economics

Biz Journalists To Profit On Panic

Ryan Tate · 09/24/08 01:41AM

For all the bloodletting on Wall Street, the financial services meltdown will probably mean handsome profits for at least some finance hacks. The troubles have to actually end before anyone has a shot at writing a popular book about them, but smart writers and publishers are already hunting. Andrew Ross Sorkin at the Times and Roger Lowenstein of the Wall Street Journal are "considering" writing books, according to the Observer, while Newsweek's Daniel Gross is raring to go with a quickie electronic title he's ready to finish in two months flat. The most leveraged proposal (if you will) comes from Bethany "Enron" McLean of Fortune and Times columnist Joe Nocera, who basically drank until they worked up the nerve to demand a million bucks for their definitive insights:

Ivy Leaguers Bitterly Regret Investment Banking Careers

Ryan Tate · 09/23/08 11:26PM

IvyGate has discovered another great way to cover the banking armageddon: Quoting whiny would-be plutocrats who thought their pedigrees would make them fabulously wealthy on Wall Street but now can't even pull down seven lousy figures a year. Instead of becoming Big Swinging Dicks in i-banking, they find themselves working for (*shudder*) retail bankers and — oh God it gets worse — the government. That's right, when you take subsidized government cash to stay in business dumping government-backed mortgages on the government at prices inflated with government money, you're not a capitalist raider anymore, you're a bureaucrat with a salary cap. As you can imagine, this has Harvard grads sounding as bitter as furloughed, Hillary Clinton-voting factory workers in the rust belt:

Newspapers Soft-Pedal $700 Billion Bailout

Ryan Tate · 09/23/08 04:35AM

What does it take to get American editorial pages honest-to-God riled up about something? In addition to the expected criticism from the left, Hank Paulson's $700 billion bank bailout has been savaged by no less a conservative than Newt Gingrich, who wrote, "we’re using the taxpayers’ money to hire people to save their friends with even more taxpayer money." Among the more strenuous Congressional opponents is the Republican senator from Alabama who chairs the Senate banking committee and said he worries the bailout "is neither workable nor comprehensive despite its enormous price tag." The Monday plunge in the dollar and U.S. stocks was widely seen as rendering judgement on the cost and effectiveness of the plan, unveiled over the weekend. And yet, save for some quibbling about oversight, the Times' Tuesday editorial on the matter treats the bailout as a given:

The Decline Of New York (Again)

Ryan Tate · 09/23/08 01:05AM

Even before the Wall Street meltdown, New York's traditional media and advertising companies faced serious sales declines as internet competitors, including West Coast companies like Google, ate into margins. With financial services in freefall, a second pillar of the city economy has seriously weakened. Cue the Gotham press' anxious soul-searching and visions of a return to the weary days of the 1970s. "It's going to be very severe for New York City," a Manhattan College finance professor said in Tuesday morning's Times. New York magazined mused in this week's issue about the global financial center shifting from Wall Street to London, Dubai and Hong Kong, "like the decline of New York’s manufacturing base in the seventies." And the New Yorker is already racing to find the upside of financial armageddon, which as you know turns out to be creative ferment:

The Last Hope Of Finance Companies: Spin

Hamilton Nolan · 09/22/08 10:34AM

As Wall Street burns and the government plunders our tax dollars to uphold the mere appearance of economic stability, financial companies are turning to their most trusted advisers for answers: ad agencies. Because when shit is really fucked up, the only way to take advantage of the situation is to convince the public that you are slightly less fucked up than all your competitors. After the jump, we look at what some financial companies are saying right now—and then tell you what they should be saying, if only they weren't scared of, you know, total ruin: Zurich Financial Services Group Aim: "wanted to directly address the recent economic turmoil." What they say: The company is "here to give you real help in an uncertain world, backed by the financial strength and stability of the Zurich American Insurance Company...It's help that's here now." What they should say: "What with the recent economic turmoil, why not go with Zurich? It's named after a city that's not in America, where everything is going to hell." Rockefeller & Company Aim: Reassure people they're stable. What they say: "Responsible and stable wealth management through turbulent times." What they should say: "Rockefeller stands for Rich. And that will never change, yo." Wachovia Securities Aim: Get people to invest again. What they say: "Think long term." What they should say: "Don't be a pussy." AXA Equitable Aim: Reassure people they're stable. What they say: "In these chaotic times, there is a financial services company dedicated to redefining commitment." (WTF?) What they should say: "Yes, we have a 3-letter name that starts with "A." But we're not AIG. Look it up." AIG Aim: To slink away quietly. What they say: Nothing, since they pulled their ads. What they should say: "Nothing" seems to be the right move. [NYT, WSJ]

Press Coddles Banks With Pulled Punches

Ryan Tate · 09/22/08 07:41AM

In July, when Richard Fuld was blaming rumormongers and short-sellers for troubles as Lehman Brothers, the Times ran a column by finance writer Andrew Ross Sorkin echoing his complaints and calling one of the rumors, that Barclays would acquire Lehman, "absurd." Today, with Barclays buying Lehman's U.S. operations, the Times is still siding with investment banks over investors, depositors and others who benefit from the free flow of information. Here's some data the paper won't be providing about the mess on Wall Street, according to an article it published today:

'The End Of Wall Street'

Ryan Tate · 09/21/08 09:11PM

The Federal Reserve announced the conversion of the last two independent investment banks into bank holding companies. The change means Goldman Sachs and Morgan Stanley can borrow money from the Federal Reserve past January but will be more tightly regulated and must hold larger capital reserves. As the Wall Street Journal dramatically put it:

Rupert Murdoch Thinks Obama is 'Naive' on Economy, But Loves Genius Sarah Palin

ian spiegelman · 09/20/08 11:55AM

Media gargoyle Rupert Murdoch is savvy enough to run News Corp.—one of earth's premiere evil empires—like one of your more aggressive 19th Century robber barons, and he's savvy enough to pretend that he's in favor of government oversight when that's the thing that obscenely rich people have to say. Despite the fact that Murdoch hates any kind of regulation almost as much as he hates sunlight, he went on his zero-credibility Fox Business Network network to half-heartedly support horror-eyed Veep hopeful Sarah Palin's equally half-hearted calls for increased government regulation of the nation's financial institutions. “I think they have been sending out different signals, but I think what she says is right," he said. "Clearly, there has to be some more regulation, but we have to be careful what that is. It could make things a lot worse. The more you get the politicians in that don't know the first thing about banking, even less than me, and God knows what might come out of it.” As for Barack Obama's calls for regulation? Well, he's just being silly. "[H]is policy of anti-globalization, protectionism, is going to be—and card checks—are going to do two or three things. It's going to give us a lot of inflation. They're going to ruin our relationships with the rest of the world. And they are going to slow down the rest of the world, too. And they're going to make people frightened to add to employment. You are going to find companies leaving this country if it's—if you put a protectionist wall around it. You're going to get—his policy is really very, very naive, old-fashioned, 1960s." [THRFeed]

Dartmouth professor says economic crisis is all the Valley's fault

Jackson West · 09/19/08 12:00PM

Dartmouth professor John Vogel, who specializes in real estate at the Tuck School of Business, explains that the fad for mortgage-backed securities among investors really kicked off after the postmillennial dot-bomb. Everyone wanted the kind of blockbuster returns they got during the technology IPO glory days. In other words, it's all your fault, Valley, for creating unrealistic expectations — don't blame Wall Street's greed.

The Financial Crisis, In 15 Easy Links

Moe · 09/18/08 01:49PM

Dude, you cannot ignore this anymore.* We are screwed. Oh my god, really really screwed. China is screwed. For Chrissakes, Russia is screwed. Investors are so panicked they are paying the government interest for the privilege of buying their T-bills just to get the hell out of the market. Wait, really? Yeah really. Says Fed Chairman Ben Bernanke "We have lost control." Unemployment claims have already started flooding in. What's next? What's a "naked short"? Is it still cool to detest investment bankers? We scoured the internet for a preliminary syllabus.Can I really figure out the crisis on the internet? Okay, so not really. On Tuesday Slate's new business site The Big Money posted a story on the next dominoes. Morgan Stanley was not even listed. Morgan Stanley was not listed because no one was talking about Morgan Stanley failing on Monday. Well that was all the way back then, and this is now. So yeah, no one writing on the internet really has a handle on what's happening, but that is why it is so important to figure out who can at least tell you what just happened. In that vein, do you mean to tell me the systems of the financial capital of the universe made it possible for these guys to not only put up a hundred bucks to borrow five thousand bucks worth of a company's stock in hopes that the company's stock would plunge on account of all the guys borrowing shares with the intention of having it plunge, but to do all of this without even actually borrowing the stock to begin with? Uh yes? But not anymore because so-called "naked" shorting is being outlawed? Here is how Dealbreaker explained it last month:

AIG Takes Its Ads And Slinks Away Quietly

Hamilton Nolan · 09/18/08 09:07AM

The ad industry is perfectly confident that this whole "meltdown of the US economy" thing will be but a blip on their radar. Uh, as long as you weren't on that AIG account. The broke ass insurance giant has (wisely) decided to pull all of its corporate advertising for the remainder of the year, which will save them slightly less than 0.1% of the $85 billion they now owe to you, the taxpayer. More importantly it will save them the absolute humiliation of the ads themselves, in which a little tot can sleep safely knowing that his family has AIG and its "Strength to be there." [In debtor's prison]. You won't have to see this bullshit any more:

WSJ Excited To Exploit Financial Catastrophe

Ryan Tate · 09/17/08 09:24PM

It's the nature of the media business to take profits from the suffering of others, and coverage of the recent financial meltdown is no exception, helping to drive online traffic and (no doubt) newsstand sales. But the Wall Street Journal should be more discreet about its gloating, particularly given the newspaper will soon eject 50 of its own staff into the economic wilderness now home to the likes of Lehman Brothers. At least one Journal staffer was none too pleased to see an internal news item today headlined "Market Turmoil Provides Hook to Sell U.S. Journal in London." (It's reprinted in full after the jump.)

A City Without A Paper

Hamilton Nolan · 09/17/08 11:00AM

The Newark Star-Ledger is in serious danger of going out of business, as we mentioned earlier. Its publisher yesterday threatened bluntly to close the paper on January 5 unless it gets major concessions from its drivers' union. Even if the threat is a negotiating tactic, it also reflects economic reality. Everyone knows the business is rough, but wow: are we about to see the first major American city without a newspaper? This would be historic. And not in the good way. As the industry has declined during this decade, almost every newspaper has suffered economically. Layoffs have become ubiquitous. Foreign bureaus have been shuttered across the board as a matter of policy. Large metro papers, which dominate major cities but lack a national readership, have suffered the worst. Many (if not most) of them have pulled their correspondents from Washington and brought them home, to save money and cover local news, which is believed to be the wisest area of investment. The glory days are over. Salaries are down. Older, more expensive reporters and editors are urged to take buyouts. It's harder for aspiring journalists to get first jobs, or even internships. Papers have changed physically. Their pages have shrunk. Their page count has come down. Sections which once stood alone have been combined, all to save printing and newsprint costs. Two-paper towns are becoming a rarity. Chicago, Los Angeles, Philadelphia, Detroit, and, of course, New York all support at least two sizable papers. But some of them shouldn't. Particularly in smaller or declining markets, it's a war of attrition to see which paper can hang on the longest. The idea that two editorial viewpoints are a necessity in most cities has been rendered anachronistic by the internet. Recent buyers of newspapers or newspaper companies have been disappointed. Brian Tierney, an ad wizard, has been unable to restore the Philadelphia papers to their former glory. Sam Zell is being sued by his own employees for the Tribune company's declining prospects. McClatchy wishes it had never bought Knight Ridder. What we haven't seen in all this, though, is a major American city with no newspaper. Everyone believes that a paper is an essential part of a city's fabric, like city hall and the jail and the local sports team. If Newark—a town with more problems than most—is left without a paper, who will tell the world what's going on there? Who will tell Newark what its own government is up to? Even bloggers should be humble enough to pray that the Star-Ledger isn't the first in a long line of papers that disappear and leave people with no forum for the local bickering, minutiae, and moments of glory that are the real American civics lesson. Print may be dead. But it shouldn't die before something better is in place.

Ad Industry Not Scared Of Wall Street Apocalypse

Hamilton Nolan · 09/17/08 08:33AM

"Financial ad spending might be soft over the next quarter or so," an executive tells Adweek today. We were like, ha, might be? "Soft?" Quite a gift for understatement, greasy ad dude. Or so we thought! But the optimistic take on reality is that the burning of Wall Street might not be so bad for the ad industry. In fact for some lucky agencies, it will be a freaking bonanza!

How Magazines Led Investors Toward Ruin

Ryan Tate · 09/17/08 01:07AM

In December, Fortune magazine admitted it had been remiss naming insurance giant AIG one of its "10 Stocks To Buy Now" before a yearlong 18 percent decline. "We... didn't expect [the] mortgage unit to be such an albatross," editors wrote. To correct the error, the magazine had a fresh list of "The Best Stocks For 2008" — including Merrill Lynch. "Smart investors should buy this stock before everyone else comes to their senses," Fortune wrote, calling a recent correction in Merrill stock "an overreaction." Investors who followed this advice are now down 93 61 percent. All the big financial magazines butter their bread with dubious prescriptions for how hobbyist investors can beat market professionals, so Fortune is hardly alone in being humiliated by the ongoing market meltdown. We'll spread the embarrassment around after the jump.

The Netflix Of Magazines Is Here

Hamilton Nolan · 09/16/08 10:15AM

It's about time the magazine world jacked Netflix's business plan. Maghound is Time Inc's new service that lets you, the consumer, choose which magazines you want to receive every month—with no hassles, and one low price! (Runs hand, model-like, over selection of 240 glossy magazines). Seriously, this may not save the magazine industry, but it's a good product for anyone who likes magazines. For these three reasons! 1. Gladiator Wars: Assuming Maghound takes off, it will offer a pure look at what consumers want to read (at least within the limited, non-Hearst pool of 240 magazines) when offered a broad array of choices. It could become the Billboard charts of magazine popularity. Plus you can watch magazines get dropped from subscriber lists immediately when people find out their content sucks! Now we just have to ask Time Inc. to make all this data public. 2. Price: Three titles for five bucks a month, five for eight bucks, seven for ten bucks. It's a deal and a half. If Maghound takes off it should cut into news stand sales, because it allows you to sample issues without paying the price of a subscription or the higher price of a news stand copy. 3. Expansion: The roster of magazines available now lacks big names like The Atlantic, The Economist, Esquire, and a bunch of others. But if Maghound proves to be a successful business, that list is bound to expand, because magazines—except very high-end titles—will see that it's in their economic interest to be included. So it's fair to expect more choice in the future. Or the thing will fold, but you only lost five bucks a month. So who cares? [Folio, Paid Content]

None Of This Is Good For Bloomberg LP

Ryan Tate · 09/16/08 06:38AM

"Bloomberg LP, whose best-selling financial news and data terminals are ubiquitous on Wall Street, is trying to reassure jittery employees that it will weather the financial storm after the failure of one major client and the sale of another." [Post]

Media Vultures Feast On Lehman Brothers

Ryan Tate · 09/16/08 06:01AM

No story about a bankrupt company is complete without the requisite "sad sack carries own crap out of office in boxes" shot, so of course every media outlet in the world was rolling tape or snapping pictures outside Lehman Brothers headquarters in New York Monday. TV reporters were doing their standups with the building in the background, so the average Joe watching at home would be able to say to his wife, "so that's where my securitized subprime mortgage is bundled with commercial-mortgage-backed securities into a mark-to-model collateralized debt obligation!" Over-extrapolating from the financial fortunes of others is precisely what got us into this mess in the first place but, but on the other hand you can't expect people not to stare at pictures of anyone potentially in the process of becoming a hobo. Watch the media watch the (maybe) new poors in the gallery after the jump.

Jim Cramer: Who's 'Crazy' Now?

Ryan Tate · 09/16/08 03:26AM

So it was a year ago now that shouting head Jim Cramer completely lost his mind in front of the cameras at CNBC. Cramer screamed that government officials had "NO IDEA how bad it is out there — NONE!!!" and that the economy was becoming "armageddon." It was glorious television. Now that the meltdown is truly molten, it's the former hedge-fund manager's turn to gloat. Last night on his Mad Money, Cramer assailed federal officials as "disgraceful" and "ignorant" for allowing things to get this bad. He also called Federal Reserve Chair Ben Bernanke "in over his head." And he did it all with relative calm — perhaps content that, for once, he was both correct and correctly understood. (Twenty minutes later, Cramer was screaming "booyah!" and triggering cannon sound effects for his "Buy Or Sell... lightning round.") Video after the jump.

Washington Mutual Will Do Anything For Your Business

Hamilton Nolan · 09/15/08 01:56PM

Pope-hating straight talker Bill Maher is seriously considering putting some money in failing Washington Mutual now that they're offering free blow jobs with every account. Click to watch the sadly plausible series of fake ads that get worse and worse until we're all broke and can't afford a blow job anyhow.