Is Financial Media Aiding Wall Street Collapse?

Jon Friedman, MarketWatch columnistMarketWatch columnist Jon Friedman (left) has a provocative column today on the role of financial media in the continuing Wall Street crisis (the Dow is down over 330 points in early trading despite the government’s $85 bailout of AIG). Where is the skepticism and outrage at Wall Street titans that journalists direct to other news makers, asks Friedman. It is not about being disrespectful, it is about being tough and expressing the same frustration and hurt that “ordinary” citizens feel (especially when they are being extricated from the jobs by the thousands and billions in retirement income is being wiped out). See Media’s Wimpy Wall Street Coverage.

MarketWatch also extensively reports that a money market fund “breaks the buck” – a frightening development that indicates a wider, deeper impact of the credit crisis on “safe” investments favored by conservative retail investors. 

MarketWatch is an excellent source of financial news that goes deeper than mass outlets such as The New York Times or even Wall Street Journal (MarketWatch is a Dow Jones property). As the name implies, MarketWatch is focused entirely on market moving news and is sort of the people’s Bloomberg, geared to retail investors and traders. Jon Friedman consistently writes incisive columns that de-mystify financial news. He has strong opinions and backs them up with the flair of a tabloid reporter.

Floyd Norris at NYTimes gets a little wild on his blog today with Socialism, 21st Century Style, arguing that the government takeover of AIG is akin to nationalization of the largest insurer in the U.S. (Didn’t Harry Truman fail when he tried to do this with the steel industry?). The business news these days is scary but this is what financial reporters live for.

Comments

  1. Al Sutherland says:

    My wife and I are among those retirees who are watching their relatively inconsequential and conservative investments in retirement savings accounts drop in value on an hourly basis.

    Our own – and very modest – portfolio is widely diversified; mining, health, financial, transportation, communications, energy, etc. Our portfolio, while not large, is intended to provide a cushion from which we could eventually begin to draw as inflation reduced the value of our (fixed) pension income. We never anticipated making a “killing” on these stocks. Rather we had hoped to – in the aggregate – realize a few percentage points more than CD interest over the next 6 to 10 years… at which point we would begin “cashing and spending” in order to maintain our (most definitely not lavish) standard of living.

    Our frustration with the system comes, I suspect, from our overly simplistic view of “the mess.” Our perception is, I must admit, based upon our personal view of finance: we own what we have paid for and we borrow only to the extent that we can reasonably anticipate paying off that debt with reliable income (no borrowing against the rising “market value” of our home, for example.)

    The exotic world of derivatives, covered calls, short selling, debt swaps, leveraged buyouts and similar financial sleights-of-hand are beyond our ability to comprehend. Most of these ‘paper bets’ appear to be simply that: gambles… no better than playing Bingo or craps. The “gamble” that bothers me the most, however, is short selling. Short selling ought to simply be outlawed in every respect… nada, no more, no how, no way, none, never again. Many investment funds are now large enough that they can easily move the market down simply by putting up a large block, thus directly creating the oversupply that drives the price down – surprise! surprise! In the penny and OTC markets such manipulation is common place and is practiced by people who would, if they were not traders, be sellling used cars or running for public office. It seems, however, that if a major financial institution participates in a successful short-sell then the traders and executives in that firm get handsomely rewarded (while those of us who hold those stocks take a bath even though we have have done nothing more than buy the stocks at some point in the past and are holding them in anticipation of selling them – honestly selling what we own – at some point in the future.)

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