I’m pretty sure that someone out there wants the finance system to crack.
Not that anyone’s wrong to suspect it might crack: I’m the last guy on the planet that can be accused of being Dr. Pangloss. Not that they are wrong to decry the regulatory and political oversight of our finance system in general and the shenanigans of Wall Street in particular: the name of this blog is, after all, “DeepCapture.com”.
But for four years I’ve been eagerly flushing the handle while watching these guys circle the bowl. In that time I’ve developed a sense of how they move. I’m pretty sure now that their orders are, quite simply, to crack the system.
We have Joe Nocera’s Sunday New York Times piece, “Propping Up a House of Cards“, that basically says AIG has the financial world by the throat and that as they die they’ll take the rest of the world with them. Maybe so. But one would think Nocera would be able to draw on better sources than Donn Vickrey. From what is publicly known about Donn Vickrey, from what has been publicly alleged (in these three affidavits) then publicly admitted, Nocera’s continued use of him as a source (and the New York Times‘ tolerance thereof) is a disgrace. That Nocera quotes shamelessly from him signals that the gang is back in town.
But more interesting to me are recent pieces on Warren Buffett. The hit parade has been led by Doug Kass, a kind of half-bright Jim Cramer-wannabee, but Jim himself has added his own special brand of empty insinuation. From the last four weeks alone:
January 27, 2009 “Kass: Is This the End of Warren Buffett?” This article reads (no kidding), “Reflecting some of the above concerns and since late September 2008, Berkshire’s shares have fallen from $145,000 a share to $85,000 a share. There is no apparent end to the decline in sight. All good things, it seems, in markets and life, must come to an end.” That is to say, the analysis that Doug Kass has to offer is that something has gone lower therefore there is no end in sight to its going lower. (Isn’t that the quintessential panic argument?)
February 18 “Cramer on BloggingStocks: Buffett sells America“.
February 18 “Kass – Buffett Watch: Questions for the Oracle of Omaha – Doug Kass says Warren Buffett’s changes to the Berkshire portfolio raise more questions than answers.”
February 20 “Kass – Buffett Watch: Holdings Getting Hammered – The Berkshire Hathaway investment debacle continues apace.”
February 23 “Cramer: Buffett Watch – Jim Cramer advises investors to look at Warren Buffet’s inconsistencies before following his investment strategy”. Interestingly, in this video Jim Cramer correctly predicts precisely what Kass is going to say on television later that night (not that there is coordination between them).
February 24, 2009 Kass – “What’s Hot and What’s Not in 2009?” (Berkshire is listed as a “Not” with a link to another Cramer hit piece)
February 24 Kass “Buffett Watch: Bad News for HOG – Despite the assist from Buffett, there is some bad stuff in Harley-Davidson’s 10-K.”
Then February 28, the New York Times published a lie. In his annual shareholders’ letter released that morning Buffett had written:
“We’re certain, for example, that the economy will be in shambles throughout 2009 – and, for that matter, probably well beyond – but that conclusion does not tell us whether the stock market will rise or fall” (page 3).
That evening, New York Times journalist David Segal published an article which states in the third paragraph:
“But he [Buffett] also needled regulators and an assortment of unnamed chief executives as he predicted that fallout from the credit crisis would leave the stock market a shambles through 2009.”
Regarding a figure whose every utterance is scrutinized for meaning that can rock markets, such sloppiness is at best careless editing. Going on my one experience with New York Times Business Editor Lawrence Ingrassia (cf. “Anti-Investigative Reporter Joe Nocera and The Newspaper of Non-Record“) careless editing of a crucial point is not something I would put past him. Nor would I, for that matter, ask the fellow to whip up a batch of jet fuel. But the consistent direction of such little liberties with the truth must give one pause.
As some readers may be aware, I have known Mr. Buffett since I was a lad, and after my parents, he has been perhaps my greatest teacher in life (which is certainly not to imply any endorsement from him on this Mitzvah of mine). However, I am not writing this article because of that connection, nor have I spoken to him of this, and I am sure he could give two hoots what these clowns write and say about him. Seeing a self-confessed criminal like Jim Cramer (“Jim Cramer is a Complicated Man“) attack Warren Buffett’s ethics is like seeing Ratso Rizzo (the Dustin Hoffman character in Midnight Cowboy) giving grooming lessons to Mr. Rogers, while seeing the New York Times using discredited sources and fabricating positions for Warren Buffett is nothing too unusual, as far as that goes.
Instead, I am writing this because there is a pattern to which we of the Market Reform Movement began calling attention in the last few years, a pattern that is amply described in Chapter 2 of my work here (“Journalists Tried to Be Players But Became Pawns“) and in Mark Mitchell’s many Deep Capture pieces (e.g., “Email Exposes Short Seller Plot to Destroy a Public Company“). These hedge fund squeegee boys got caught in a spotlight (and while mentioning DeepCapture is something they avoid like the plague, from reviewing the IP logs I know that every major news organization in America visits this site regularly and extensively, so I can promise you it is indeed in their spotlight). For a year or more, that pattern submerged itself. Tiny stabs were occasionally taken (see Bethany’s piece on me on her way out the door of Fortune and my response: “David Einhorn, Cheryl Strauss, and the ‘Unavailable’ Bethany McLean“). But by and large, these stumblebums have been on their heels.
Yet suddenly they return, quoting hedge fund choagies to support doomsday predictions while firing up an attack machine on Buffett, up to and including having the New York Times publish a fabrication regarding the single line in Buffett’s letter that will get more attention than any other. So in sum, it appears to me that certain folks have piled up a lot of favors in a favor bank, are short the market, and are using these HandiWipe journalists to crack it for them.
As I said, no one can claim that I am being Panglossian: few have been out there arguing as loud and long as I that the sky might fall.
But right at this moment, I smell skunk.
Errata: DeepCapture has been relocating its servers and this has created numerous issues. A draft of this essay that was inadvertently set live last night at midnight had several errors which have been corrected: a number of flagrant typos were still present (corrected); I misidentified a law professor with a good history with one of San Diego hedge fund choagies (corrected & apologies); and the comments were accidentally turned off (corrected). In addition, you will continue to notice various other glitches occuring in the site: most text is in italics, buttons are appearing where they should not be, and the new navigation format is somewhat stillborn. When the move is completed this week thes problems should get cleared up as well.