13 March 2009


Thank you John Stewart for tearing Jim Cramer a new one on your show last night. You made it personal, which was just fine with me, but at the same time you made it clear that Cramer was simply one symptom of the much larger problem with the financial media.

The title of this blog is from a quote that is attributed to H.L. Mencken about the proper role of journalism: "To afflict the comfortable and comfort the afflicted." That is something that far too few journalists, and I think especially business and finance journalists, take to heart.

I ought to know. I was one. I did take Mencken's quote to heart, but it wasn't easy.

Too often, reporters are bullied, seduced or bribed into trading accuracy for access.

"You want an interview? Stick to the script or it's the last one you'll get."

Or: "Hey," says the CEO of a hedge fund to the lowly financial reporter (sounding like a spider to a fly), "I'm playing a round of golf with the CFO of this widget maker and the Chairman of a bank, we could use a fourth. All off the record, of course, just us boys."

Or: "Sure, I'll send you the financials from the company you're interested in. While I'm at it, I know you're not reporting on this other company, but I'll throw in a report on them as well. You might find it interesting." (Or lucrative if you can tell yourself, as a reporter, that it's okay to trade on information on a stock that you aren't covering. Where's the conflict of interest in that?)

Financial reporters all too often like to think of themselves as movers and shakers in the financial markets. And they can be; people trade on information. When traders buy and sell shares, they aren't trading in hot dogs or corn or industrial fasteners; they're trading in information and speculation (sometimes called "analysis") about those things. You can own millions of shares of McDonald's, but if you want a Big Mac you'll still have to head down to your local outlet with cash in hand.

Financial and business reporters supply much of the currency (information) that most people trade in the financial markets. And that currency is more or less valuable depending on how accurate it is. When accuracy is traded for access, when skepticism and unflinching analysis are put aside so that journalists can enjoy a round of golf and drinks with the chairman of the board, sooner or later the markets suffer.

Skepticism and independence are the two most important tools in a reporter's pencil case. When a reporter is in bed with their beat, when they think they're part of the industry they're covering, they are not doing their job. That's what is wrong with Jim Cramer and with most of the other so-called "financial reporters and commentators" on TV. If they did some of what they do, and were employed by the companies they talk about, it would be illegal.

The purpose of a free press isn't merely to entertain us; it's to protect us. The skepticism of the press, brutally applied from time to time, is our first line of defense against corruption, venality, stupidity, thuggery, criminality and whatever else you can think of that you might want to be defended from. Unlike criminal proceedings where the defendant is considered innocent until proven guilty, any good journalist should take the opposite approach.

It isn't easy. It means sometimes that a good reporter will need to find creative and difficult ways to get around the bullying, seduction or bribery put in their way.

Sometimes it means playing tough: "If you won't talk honestly with me, all I can do is figure you've got something to hide and I'll rip you and your company apart until I find out what it is."

Sometimes it means seeming rude: "You're a nice guy, really, I like you, I do, but I'm not going to let that get in the way of my trying to find out why these numbers of yours don't add up, or why they seem too good to be true."

And sometimes it requires recognizing when a bribe is a bribe: "Hah, this dude sent me some inside dope on a great stock buy, hoping I'll overlook some of the sleazy stuff I suspect about his company. Into the trash it goes."

Real journalism isn't for sissies. Jim Cramer and other buffoons of his ilk aren't journalists. They're not analysts. They're not even really any sort of honest commentators. Thankfully we've got a comedian around to call them onto the carpet.

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