CNBC IS HAZARDOUS TO YOUR WEALTH

CNBC IS HAZARDOUS TO YOUR WEALTH

by CJ Follini, BLACKSWAN

I was sitting here writing another scintillating (at least I think so)  feature article about creative approaches to alternative real estate investment while watching David Gregory interview Henry Paulson and Alan Greenspan on Meet The Press and I just couldn’t continue. Listening to these so-called sages pontificate forced me to save the draft and start a new article to release the frustration I have repressed about the dangers of the financial news media for a very long time. First, I don’t have a particular vendetta against CNBC as belied in the title above; rather they were an easy target to use as a proxy for all financial media.

Back to Greenspan and Paulson.  It amazes me that broadcast media provides any podium to these two. The first one lit the match and the latter stood by with a cook’s apron spraying lighter fluid on the flames of our financial meltdown.  Greenspan chased media accolades that were then showered on him as he neglectfully pursued a Goldilocks economy while believing the heavy lifting of financial oversight was beneath his ideological Mt. Olympus. The following link is a trenchant analysis of Greenspan’s failures –
6 Ways Greenspan Caused the Current Economic Crisis | Currency Trading.net
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It was his love of the media glow that kept him from making unpopular but necessary steps to stop Wall Street’s pump and dump of CDO’s bloated with no-income verification loans and crazy ARM’s.  In hindsight, were any of us prudent to follow lockstep behind Doctor Greenspan whose only real world experience was sitting with 20 economists for 33 years in a Wall Street office running little computer models?

As for Paulson, at least he knew better from his years in “the game;”  he’s been doing the backstroke in shark infested waters since 1974. But his lame scolding last Sunday morning of Wall Street excess and his pleading for financial regulatory reform when he was the first hog at the trough in 2005 to the tune of $37MM, not to mention one of the key architects in 2004 pushing the  U.S. Securities and Exchange Commission to release the major investment houses from the net capital rule, requiring that brokerages hold reserve capital that limited their leverage and risk exposure, is unbearable. His book should be called “Exit Laughing” instead of “On the Brink.” He gave away $700 billion dollars of our money to his buddies (and brother!) to do as they wish with no more stringent requirement than signing the guestbook at a B & B. Yet here is David Gregory giving these two major airtime and hanging on their pearls of wisdom. Did he have the temerity to ask Greenspan, “ Hey Doc, what were you thinking? “ or ask Paulson, “ Umm Hank,  when you were writing the checks, did you think to, uh, maybe,  politely ask anybody what they planned to do with all our tax dollars? Or if they minded terribly to throw a few bucks to some hard-working small business owners and prudent real estate investors who also risk their own money?” Guess not…

Back to CNBC for a minute. Now I love looking at Mrs. Kushner (nee Ivanka Trump) as much as the next guy, but seriously, do they really expect us to believe that a 29 year old who has never worked through a real estate depression a la 1987, 1993, etc or has ever risked their own hard-earned capital in a deal can enlighten us about the future? Come’on. She might as well have sounded like the unintelligible teacher from Peanuts honking away off-camera and yet Joe Kernen would still stare at her doe-eyed. And come to think of it, where was Ron Insana (running back to the CNBC womb after cratering at SAC & his own private equity biz), Maria Bartiromo and the rest of the CNBC vaudevillians to question Greenspan or any Lehman, Bear, Goldman bonus babies during the 2004-2007 “irrational exuberance” when the dollar was tanking and home prices and per capita income were diverging faster than Brad and Angelina. Instead they offer us adoring stares at an oompa loompa-tinted mortgage salesman named Angelo. Why? IT’S ENTERTAINMENT! NOT JOURNALISM OR EVEN INFOTAINMENT. E-N-T-E-R-T-A-I-N-M-E-N-T!

The dangerous problem is that all these talking heads with zero real world business experience pass themselves off as financial experts and unfortunately, some naive viewers mistakenly listen to these entertainers just because they take their jackets off and roll up their sleeves to look more credible. Remember: most of the guests on these shows are touts placed by paid PR reps who promise ad spending in return for face time for their clients. The name of this game is pay to play, especially any news organization owned by Murdoch such as the soon-to-be tabloid rag, Wall Street Journal – I expect to see Snookie topless on WSJ’s Page 3 any day now.

SO BEWARE OF WATCHING CNBC, MSNBC, FOXBUSINESS (that’s an oxymoron if I ever heard one) , Neil Cavuto’s Your World, BARTIROMO REPORT  et al for anything except passing time but definitely not for business advice; I already made that mistake. Remember Cramer’s infamous “Buy Bear Stearns” (thank you Jon Stewart) or Kudlow’s ridiculous ‘green shoots” mantra? What does that even mean when 16% of our eligible labor force is either unemployed or underemployed or just plain given up altogether? Not to mention skyrocketing commercial vacancies and household balance sheets that will take years to de-leverage?!

I’ll conclude this piece on a positive note: there are plenty of insightful, thorough financial media sources providing objective views and hard data worth our collective attention. Here is my recommended list:

Gretchen Morgenson, NY Times; author Michael Lewis; Urban Land Institute;  Vikas Bajaj, NY Times; the Seeking Alpha blog; Adam Pincus, The Real Deal.com; National Real Estate Investor Magazine; Healthcare Real Estate Insights Monthly; Real Capital Analytics ; Andrew Ross Sorkin’s DealBook; REIS.com; Mark Haines on CNBC (sometimes); CBRE Econometric Advisors and whatever Mort Zuckerman says on the McLaughlin Report.

Whew, I feel much better now that’s off my chest and I promise my next article will be something I’m a bit more informed about – oh yeah, alternative real estate.

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12 Responses to “CNBC IS HAZARDOUS TO YOUR WEALTH”
  1. I used to be like you and Taleb shouting at the wind. Telling anyone who would listen that the train was off the rails, the sky was falling. It fell. Now, I am past it. Thats not good for MY business. I counsel my core group to make great deals, and encourage everyone else to listen to Fox and CNBC.

    by Marshall Murphy
    on 10. Feb, 2010

  2. CJ,
    You nailed it, it’s entertainment!!!!! Unfortunately it is perceived as actionable intelligence and just adds to the “irrational exuberance” of widely swinging markets.

    by Tom DeCaro
    on 11. Feb, 2010

  3. Watching CNBC is simply a waste of time. There is little useful on the channel. Bloomberg is far better – though I do not like the new format – and first thing in the morning MSNBC is much more interesting.

    by Bucky Canales
    on 11. Feb, 2010

  4. CNB Who?? What??? Trumped!!!

    by Derrick Z. Venter
    on 11. Feb, 2010

  5. You got that right! CNBC is not only hazardous to your financial health but they are hazardous to your overall health!

    by Kenneth Shapiro
    on 11. Feb, 2010

  6. While some of your rant has merit, why stop at CNBC. CNN, Fox and all other media news have abandoned true newsworthy journalism with the retirement of Cronkite and Huntley & Brinkley. MSNCS, CBS and ABC have all covered Paulson in recent days as he hawks his new book. News is business, and unfortunately it is now about ratings and advertising dollars, not news or quality journalism. And face it, we all loved Greenspan when rates were low and the markets were rising. Those bad arms were a problem in the last banking crisis in 1990 and weren’t addressed then. The problem is much deeper than Greenspan and Paulson pandering as authority or entertainment on CNBC. In case you haven’t noticed, there is a whole new cast of characters busy reeking havoc on our future financial viability with a host of socialistic programs and entitlements that are impossible to fund. But then you never see a congressman offer to reduce his entitlements for the good of the country he was elected to serve. It is sorry but true, the great majority of our citizens are lulled to passivism by the hypnotic entertainment of our media and we have only ourselves to blame as to what we listen to, what we watch, and what we are going to do about it. Our liberty and freedom is being usurped in the name of national security while our dollar erodes more every day by a Fed that is private cartel printing more and more money backed by nothing.

    by Ed Hogg
    on 11. Feb, 2010

  7. CJ,

    I could not agree with you anymore. The commercialization of media and the age of the 30 second sound-bite devalues intellectual discourse and exploration and stymies neural activity. It is all too rare to find a colleague or friend that possess razor sharp analytical skills. I am a voracious consumer of news (mostly business related) and have become resigned to having to read 5 or so newspaper dailies and countless monthly magazines. Commercial TV media is simply not incentivized to produce any high quality or hard hitting programming. I am, however, a big proponent of PBS. Some of the PBS documentaries and programs remain outstanding. I am also grateful for the internet. The accessibility of news from around the world is astounding. The only way to combat the demise of high quality journalism is to pay for it and actively support it. I very much feel that consumers are increasingly devaluing high-quality products/services and fail to understand the cost associated with producing such high quality products/services. I consider the main stream media to be Starbucks- bland, somewhat smooth, generic, machine-produced espresso. It makes finding that cup of artisan espresso that much more rewarding!

    by Oliver Swan
    on 11. Feb, 2010

  8. I have become disillusioned with investing in the stock market. I don’t believe that stock prices have anything to do with the companies anymore. So much of the trading that is done now is computer-driven based upon statistical models developed by mathematicians, statisticians who manage the large hedge funds.Stock prices have nothing to do with the companies financial health anymore.

    It makes investing in the stock market these days simply a matter of chance.

    I am sticking with cash and bonds.

    by Greg Reicks
    on 12. Feb, 2010

  9. Reporting the news or factual reporting is nonexistent anymore. It’s all about ratings.

    Posted by John Inman

    by John Inman
    on 12. Feb, 2010

  10. It seems the only good reporting comes from the Daily Show anyway.

    by samantha
    on 15. Feb, 2010

  11. CJ, you’re pissing in the wind. Americans don’t want to ask the “complex” questions that you raise. It’s much more entertaining to worry about who is sleeping with Tiger instead of getting outraged that guys like Paulson cram deals through like Chase’s purchase of $300 billion of Wamu’s assets for $2 billion. And then they appeal to the masses with feigned outrage that the bankers are making money.

    by John Galt
    on 16. Feb, 2010

  12. Absolutely on target. So what is the solution to this problem of vapid entertainment passing as solid financial advice, which seriously threatens our economic prosperity when masses of people follow it?

    At the risk of getting off on a tangent, isn’t the ultimate problem that our education system is failing to teach people to read carefully, think critically, and learn from history? If we don’t start investing seriously in public education, K-12 and university level, and bringing our citizens up to a reasonable standard of understanding, the future looks bleak to me.

    by Elizabeth
    on 17. Feb, 2010

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