Wednesday, July 1st, 2009

The Finance Press Becomes Ever More Willfully Obscure, Clubby And Unhelpful

OMG I DON'T KNOW IT'S SOME CHART ABOUT STUFF?Yesterday, Matt Taibbi explicated the response he got from Goldman Sachs about his piece in Rolling Stone. (A piece that is only on newsstands, um, except in pirated versions-which, when will Rolling Stone let themselves enjoy good web traffic?) One thing Goldman definitely did was "make it clear that both I and my sources are simply not as smart as they are and don't understand what we're talking about," Taibbi writes. This is standard operating procedure when it comes to bankers-and also when it comes to financial writers, some of whom are now sniping about how Taibbi actually doesn't understand. (Undoubtedly, he probably doesn't understand it all!)

Although what that also means is that perhaps Taibbi is emphasizing stuff bank-type-people find irrelevant, and omitting things that are relevant to bank-type-people. And also putting finance into real-world language, and addressing economic operations without regard to entrenched and common practices, so as to make sense of them in a non-banking context, which infuriates bank-type-people. (Just because it's what is done normally doesn't make it any less crazy!)

And Taibbi at least is explaining (or trying to explain!) complicated financial operations to the real world-while the finance writers and bloggers are often willfully obscure, tradey, impenetrable and even at times useless to any audience who actually isn't working at (or recently laid off from) a bank. Why are they so willing to abandon us when they should be explaining things to use more than ever?

One of the few exceptions to this is the aforementioned Taibbi-sniper, Epicurean Dealmaker, who is for the most part highly-readable for civilians with an interest in finance, as long as you're willing to do a little supplementary reading.

Many of the rest of them can be WAY more difficult. The New York Times' Dealbook has little interest in the civilian reader, which creates a different standard for the Business desk of the Times than the mandate for the rest of the paper. (Imagine if the politics coverage was edited without regard for people without at least five years experience in the State Dept.)

I read Felix Salmon, who now blogs for Reuters, every day-and understand 3.4 words in 5. He is very very smart! And I am very gratified when I understand him!

And then: "Mike at Rortybomb wades into the CRA debate with a very good point: toxic subprime loans bear almost no relation to CRA loans." Ha, okay, I will Google "CRA"! Um, it's not the Canada Revenue Agency… it's not the-oh, I bet it's the Community Reinvestment Act! Which has to do with low- and moderate-income lending in the U.S.! This is something I would like to know about. Something I would undoubtedly know, if I had an MBA or worked in finance.

"I do hope the formal debate between John Carney and Barry Ritholtz happens," he goes on. Ooh a debate? Ha, okay, I know John Carney because he drinks on the Lower East Side and I read the lively and hilarious Business Insider every day, even though it couldn't be more obscure sometimes, particularly in the comments section, where everything is "YOU ARE WRONG NO YOU ARE WRONG, because pi*x=(y-z)." And Barry Ritholtz is that guy who's always on CNBC saying stuff. Or he's on the Mets or something. I think. It's like reading about the goings on at a bridge club in 1970.

Hilariously, yesterday Salmon wrote, as explication of a funny/informative video: "It almost makes you want to find out what a swap spread is." Yes, I would love to know. Oh, a helpful link… to this:

PV of fixed side = (t1 – t0)*C*P(t1) + (t2-t1)*C*P(t2) + … + (tN-tN-1)*C*P(tN)


I don't expect to understand everything I read on the also delightful Alphaville or even Dealbreaker, which is intentionally obscure as a means of wit (here is one of their posts yesterday: "Do Not Dare To Suggest Dennis Kneale Is An Idiot: Like Greg (and the universe) did yesterday, after DK's proclamation that "the recession is over." WHO THE HECK ARE YOU TALKING ABOUT? Still, this is the opposite of Baseline Scenario, which is working hard to explain important concepts to morons.

As for the rest of us, whenever we try to explain what little we understand about finance to others who understand less, we get the "you're a moron" emails from the people who largely do understand-whether they come from Goldman Sachs or from finance bloggers. (Last year, I wrote about the rising tide of income from mortgage fees (as well as rising fees in banking in general, including ATM usage) as a component of the subprime crisis-and that is true, that in part banks were cutting crappy mortgages because fee collection is a huge income source-and got raked over the coals for that focus. Except, it's true that banks will do anything to charge customers more at any point in transactions.)

So okay, yes! We are all morons out here, except for all of you! I freely admit my moronhood. The consequence of all this insider chat is that fewer and fewer people can follow extremely important goings-on. People are tuning out what is the most important story of our lives, which is being delivered incrementally by a number of very smart people, nearly all of them working exclusively online, to a small audience of people who are financially educated enough to understand. So do your part and educate me, please.

17 Comments / Post A Comment

katiebakes (#32)

I can't decide if this is more like Jakob Lodwik soliciting three sentences about China or Balk asking for someone to use blow jobs as a proxy for describing the yield curve.

I recall that bit spreading through the intersphere like kudzu for a good long while.

NinetyNine (#98)

In case anyone was wondering if Choire has ever seen a Tumblr, this comment here serves as a resounding no. Also! Not enough appreciation for the beejer/yield curve joke (or is that a post too?).

whowhahuh (#57)

"Although what that also means is that perhaps Taibbi is emphasizing stuff bank-type-people find irrelevant, and omitting things that are relevant to bank-type-people"

That's actually not what he's doing.

1. he is trying too hard to relate to the youngs and hippies (okay I get that it's in RS)
2. he makes poor causal relationships
3. he is often intellectually dishonest either because he doesn't understand and is afraid to sound ignorant or he does and willfully ignores other factors.

The article is just ugh and will will be held up by the type of people who read rolling stone and shaken while yelling "see, see!"

Yeah, my jury's a little still out on the Taibbi piece. On the one hand? I thought Goldman's response was laughable, and I do think they are fairly evil. And on the other hand, well they are very good at what they do, largely, with a couple exceptions. And also on some level I am pro-capitalist! So yay for making money!

And like many of us who are loud and mouthy, Taibbi can undermine himself. (Lord knows I do!)

But I have yet to see a good fact-check of Taibbi's piece from the perspective of a finance person, written sensibly. AND INTELLIGIBLY.

Psst! If you are looking for the perspective of a finance person who writes sensibly, intelligibly and CLEVERLY, I think I know where we can find one…

brianvan (#149)

My take on Taibbi's piece is that it documents how Goldman engages in bubble economics for profit. It's overburdened with condemnation, as we've all agreed need to be in the soup for an RS piece. None of the charges are false or illegal. There's even a little double-jeopardy in there, because one of those "bubbles" is part of another.

However, the information presented is pretty condemning in terms of judging Goldman's will to be a good citizen.

As you know by now, corporations are unique legal entities set up in such a way that they are each like individual sociopaths, the most irresponsible and unreliable citizens that can exist in a society. So really, how Goldman got there legally and with the help of many (and the resistance of few) is maybe beside the point.

And maybe corporations acting like irresponsible and unreliable citizens is also beside the point. Because the rest of us have been well trained to not give a fuck!

mathnet (#27)

People who live in numbers don't know they're not speaking in words.

(And I am not talking about myself. I avoid math at all costs! Mathnet is just something I appreciated as a kid because math teachers suck at teaching.)

GiovanniGF (#224)

I had assumed it was a Turkish name!

katiebakes (#32)

Good finance writers are like good science writers in that they are able to distill complex mathy/theoretical relationships into clear language without losing the interest of those who are "in the know". Felix Salmon is so unmatchably great at what he does.

Tuna Surprise (#573)

My 81(!) year old aunt had tabbed the last R.S. article on the financial crisis "villians" and made me sit down in her living room while she wagged her finger at each of them. Then she made me defend my financial compatriots. *Sigh* I wish she'd get her news from USA Today like everyone else.

KarenUhOh (#19)

Actually, Barry Ritholtz was optioned to Binghampton after his OBSP dropped to .363.

KarenUhOh (#19)

It's "Binghamton," you Poli Sci moran.

Kataphraktos (#226)

Choire, try Michael Shedlock's blog, it is very good, and thoroughly comprehensible.

That said, I am not ashamed to admit I can understand that formula, which is probably why I can't get a date in this cache-less Wall Street world.

sigerson (#179)

Choire — what I love about this post is that you've crafted an irresistible linkbait post for all these finance blogs. Coming off the Silicon Valley Insider post suggesting that AOL buy The Awl, this seems likely to raise your blog's profile in that entire sector. Nice!

BoHan (#29)

Oh gosh, read Scott Burns. He's syndicated and independent now, but he started out with a Sunday column in the Dallas Morning News. Nowadays he focuses principally on retirement issues, because duh, who still reads print, but the Dude has a degree from M.I.T. yet is incredibly and simply delightful and plain-spoken and unbiased. He just makes you feel smart about this shit and isn't all indignant and snotty like your Paul Krugmans of the world. On the other hand, he'll make you feel really horrible about your spending habits, but evs. He's a treasure.

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