Extra! Finance journalists confess some of their sins

Eventually business journalists are beginning to confess
in larger numbers their sins. In the USA. Lets hope
this serves as a good example for European journalists
and gets them to do likewise. The newspaper crisis has positive
side - effects after all.

The financial crisis, all those tremendous losses in the
banking sector would not have been possible without
the media acting as cheerleaders, hyping up all nonsense,
acting as gatekeepers - those that select and decide what
the general public needs to know and what not. An activity
which seems harmless, almost unnoticeable, it's just omissions
and seeming desinterest in certain matters and stories, but
which has disastrous consequences later on. When an
investor in the worst case finds the office of an investment
firm simply closed because it folded.

The Colorado Independent broke the story (it was also
on the Huffington Post):
Business Journalists Confess ...

For visistors interested in looking back: a pretty popular
video that is posted on this blog under "Crisis bunch". It
consists of three news shows on TV in the US in 06 / 07
and provides a convenient flashback of what the pundits
said and recommended on TV.
(And is reposted here again):
Peter Schiff ...

Update:
Readers for whom the media crisis is not the end of the
world or even expect something good out of that might
be pleased with Jack Shafer's:
Life After Newspapers
an article in which he describes the newspaper strike in
New York in 1962 / 63. It quite funny to read.

And as good news can also this opinion poll / survey be
regarded according to which lots of Americans blame
ad agencies and the media as complicit in the financial
crisis. That's obviously the rather prudent folks who seem
to be in mood to change their media consumption, what
they have money for according to their experience and
knowledge.
Americans blame ad agencies ...

It would be interesting what results a similarly sensitiv
and rather intelligent poll conducted here in Europe come
up with.

Songs that became suddenly hits in the 60's

Susan Boyle and Paul Pott are not the first to have
overnight success. A really cheerful story was told
two years ago by Michelle Phillips, member of the 60's
band The Mamas and Papas and a couple of then
practically unknown artists became a success after
participating in a festival in Monterey, California.
A festival that was also unique the way it was set up,
an idea that seemed impossible to realize at first.

Michelle Phillips told that little story in the Huffington
Post: Mods And Rockers Festival: California Dreaming ...

Hit number one of the day:
Scott Mackenzie: San Francisco

And here one later hit of the then largely unknown, a
random choice:
The Who: Baba O'Riley

Susan Boyle and Paul Potts may be different in their
appearance, look different, but what they have all in
common is talent. They all can sing.

Newspaper rants about Google. And "Oh Shit"

Media people have somehow asked for it. And they
got it now. A brilliant response from Danny Sullivan
from Search Engine Land. It really is a funny and
inspired essay.
Silicon Alley Insider introduced his essay to a wider
audience. hence the link here:
Search Guru Tells Newspapers ...

In the mood for some more laughs about the
newspaper industry?
Henry Blodget wrote a funny article a longer
time ago that is still not old, quite to the contrary.
He elaborated his way on the advertising revenue
of the newspaper industry and what is going to
happen (in the USA):
$ 42 billion up for grabs ...

For those not receiving pay checks from advertising
or newspapers, the newspaper (and media) crisis
includes some good news. For instance the end to
the often highly problematic financial / bank
advertising that was paving the way into all this
financial crisis. Not to mention a lot of other sins and
bad habits.

Paparazzi turning cameras to scandal bankers. A good idea, after all

The paparazzi and some tabloid media might do some
really good after all if one looks at what a very solid and
well-run investment firm, who have understandably no
sympathy whatsoever for crooked bankers and their
practices, have to say.

It began in the USA that the paparazzi and some tabloid
media turned their attention to the overpaid scandal
bankers. The Huffington Post recently pointed this out
and linked to an article in the NYT about that subject:
Paparazzi turn cameras on CEO's
And meantime this idea has caught on in the UK as well
as the Guardian reports:
Rich pickings

It might be be a good thing if this interest of paparazzis
would extent to other countries as well. It's actually quite
likely for many reasons.

And from the tabloid interest in these fat cats we come to
Greycourt & Co., a financial services adviser with lots of
experience in the financial and money market business.
They know what they are talking about. While Greycourt
focus on rather wealthy clients, what they have to say and
the insight they give in the linked - to white paper here is
basically recommended reading for poor poets, a working
poor person just the same as this paper certainly is of
interest to not so poor persons.
They could not have been much more outspoken in the
context of a white paper, providing a proper insight into
the fraudulent practices that evolved over the years and
which are far more serious in their consequences, the
problems created than one might assume. One is getting
used too easily to this mess and softballing. Time is well
spent on this nineteen pages.
Greycourt & Co.:
The Financial Crisis and the Collapse of Ethical Behavior

After being properly briefed by Greycourt's paper the
new found interest of the paparazzis is probably seen a
bit different as well. As highly necessary, probably. Apart
from adding some colour to such dry stuff, maybe even a
bit of crime, sex and money. Their attention is really
necessary because it not just takes away some unresolved
frustration, they shed by coincidence light on matters
which are existential.

They might by coincidence be of some help to take a look
who is on the board of directors of publicly traded companies,
particularly banks. Not that this requires a lot of research.
Investors have been a bit negligent over the years, didn't care
much about those board members who clearly failed in their
duty to excerise their control, their obligation of oversight
of what is going in a bank, for instance.
Here the general description by Wikipedia of the "boards",
their various funtions, what they are supposed to be there
for.
Right now the bonuses are the outrage, the big themes.
That's just part of the story. Who was responsible for these
bonuses? The "boards". And not just that, they were also
great in their failure to exercise control when things got
- and still deteriorate further. Right now "everybody" on
these boards, including politicians, excel with "didn't know",
"nobody knew, could have seen it coming" and so forth. And
so those board members in banks have the same brilliant
explanation.

And this why a bit tabloid - like attention would shed light
into a corner hitherto unfortunately neglected. If for instance
some such media would have the idea to come up with names
and faces, placating them as the ones responsible for whatever
this would be the spanner in the works. All magic and
mysterious power all too often ascribed would vanish like
morning mist in sunlight.

Let's also hope that those tabloid media digging in such
matters are not regarding people in general just as stupid.
Being not familiar with one or the other subject does not
mean a person is stupid per se. They could just as well
provide some upgrading, some learning, for the general
public.

As we see, upgrading on some basci corparate law and
structure, to name just one theme, is basically damn easy,
no big deal at
all.

The newspaper crisis: very easy to explain

The crisis and occasional closures of newspapers in the USA
and here in Europe can, from an ironic perspective, be explained
very easily, summarized to: circulation down and ad rates up.
Just recently the Rocky Mountain News in Colorado shut down
and staged the end pretty media - typical, as not many other
businesses going bust would do.

In 2004 an article appeared in a biz - journal, written by Amy
Bryer, who told of the falling circulation of the two Denver dailies,
the RMN included, that was down by 11,6 % while ad rates at
both papers were increased by 189%. This article made inter-
esting and lucid reading and got noticed also here in Europe,
inlcuding the editorsweblog.

Ever since then some sort of drama, a ratrace took place. Two
opposite strategies were pursued. The one by the more serious
ad professionals, business and tax consultants who know of the
pitfalls of advertising and ad expenses. And of course business
managers, etc. themselves who calculated and decided different
from how the media would want.
The media increased their efforts to get as much ad revenue as
possible. The efforts of ad sales reps were obviously intensified
as much as possible. And all over the place they all had the same
instrumtent: the forecasts of national as well as the global media
consumption and ad expenditures. Both were rising steadily and
permanently, like in this one by the WAN.

That was their tool, mass psychology and instrument of
persuasion at the same time. And that was the only, the
absolutely true, the holy, the only legal and anyhow best possible
criteria for businesses on which to base their advertising
expenditures.
The media would not know any other criteria for ad spending
than that. And would make sure no one has any other ideas in
this universe.

For a long time advertising increased like the arms race decades
ago. It was often merely to make more noise than the others.
Consumers on the other hand were not so enthusiasitic, would
all the time long not have minded somewhat less of that.

Convinced that the whole world decides and spends like told on
ads, some businesses spent like that. For a longer time they
were pretty careless and complacent about that. But only to some
extent. Basically it was clear that it was an unsustainable
situation that would come to an end eventually. The Denver
papers are surely more extreme cases of ad expenses getting
too expensive. But similar pricing strategies can certainly be
found in Europe as well. Usually it is small businesses getting the
worst deals.

For a long time printing a newspaper was considered to be some-
thing like a licence for printing money. In the USA this was more
openly talked, even bragged about, while high - earning papers
in Europe were more discreet about that. The media are not that
holy or very good people when it comes to their revenue. It is
widely known that they are fleecing their clients.

Critical investors consider newspapers risky since a longer time.
Their pricing strategy, revenue policy made it all too clear. The
share prices of newspapers have declined dramatically over the
last two years. A sure bet for short sellers. Bets that were
confirmed time and again.

The unsustainablility of advertising expenses was brought to
a climax last Christmas. For instance, both in New York, USA
and Londong, UK, shops began selling at discount prices weeks
before Christmas. Even the luxury segment had to sell at
discounted prices. A page in the New York Times costs about
$140 000,- (superficial research). A page in The Times, UK,
(circ. 1,2 million) goes up to £ 98 700,-
A page in the Irish Times (circ. 105 000) goes up to about
Euro 32 000,-, in the property even over 34 000,-. That's
(examples of) ad expenses which were splashed out rather
easily as long as people were on the spending spree, before the
credit bubble burst. But such expenses weigh heavy on shops
when the going gets tough and they have to discount prices.
Then even ten or twenty percent of former ad spending burns
a hole in the pockets of firms.

It is further possible to take a critical look at the role of the
media in the years leading to this financial / economic problems.
What Danny Schechter writes about the US media is just as
valid for European media.

Now the media companies, newspapers first of all, have to
face the music, are having the "blues". Here a look at the
stock market of a few, just as examples.
New York Times, NYT, News Corp, NWSA, or INM,
owner of, among others, the Irish Independent.

When the outgoing media threaten with doomsday scenarios,
no life on earth without them, the end of democracy and what-
ever, new media inreasingly come up. And this is probably
continuing. The more old media go out of business, the more
chances and opportunities there are for new start-ups. And
probably doing a much better job than the current ones,
even if it is just something nice centred on crosswords, sports,
recipes, etc. And also journalists are likely to find new chances
in maybe even better circumstances than now.
Intellectual sincerity is most likelyan important criteria for the
future. Not much chances for manipulators, people without any
critical reflection of media drivel, rather problematic money
and finance advising, and so forth.

The crisis. The growing unpopularity of pundits on TV and a popular video with Peter Schiff

While many people still have a fresh memory of the
many wrong predictions on TV, the same awful pundits
now recession experts, the video with Peter Schiff seems
to come in handy. Simply being a re-run of three news-
shows in 06 / 07 with awfully wrong predictions, it helps
to restore the memory and meeting a certain need of
criticism at the same time.
By now it obviously gets popular with people otherwise
not interested in stock markets and things like that, often
people who have figured out problems in good time and
who just want to see their suspicions confirmed.

If somebody had the means and would care to put together
viral videos of financial news shows here in Europe, the
results would be pretty much the same. What was said
and predicted by the money experts, bankers and pundits
in 06 / 07 was not different at all.

Here it is again (it is the second posting of it on this blog):
Peter Schiff was right

and, fitting to that (also a repost): where comedian Bill Maher
asks much later on Art Laffer, one of the guys making those
really wrong predictions, about the one cent bet with Peter
Schiff. For a laugh:
Bill Maher questioning Art Laffer

In case of interest, and not if fully informed about the matter:
the media are finding themselves increasingly in a crisis, have
problems to make ends meet. There are lots of complaints to
be heard from their side about decling ad revenue, for instance.
And somehow they seem to have lost some favour with the
general public.

May 7: (update) coming soon on this blog:

bookreviews and author introduction:
two finance / money historians:

Charles R. Geisst, auhtor of a several books, including the
History of Wall Street, and his book "Undue Influence",
80 years of Wall Street lobbying ( very hot topic right now,
righfully so)
for a first glimpse:
Undue Influence

Niall Ferguson, author or a couple of books,
here for a first glimpse (if unknow)a visit to his site:
Niall Ferguson

Update:
Peter Schiff was guest in The Daily Show / Comedy Central
with Jon Stewart. Here's a clip, not the best quality but the
only available right now.
Peter Schiff guest of Jon Stewart

Novel and movie inspiring aspects of Madoff scam

Bits of the Madoff scam could be the basis for novels
and films set almost anywhere. Bank Medici in Vienna,
Austria, and the "Austrian woman", Sonja Kohn, who
was active in selling Madoff related funds. And now
she might be in danger of duped investors. An article
in the NYT points at the possible physical danger from
Russian oligarchs who belong to this group. Sonja Kohn
managed to find investors even among Arab investors.
If all that doesn't make up some good background for
novelists or financial thriller writers!
Austrian Woman Who gathered ...

Vienna was the location for what became a classical
movie: The Third Man, shot right after the war, released
in 1949. This movie, it was based on reality, dealt with
gangs dealing with, among other, pharmaceuticals that
got streched to make more profit and thus got letal,
killing children.

What made The Third Man really famous was the
film music. Here a clip with the Zither player Anton Karas
with shots included from the movie. Maybe something for
inspiration, to get a feeling for novels, a bit of scenic drama and
people, characters. A 7 minute trailer, without showing
Anton Karas: here.
Every country offers it own opportunities for movie directors
and novelists.

The story of the movie is nicely told on Wikipedia.

Update: A movie is coming out:
Timely Hollywood thriller sheds light on shady banks