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.