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 7:00 pm EDTTuesday, July 1 |
| Unindicted co-counterconspirator-in-chief Donald Luskin will appear on CNBC's Kudlow & Company. Don will be talking about -- you guessed it -- politics, the economy, and the market. |
Chronicle of the Conspiracy
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Saturday, December 07, 2002
WILL THE NYTIMES' RAINES BE REINED IN? The New York Times, in an embarrassing policy reversal, has decided to publish two pieces from its own columnists that it had previously spiked because they disagreed with the "newspaper of record's" editorial stance insisting that women members be admitted to the private Augusta National Golf Club. Those of us who make up the nation-wide cottage industry of holding the New York Times accountable for its bias, its unfairness and its unearned self-importance -- an industry of which I am proud to say that I am a member -- must be delighted.But I'm probably less delighted than most. Sure, it's fun to see executive editor Howell Raines -- evil lord of the Times' crusade against privately owned institutions such as Augusta -- have to publicly reverse himself. But I think that many of my anti-Times co-counter-conspirators may be misinterpreting the meaning of this event.
Andrew Sullivan yesterday called the Times' decision to publish the spiked columns a "great victory for freedom of debate…" But the Times is a private institution, just as Augusta is. Policies at neither institution can have any implications for "freedom" of anything -- their policies are private matters of how owners of private property wish to see their own property used. If Augusta changed its policy about admitting women members, it would not be a "great victory for freedom of women." Thinking that it would be is precisely what's wrong with the Times crusade against Augusta in the first place.
Whose "freedom" is at stake in the Times' decision not to publish commentaries that contradict a position that it wishes to take? Should we think of a columnist as having a "right" to publish whatever view he wishes in the pages of a newspaper for which he works -- but which he does not own -- whether or not the owner of the newspaper wishes to have those views expressed there? Should we think an assembly line worker at General Motors has the "right" to put a bumper on backwards because he thinks it would look better that way? No -- and we should not think that women have the "right" to be admitted to Augusta.
Even if we wish to see this as a "great victory for freedom of debate," let's make no mistake that this is anything but a victory in which the victor only won a battle with himself. All that has happened here is that the Times' decided to publish more opinions from the Times. I'd be a lot more impressed if the Times had reversed itself on its decision not to publish a letter from Citigroup protesting Times columnist Gretchen Morgenson's bashing of CEO Sandy Weill's favorable views on AT&T despite her own similar -- and now denied -- views expressed at the same time. Raines would never back down and grant "freedom of debate" to Citigroup. But journalists, and especially the Times' own staff, are another matter.
Andrew goes on to say that the Times' decision is a victory for "good journalism." I certainly agree that it's bad journalism for the Times to have hammered on the Augusta matter in 20 editorials, letters and stories over the last 30 days, and for it to have let this matter of editorial opinion repeatedly leak over into straight news coverage. But will the Times' journalism really be made any better when the count goes to 22 with the publication of the previously spiked columns? Doesn't this just give the whole silly Augusta matter longer legs?
Even the delight of seeing Howell Raines publicly humiliated is not without its ambiguity. Raines' own opponents may have already shown him how to snatch victory from the jaws of defeat. If this is a "great victory for freedom of debate," it's one that Raines can take credit for. Oh, sure, that would be like a perjurer taking credit for admitting later that he lied under oath, and calling his admission a "great victory for truth." But Raines is certainly not above such a strategy -- mark my words, he'll use it.
My frank hope is that this event will damage Raines not as a journalist, but as an executive. Would it be too much to hope that his corporate masters will put him on a shorter leash, thinking more carefully about what Andrew called Raines' "manic attempt to corral news stories and now columns to reflect a party line"? The very best outcome would be if the senior-most management of the Times Company simply made the cold-blooded decision, in the interest of their shareholders, that Howell Raines is bad for business.
Posted by Donald L. Luskin at 1:16 PM | link
Friday, December 06, 2002
ECONOMIC TEAM REAMED The firing squad arranged in concentric circles is performing its inevitable function, and now the Bush economic team is entirely purged, or at least decapitated. On election day it was SEC chairman Harvey Pitt, and now this morning it was first Treasury Secretary Paul O'Neill and then White House economic adviser Larry Lindsey. We can only hope that both O'Neill and Lindsey are properly chastened by the fact that the stock market rallied the moment their resignations were announced.Of the three stooges now resigned, only Harvey Pitt had pro-capitalist and pro-growth policy instincts -- he was sincerely committed to working cooperatively with the companies he regulated to make the markets work more smoothly and more honestly. But he got borked by a political and media establishment committed to portraying his constructive approach as complicity in Wall Street corruption. O'Neill and Lindsey were just empty suits (actually, between the two of them, three suits were required). They wouldn't know a pro-growth policy from a "Whip Inflation Now" button. So we've lost one good man and two mediocre ones.
Dare we hope for a net upgrade when these posts are eventually filled? My fear now is that we could get three bad ones. My guess is that Bush, Cheney, Rove, "41" -- whoever makes these decisions -- fired Pitt, O'Neill and Lindsey without respect to their policy positions, but just because they were politically inept and unable to manage the media? If that's the case we could end up with the worst of all worlds when they are replaced -- three people with bad policy convictions who are more politically capable of getting their bad policies implemented.
Posted by Donald L. Luskin at 11:38 AM | link
Wednesday, December 04, 2002
FROM SMEAR TO ETERNITY (PART II) Is the New York Times covering up evidence? Is the "newspaper of record" hiding the records?Just try going to their archives and pulling the story that slurs Dallas Federal Reserve Bank president Robert McTeer -- the one referenced in yesterday's op-ed in the Wall Street Journal by William McGurn. Try it -- try searching for "McTeer." The obvious bingo is "Who's Next At the Fed? A Look At the Field" by Richard Stevenson, published on Sunday, September 8, 2002.
Try plopping down your $2.50 to read it -- you can't. You can buy the one before it in the search results, and you can buy the one after it. But you can't by this one.
According to McGurn, here's what's in the story the Times won't let you read: "'Uncomfortable questions' could be provoked by any McTeer nomination, warned the Times. The cause of those 'uncomfortable' questions? 'Earlier this year,' the article reported, Mr. McTeer had 'arranged a conference at which a speech by a conservative author was criticized by some Fed officials as offensive to blacks and gays.'"
It's just the Times turning up the decibels in the media echo chamber, a sound-byte here and a sound-byte there meant to amplify into a smear of the reputation of the man who I believe is best qualified to replace Alan Greenspan -- and who just happens to be, in the Journal's words, "a hard-money, tax-cutting conservative." The Times so strongly opposes President Bush's doctrine of pre-emptive war, it's surprising that they would indulge in this exercise in pre-emptive borking -- McTeer hasn't even been nominated for Fed chairman yet.
No surprise that the Times doesn't want the ever-growing army of its critics inspecting the evidence. It was embarassing enough when I caught their financial columnist Gretchen Morgenson in a lie by digging out of the Times archives a 1999 column in which she touted AT&T as an "Internet play for widows and orphans" -- a more irrationally exuberant claim for AT&T than Jack Grubman ever made. I'm sure in a couple days they'll manage to "fix" their archive, once the "newspaper of record" is confident that the flames on this issue have died down.
Posted by Donald L. Luskin at 12:40 AM | link
Tuesday, December 03, 2002
FROM SMEAR TO ETERNITY (PART I) An op-ed by William McGurn in today's Wall Street Journal is must reading for anyone who wants to understand how the press works as an echo-chamber that amplifies and distorts events to forward its own political agenda, and the political ambitions of those who know how to use it. The McGurn's op-ed concerns the smearing of Dallas Federal Reserve Bank president Robert McTeer -- the man who is, in my view, the most capable single candidate from within the Fed hierarchy to someday replace Alan Greenspan -- over what has been trumped up as the violation of politically correct standards of public speech. I'll be writing a lot more on this one -- but for now, be sure to read the op-ed.Posted by Donald L. Luskin at 11:06 AM | link
Monday, December 02, 2002
NEW YORK TIMES SUPRESSES CITIGROUP'S DEFENSE In his Washington Post media column today, Howie Kurtz picks up our story about New York Times columnist Gretchen Morgenson's horrible 1999 AT&T buy recommendation -- and the fact that she admitted it was a "bad call" in the same column in which she charged Salomon Smith Barney analyst Jack Grubman and his boss, Citigroup CEO Sandy Weill with corrupt conflicts of interest.Kurtz is reporting that Citigroup wrote a letter of protest to the New York Times, which the "newspaper of record" refused to publish. According to Kurtz, "…Citigroup wrote: 'Why is it surprising that Sandy Weill, an AT&T board member . . . would share Ms. Morgenson's views about the company -- and therefore suggest to Jack Grubman that he do more research into the fundamentals driving AT&T's business?'"
Kurtz ends with a defensive quote from Morgenson -- and Kurtz completely ignores the fact that Morgenson deceptively covered up her 1999 AT&T call in her recent column, claiming that all she had done was quote a bullish analyst. Professional courtesy?
Posted by Donald L. Luskin at 3:33 PM | link
FORBES SPITS SPITZER It takes a lot of guts for a popular magazine to defy the conventional wisdom of its readers. That's just what the latest issue of Forbes has done, by offering a courageous exposé of NY attorney general Eliot Spitzer's jihad against Wall Street. No doubt Forbes' readers are as eager as any others to hear about Spitzer's righteous vengeance against those being scapegoated for investors' bear market losses. Nevertheless Forbes has enough integrity, courage and respect for its readers to call Spitzer's crusade exactly what it is: a witch hunt -- and to show Spitzer for what he is: a corrupt politician.
For example, Forbes says
- "He failed to disclose $9.1 million in loans that funded his 1994 and 1998 candidacies, in possible violation of state law. …The loans came from J.P. Morgan Chase --one of the banks that Spitzer hasn't investigated."
- "…his father must be paying off the two loans, a potential violation of campaign finance laws that limit the amount candidates may receive from family members to $260,000. At first Spitzer told reporters the money had come from his personal savings. But with just days to go until the election, he admitted to the New York Times that his father had lent him money to repay the first Morgan loan."
- "To dig up still more money for his 1998 campaign, he turned to an old law school chum, hedge-fund manager James J. Cramer. In the 1990s Spitzer had invested an undisclosed sum in Cramer's fund, and Cramer says he made Spitzer a "boatload" of money. Cramer would pick up bits of news, load up on the right stocks, leak the gossip to Wall Street analysts and bail out after the price popped."
- "He filed a civil suit against five telecom executives alleging they gave their underwriting business to Salomon Smith Barney in exchange for access to hot initial public offerings--even though no law expressly prohibits this."
- "…Spitzer appeared as a guest on Kudlow & Cramer, a CNBC talk show cohosted by his old money man, Jim Cramer, who on the show identified Spitzer as 'one of our most courageous public servants.' …And on Apr. 25 he told CBS Evening News that if Merrill continues 'to maintain that what happened was inappropriate but wasn't illegal, then there will be no settlement. Then there will be much tougher sanctions. There could be criminal charges. And the fate of their company is in their hands.' Yet state ethics rules prohibit lawyers from using the threat of criminal liability to obtain advantage in a civil settlement. The regulations also ban lawyers from speaking out on matters that could prejudice a jury."
- "Last July Spitzer met with… Thomas Brown of hedge fund Second Curve Capital ... Spitzer assured him that the Merrill fine was just the beginning and spoke of his plans to investigate new-issue allocations. The next day Brown posted Spitzer's comments on his own Web site. Brown says he didn't trade on Spitzer's revelations."
- "While Spitzer railed against conflicts of interest, he may have had some of his own. He insists it wasn't wrong to accept a campaign contribution of $25,000 from Joseph Flom, the Skadden Arps partner who negotiated the settlement for Merrill, because the cash didn't come from Merrill itself. On Sept. 3 Spitzer accepted a $10,000 contribution from Stuart Subotnick, a director at Metromedia Fiber Network, whose chairman is being sued by Spitzer's office."
- "The Founding Fathers would be appalled. The line of demarcation they so carefully drew between federal and state power has been breached. We now face the prospect that various rogue states, getting into the securities regulation business, will extract extortion payments from Merrill Lynch and all the other big brokerage firms… Securities law should, by congressional preemption, be cleared of state involvement. No longer would we have a state decreeing (as Massachusetts once did) that Apple Computer's shares are overpriced and therefore cannot be held by its citizens."
Fortune never questions Spitzer's integrity. In fact, instead of criticizing Spitzer's conflicted connection with Cramer, Fortune has the gall (or is the ignorance?) to quote Cramer extensively as a source, evoking adulatory anecdotes from their college days showing what a boy scout Spitzer was, without once even mentioning their business relationship.
Fortune celebrates the fact that Spitzer has never gotten any actual civil or criminal convictions in his jihad. For Fortune, that's a sign that Spitzer is operating on a higher plain, above mundane matters such as guilt, innocence, or justice: "The overriding goal is real and rapid reform of American business."
Fortune doesn't bother to adduce facts to prove that such reform is necessary, or to show why the attorney general of New York ought to be engineering such reform on behalf of the entire United States. It merely notes that Wall Street has been in "a spasm of greed," and says "There is no doubt, of course, that reform is needed." (Lesson: never trust anyone who says "there is no doubt" and "of course" in a single sentence.)
The only "facts" offered in support of Spitzer's jihad are polling statistics -- for example, "A poll conducted in February by the Pew Research Center for the People & the Press, as the Enron scandal was breaking, showed that 66% of Americans thought business executives had low ethical standards…"
It's just the kind of financial journalism we've come to expect from this sister publication of People Magazine -- give the people what they want: big celebrities and big scandals. Just remember what Fortune was saying in 1999 and 2000 -- then what the people wanted was cheerleading on Internet and technology stocks, and that's just what Fortune gave them (as did the Wall Street analysts whom Fortune now thinks ought to be "reformed" out of existence).
Who can forget such Fortune whoppers as 10 Stocks to Last the Decade [8/14/2000], touting a list of hot buys under the caption "Retire When Ready: Ten Stocks to Get You There", including Broadcom at 237 (now 19.73), Nortel at 77 (now 2.25) and…there is no doubt… of course… Enron at 73 (now nonexistent).
An ironic personal note… the author of the Fortune piece on Spitzer is Mark Gimein, who wrote a glowing feature on MetaMarkets -- the dotcom I founded way back when, which has long since given up the ghost -- for Fortune's "Cool Companies of 2000" round-up.
Posted by Donald L. Luskin at 12:17 PM | link