[Corp. Watch] Embedded business media kow-tow to Dow

[Corporation Watch]

Brain-Dead Economic Reporting

  If Wall Street approves of Obama's plan, it must be a winner!

By Brad Reed

(AlterNet, March 25) -- The press corps has discovered an important  
scoop: Rich people approve of using taxpayer money to help rich people.

	Immediately after the Obama administration unveiled its cunning plan  
to help the titans of Wall Street avoid the hit that should result  
from their bad decisions, members of the national press corps fanned  
out across the land to ask investment bankers, hedgefund managers, and  
stock traders whether Obama's plan went far enough in lining their  
pockets with taxpayer cash.

	Setting the tone for the rest of our media, CNBC dutifully dubbed  
President Barack Obama's plan a potential "game changer" because it  
got a big thumbs-up from people like Quincy Krosby, the chief  
investment strategist at the Hartford Financial Services Group.

	Krosby said that the investment community's response to the plan will  
likely be "positive," although she cautioned that the government would  
have to provide "written guarantees" that it wouldn't do anything  
silly -- such as, say, heavily taxing the undeserved bonuses of  
executives living on corporate welfare.

	Politico's Eamon Javers similarly declared that Geithner had "cleared  
the bar" with his new bail-out scheme because it had received an  
"important endorsement from the Financial Services Roundtable," which  
deemed the government's plan to help Big Finance artificially inflate  
toxic assets above their market value a home run. Who would have  
thought?

	Similarly, Javers discovered that the CEO of a hedgefund trade group  
-- whose members stand to make a killing by using government cash to  
subsidize and insure their purchase of the assets -- also thought the  
plan was a swell idea.

	There was some trouble in paradise, however, as Javers also reported  
that a few members of the investment community opposed the plan  
because it didn't do enough to benefit the banks.

	Patriarch Partners CEO Lynn Tilton told Javers that while she was  
pleased to see the government willing to pay the banks cash for their  
worthless assets, she was worried that banks would not "share in the  
upside" if their worthless assets ever somehow regained their value.

	Elsewhere in the alternative universe known as Media World, Fox  
Business reported that Geithner's plan to bribe investors to purchase  
trash had "removed a huge cloud of uncertainty hanging over Wall  
Street" by offering "clarity over how the government will help banks  
get rid of up to $1 trillion of their toxic assets."

	Reuters, meanwhile, boasted an "exclusive" interview with Bill Gross,  
the founder and co-chief investment officer of the PIMCO bond fund,  
who called the Geithner plan "perhaps the first win-win-win policy to  
be put on the table" and said that his company was "intrigued by the  
potential double-digit returns as well as the opportunity to share  
them with not only clients, but the American taxpayer."

	And CNBC analyst Marc Chandler said that there was "a sense of  
relief" that private assets managers who bought toxic assets "will not  
face the compensation limits of other Fed programs."

	In case you haven't noticed, there's a common thread throughout all  
of this coverage, which is that Geithner's plan cannot be successful  
unless it wins the enthusiastic endorsement of the very rich people  
who drove the broader economy into the ground in the first place.

	The press corps' primary gauge of measuring rich peoples' happiness  
is the Dow Jones Industrial Average, which it uses as a general  
substitute for actual economic information.

	When the Dow was crashing a few weeks back, the crackerjack staff at  
Politico was asking pundits if the Dow was spooked by Obama's  
socialist plans to raise taxes on rich people to help poor people pay  
for healthcare.

	But after the Dow rose by more than 500 points yesterday, Politico  
speculated that "Barack Obama's aides must have been breathing a sigh  
of relief to see the real-time Dow ticker headed upward after  
Geithner's big announcement."

	Indeed, the Dow Jones' rise and fall is deemed so important by many  
members of our establishment press corps that it far outweighs expert  
opinion.

	After New York Times columnist and Nobel Prize-winning economist Paul  
Krugman blistered Geithner's plan yesterday, CNBC's John Harwood  
smugly brushed off his criticisms by stating, "if the White House had  
to choose between praise from Paul Krugman or plus-300 points on the  
Dow, I suspect that they would happily take the latter."

	What's so galling about much of the media's response to this plan is  
how focused they are on the short-term political ramifications: i.e.,  
if the Dow jumps, it must be good for Obama; if the Dow falls it must  
be bad for Obama.

	By using metrics such as the Dow to discuss a plan's economic merits,  
the press ignores vastly more important questions, such as whether or  
not the assumptions made by the Treasury Department are at all correct.

	Under the Geithner team's calculus, the toxic assets weighing down  
banks' balance sheets are being drastically undervalued by panicked  
investors.

	With just a wee little push from the government -- or a bribe, as the  
more shrill and unbalanced of us would describe it -- they seem to  
think the assets will recover at least some of their value, enough to  
make subsidizing them a worthwhile endeavor for investors and taxpayers.

	But what if these assumptions are wrong? What if the toxic assets on  
the bank's balance sheets really are just piles of trash consumed by  
underwater mortgages that will never be worth anything approaching  
their original value?

	How will the government react if it turns out that many banks can't  
sell these assets, even at artificially high prices, because doing so  
would render them insolvent? Alas, with a few notable exceptions, you  
won't find a lot of our mainstream press corps asking such questions.

	Because after all, the Dow is up today, so things must be going well,  
right?

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Brad Reed is a writer living in Boston. His work has appeared in the  
American Prospect Online, and he blogs frequently at Sadly, No.