One example of the worst aspects of financial journalism
What if two men, in the year 2006, said “Hey, America’s financial system is running up a dangerous amount of risk. Loose credit is creating a bubble in the housing sector. This bubble is certainly going to burst, and it will drag America’s economy into a deep recession.”
You might think that these two men were very smart. You might think that they deserve a great deal of respect for their foresight.
The two men in question are Nouriel Roubini and Nassim Taleb. They were just on CNBC – I found this clip quite surprising. The 5 journalists who interview them greet them with a fair amount of hostility.
Roubini and Taleb are both fairly negative. They have a dark view of where the economy will be over the next 3 or 4 years. Their negativity seems to get in under the skin of the journalists. The journalists run a financial show, what they seem to want most is good news, a reason why their viewers should start investing in the stock market again. Neither Roubini nor Taleb give them what they want.
Roubini says the depression might be a deep U-shaped depression. One journalist responds “So? That’s not the end of world, is it?”
Taleb says credit card defaults will peak at almost 4%, and one of the journalists says “It’s still under 5%!”
One of the female journalists says to another journalist “Doesn’t it seem like the peak of hysteria that these men received standing-room only crowds at Davos?”
Towards the end, one of the journalists starts asking, over and over again, “How is this actionable? Give us something actionable!” The journalists all want investment advice. Towards the end they repeatedly ask Roubini and Taleb what they are personally invested in.
The journalists may have occassionally had some valid point to make, but the overall impression I was left with was one of emotional resistance and denial of all bad news. The journalists attacked the men because the men had bad news to share. Sadly, I can’t recall many times when I’ve seen a corporate CEO challenged this vigorously on any finance show.