Matthew Fraser on financial journalism

Cash, Crises and Journalism was the title of a session at last week’s Journalism in Crisis conference at the University of Westminster. One of the participants was Matthew Fraser and he had this to say about financial journalism.

1 – Competitive pressures for scoops. In the modern media environment, journalists are just too busy to do off diary features like the potential state of the economy.
2 – Lack of professional training among business journalists, with most of them coming from Oxbridge but not having any financial experience.
3 – Business journalists simply have short memories, like everybody else, and failed to see the signs of the oncoming crisis.
4 – “Implicitly, everybody in the industry knows that business journalists don’t rock the boat of the audience with their careers”.
5 – Finally, many journalists were cheerleaders for the businesses, were having a great time in the club and simply had no interest in raising the alarm.

source: Westminster News Online

In a world of cold harsh truths…

Parodies of journalism require talent, time and money. Just ask “Raoul Djukanovic” and “Philip Challinor”, two financial journalists who caught London commuters off guard last week by handing out a free, spoof edition of the Financial Times (FT). According to the Guardian, Raoul and Philip

put thousands of pounds of their own money into the publication. … It took the pair “about a month” to write about 150,000 words at the same time as working full time and they say the publication, called Not The Financial Times, was partly designed to show other journalists that they seldom write objectively.

The fantasy edition headlines and articles a joy to read (BBC ‘swear quota’ gets journalists cursing, G5 unveil new oligarchitecture, World survives Equal Rights Day) and remind me of the fake news genre that The Onion has down pat. The bulk of the content however, criticizes the practice, role and responsibility of news media. A lengthy analysis of news making practices, written by the Why do they hate us correspondent, articulates churnalism commonalities and offers this biting critique of the news industry and its truth claims:

Freedom from corporate culture doesn’t abolish groupthink, nor guarantee insight, entertainment or basic accuracy. So if churnalism’s the norm wherever you turn, is reframing a solution, or part of the problem?

The investigative track record of FiJo

Financial journalism (FiJo) – coverage of financial markets and corporate finance – remains a largely unexamined field of professional journalism, despite its prestige (cf. the cricital acclaim of The Financial Times or The Wall Street Journal), widespread concerns about its role and responsibility and a weak investigative track record. For example, no reporter uncovered the Enron collapse a few years ago. And also, how did we miss the 2008 credit crisis?

This question will be addressed during a POLISmedia panel discussion on Feb. 23 at LSE, entitled: “Why did nobody tell us? Reporting the Global Crash of ‘08”.

As seen on South Bank: subprime lending

Currently making the blogosphere worthwhile (heads up to discoursology) is a brilliant satire on the subprime implosion by John Bird and John Fortune. Having explained the intricacies of market sentiment, they show how lending money to ‘an unemployed black man in a string vest’ becomes a ‘structured investment vehicle’. This sketch first aired in 2007, but remains topical.

Not so Fortis: share price falls to €1.2

After a weeklong suspension and the release of “non-audited pro-forma figures“, Fortis trading resumed on Tuesday, sparking a massacre: Fortis Euronext shares fell a whopping 77% to €1.2 euro. At the investment club conference last week – after the BeNeLux nationalization but before the BNP Paribas takeover – Fortis shares were estimated at a value between €3 to €4. In its “new constellation”, Fortis plans to focus on global insurance.

Fortis also announced that it was planning to call a shareholder meeting in eight weeks. I would give good money to attend this meeting because investors are outraged over what they see as “mismanagement” and “misinformation”. Lobbygroup Fortisaction.com argues that shareholders are left with:

• a marginalised company with a 66% stake in a structured products portfolio (worth 6,8 billion euro)
• a small insurance business that could not be sold directly (Insurance International) worth between 1,5 and 2,0 billion euro.
• no dividend
• a 90 percent decline in the shareprice.

Companies affected by the credit crunch

As selected by De Morgen (8 Oct. 2008). UBS and KBC were left off the list. Worse, still: Iceland.

The revolution will be blogged

In The Europeanization of America, writingfrontier.com correspondent and former Playboy model (insert your own joke here) Suzanne Bertrand argues that 9/11 precipitated a socio-economic convergence between North America and Europe.

For the first time in it’s [sic, tvh] history, the United States had been successfully attacked by foreign terrorists on its own soil and our country was going to react precisely as it should. It would follow the trail blazed by Europe decades ago.

This trail is one of security measures (eg. video surveillance in shopping areas), economic interventionism (cf. “European subsidization and outright government ownership of various key industry sectors”) and inflation. These measures are importing a European lifestyle of urbanization into the US: more fuel efficient cars, cycling to work or commuting to work by public transportation and urban living. This, the author warns, will lead “(m)ore and more Americans, like Europeans, (…) to make do with less, including less square footage in favor of more convenience.” While I applaud the author’s positive evaluation of this change, I do not think that Europeanization will fundamentally change American identity/culture. I believe that the financial interdependence (and risks involved) of Europe and America looms larger, casting dark clouds over ‘our’ living standards – and those of our children.

Fortis trade suspended until fog clears

The shit has hit the fan. The CBFA, Belgium’s Banking, Finance and Insurance Commission has reportedly suspended Euronext trading of Fortis shares until the market can adapt to the BNP Paribas takeover. No official press release confirming this news could be found on the CBFA website at this time. Lame.

Flemish investment club shindig

All eyes were set on Filip Dierckx, Fortis’ newest CEO, at the annual Flemish investment club conference in Antwerp today. Alas, Fortis cancelled at the last minute, sending apocalypse rumors and cholesterol levels flying.

This was an eye-opening day among corporate high rollers, financial analysts and frustrated investors. As I mingled with attendees and exhibitors during coffee breaks, I was casually told that it used to be fairly easy to make your first million on the stock market – yes, I kept the Lil’ Wayne jokes to myself – and that, as an entrepreneur, cornering a niche market is key. Just ask Omega Pharma.

(research mode: on) The CEO and CFO presentations provided rich arenas for displaying competence and illustrated, at least to this investment novice, how crucial the interpretive work of the audience (nodding, taking notes, asking questions, chatting) is in acknowledging and enacting the speaker’s expertise. These performances are research grants waiting to be written (research mode: off).

Lessons learned: Zetes is, IMHO, a company with killer technology and a sound business plan. KBC is sitting pretty for now. The art of public speaking is not exactly lost on Agfa Gevaert CEO Jo Cornu. Eyes-on-stalks boring. And Fortis? They’re in rocky waters. Expect more drama soon. In the meantime, roll with the punches. And please don’t make a run on it.

Prime Minister: Fortis to be dismantled

At a press conference earlier today, Belgian Prime Minister Yves Leterme announced that the Fortis banking and insurance concern will be dismantled. Belgium will acquire Fortis Bank Belgium and the Netherlands have agreed to purchase ABN AMRO and Fortis Insurance The Netherlands for 16.8 billion euros. Luxemburg is expected to follow suit by nationalizing Fortis Bank Luxemburg. (Source: De Tijd, De Standaard).