, but it presupposes that corporate managers can know all that is lurking out there.
In many cases, the company may have a sense that more is going to come out, but simply can’t know what that information will be exactly. This is where the communications adviser needs to work closely with legal counsel to consider the next steps. The last thing any company wants is for news to drip out over time. A steady drumbeat of news can cripple a company as employees lose focus, outsiders ask more questions, regulators pay more attention and operating the business becomes harder and harder.
Therefore the focus needs to be to try and craft a credible communications approach that allows the company to put out as much information regarding the problem as possible, while also closing the door on the issue for some determined amount of time. This is typically done by launching an internal investigation (as likely should be in for good business practice) and telling reporters the company will not have a comment until that investigation is done.
Engaging with reporters from that point on should be focused on background conversations to update them as appropriate on news events, but also to use that outlet as an important way to gather information. As I mentioned above, company’s may not know all the dirt that is about to spill out and an important way to get ahead of this can be to work productively with the media.
At the end of the day, there is little a company can do in these situations to have a significant impact on the media attention brought on by “self-inflicted” wounds. The goal is to manage the situation so that the problem can be solved and the business can continue to operate.
by Chris Roush
Conor Friedersdorf of The Atlantic responds to “The American Pravda,” a provocative article by Ron Unz of The American Conservative that dissects why American media is so bad.
Here is the argument regarding business journalism, and Friedersdorf’s response:
Having described the failure of the press to uncover impending doom at Enron or Bernie Madoff’s hedge fund, Unz writes, “In many respects, the non-detection of these business frauds is far more alarming than failure to uncover governmental malfeasance. Politics is a partisan team sport, and it is easy to imagine Democrats or Republicans closing ranks and protecting their own, despite damage to society. Furthermore, success or failure in public policies is often ambiguous and subject to propagandistic spin. But investors in a fraudulent company lose their money and therefore have an enormous incentive to detect those risks, with the same being true for business journalists. If the media cannot be trusted to catch and report simple financial misconduct, its reliability on more politically charged matters will surely be lower.”
This is unpersuasive. As a matter of both law and prevailing norms, journalists have a lot more access to government officials and public information than to goings-on in most private enterprises. The typical journalist also understands the worlds of politics, policy, and government better than business or finance. And while almost every journalist would agree that furnishing the information a democracy needs to function is a core duty of the profession, it is unclear, at least to me, that saving wealthy New Yorkers from unscrupulous hedge-fund managers is something media outlets ought to develop a capacity to do better, even having failed. No one had a better incentive to detect the risks of investing with Madoff than his investors. If they couldn’t succeed in doing so, why would journalists be expected to do better?
Why would they prioritize trying?
As a public company that got its share of fawning profiles before its collapse, Enron is a much more damning example. It is still false to suggest that business journalists had as big an incentive to catch the fraud as investors. In fact, my sense is that business journalists generally have an incentive to cheerlead for “hot” companies rather than questioning their apparent success, which inevitably results in push-back from powerful actors and less access granted. (I am unfamiliar with the trade press, which may well perform a lot better on this metric.)
Read more here.
by Chris Roush
Dean Starkman of the Columbia Journalism Review has an excerpt from Ann Davis Vaughan, a former Wall Street Journal reporter that is a contribution to Ink Stained: Essays By the Columbia University Graduate Journalism Class of 1992, edited by JJ Hornblass, Michele Turk, and Tom Vogel. The book is self-published and on sale today at this link.
Vaughan writes about how the culture at The Journal has changed away from business journalism and away from investigative reporting.
I do not deny for a minute that the Journal is News Corp.’s paper to run, and that the business model must change for newspapers to survive. Good for them for trying. I also still believe the Journal is a quality business publication with terrific journalists, and it will continue to be one of the few papers with long-term staying power. But it is debatable whether subscribers to a flagship business newspaper like the Journal really want less financial and corporate news. Murdoch and Thomson love talking about how journalists at establishment papers feel entitled and presumptuous. I will concede this is sometimes true. But I would turn their point around: News Corp. feels entitled to ask highly skilled journalists to produce commodity journalism, in return for a relatively low salary in a dying industry.
If talented business journalists care at all about the long-term portability of their skills in a shrinking media world, succumbing to pack journalism in the crowded general news category is no way out. It makes senior, expensive reporters expendable. That was not the direction I wanted my career to be heading…
My career shift is not necessarily good for business journalism or Main Street investing. Increasingly, investors are paying investigative reporters like me to go digging exclusively on their behalf rather than publish our findings for a wider audience. But the exodus is inevitable as newspapers offer less space, time and money for investigative reporting. At least the investment world, which is infamous for missing red flags and failing to ask painfully obvious questions, is now getting more of it.
Read more here.
by Chris Roush
Dave Lieber, the consumer watchdog columnist for the Fort Worth Star-Telegram who was laid off after 20 years at the paper in January, has been hired by the Dallas Morning News.
Lieber’s inaugural column with the Morning News will be published on Friday, May 31. His column will run every Friday and Sunday.
“Dave has one of the most trusted voices in North Texas and our newsroom is honored to have him here,” said Bob Mong, editor of The Dallas Morning News, in a statement. “For 20 years, people in Tarrant County knew they had an advocate, someone in their corner to help them solve problems with business or government. We’re lucky to have him, and we think readers across the region will feel likewise.”
Lieber won the Will Rogers Humanitarian Award in 2002 from the National Society of Newspaper Columnists, for work that “best exemplifies the high ideals of the beloved philosopher-humorist who used his platform for the benefit of his fellow human beings.” Lieber is also a sought-after speaker, appearing in front of more than 100 audiences each year.
The Morning News, named Texas’ best newspaper by the Associated Press Managing Editors, added Mitchell Schnurman as a business columnist last year.
Read more here.
by Chris Roush
Thorold Barker, the Wall Street Journal editor who oversees coverage of Europe, the Middle East and Africa, sent out the following staff promotion on Monday:
I am delighted to announce that Simon Nixon is appointed Chief European Commentator of the Wall Street Journal.
High quality commentary and analysis is an increasingly vital part of our business. This is particularly true in Europe, as our readers try to make sense of the region’s debt crisis which continues to threaten the global economy. In his new role, Simon will write two major columns a week for all digital and European platforms, with at least one per week appearing in the U.S. paper. He will write blog posts and develop new digital initiatives, while also playing a leading role in building awareness of the WSJ brand in Europe.
Simon is well-qualified for this role. Through his own writing and his leadership of the London-based Heard on the Street team, Simon has established himself over the past four years as an incisive analytical voice on European issues. His weekly Agenda column is well read among senior business and finance executives as well as policymakers across Europe. Earlier this year, Simon was the only journalist for an English language publication short-listed for the best commentator award in the inaugural European Press Prize.
Before joining The Wall Street Journal in 2008, Simon was executive editor of Breakingviews.com, now the financial commentary arm of Thomson Reuters. Before that, he was City editor of The Week and a founding editor of MoneyWeek, now the U.K.’s leading retail investor magazine. Simon spent the first five years of his career working in investment banking. He has a first class degree in History from Trinity College, Cambridge.
Please join me in congratulating Simon on his new role.
by Chris Roush
Brett Arends of Marketwatch.com writes about the problems in the media, and includes one that is particularly an issue in financial journalism.
Arends writes, “In early 2007, when the subprime crisis first blew up, some executives at big mortgage lending companies were going around telling everyone that their companies were okay. But I reported at the time that several of these executives were also quietly dumping stock in their own companies as fast as they could. Six months later one of the companies had plunged into crisis and was sold off cheaply. The CEO was interviewed on TV about the industry. Not once — not once — did the big-name interviewer ask him about the way he had dumped his own stock.
“There’s a reason the interviewer didn’t ask that question. It wasn’t her job. She wasn’t paid to break news. She was paid to get what the TV crowd calls ‘the big ‘get.’’ In other words, she was paid to get access. Her job depends on getting the honchos to come on her show. And to get them to come on her show, she had to promise them — implicitly — an easy ride.
“A few years ago a Wall Street tycoon was so incensed by a plan to eliminate one of his tax loopholes that he invoked the memory of the Holocaust by comparison. He is still welcome on TV channels. He is still invited to give speeches at lucrative media conferences. That’s because he still has money and power, and the media cannot give up their access to him.
“No one who asks tough questions will ever get ‘access.’ And an increasingly powerless media needs access. Work out what will happen.”
Read more here.