I know it may be hard for most readers to believe this, but once upon a time, the New York Times really was a very good paper. I trace its demise to its decision to become a national newspaper, which took place in the later 1990s, instead of a New York city newspaper that set national standards.
That is not to say the Times was perfect, Lord knows it wasn’t, but the average quality was high and there was not too much deviation in the caliber of its stories. Now, while the good stories are still fine indeed, the quality is inconsistent, and there are too many articles that look to be PR plants or are otherwise too obviously hewing to some sort of party line.
Like the New York Times, the Financial Times has decided to become important paper in the US, and the caliber of the paper as a whole has deteriorated. Yes, it still has some excellent reporters and columnists, but it like the Times has taken to writing up tidbits from influential sources with a notable lack of critical thought. I wish I could have my FT circa 2006 back.
Today’s object lesson is a story now on the front page of the Web edition that reports that the Federal Reserve “earned” $14 billion on its special facilities, according to an unpublished estimate by the central bank. That calculation is based on the interest it earned in excess of what it would have made on T-bills. The article then says,
The Fed assessment underlines the possibility that other central banks could make a profit on their crisis-fighting measures – at least before adjusting for the risk they assumed.
And a few paragraphs later, we get another caution:
The figure is not a complete picture of Fed finances as it excludes its company-specific bail-outs and purchases of long-term assets.
Ahem, that means it excludes some elephants in the room, such as the AIG and Bear rescue facilities. The Fed was ‘fessing up to combined losses of nearly $8.6 billion on them as of July. Willem Buiter and anyone else of a reasonable skeptical persuasion thought those losses were understated. And then we have the untallied losses on the Fed’s $1.050 trillion program of purchases of mortgage-backed securities and Treasuries. Unless the US winds up in Japan-style long-term mild deflation, those purchases are very likely to be worth less than what the Fed paid for them.
While the FT offers the right caveats. the “let’s not look at this palaver too deeply” posture means it sidesteps the real story. If anyone at the Fed treated this bogus analysis seriously, it says the Fed is not competent to oversee anything more complicated than a dog pound. pricing in the option to renew it or adjust the balance size periodically is missing a very big part of the real value here. The Fed is not going to deny renewal of these loans. Similarly, judging performance by comparison to a risk free asset is obviously bogus. Any student in a basic finance course who did a simple spread comparison, failed to assign a risk premium appropriate to the borrower, and ignored the option value of these facilities would get an F.
Since we assume that someone at the Fed does understand these issues, we are left with a second line of thinking which is actually not much more favorable to the central bank, namely, that it holds the financial press and the public in contempt and figures they will buy any and every superficial and misleading explanation, so long as it has a few numbers attached. The fact that the Financial Times dignified this rubbish will only reinforce the Fed’s imperial tendencies.
And the public is not as dumb as the Fed assumes it is. The Financial Times notes:
A recent Gallup Poll found the Fed had the worst public approval rating of nine government agencies, even lower than the tax authorities.
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I trace its demise to its decision to become a national newspaper, which took place in the later 1990s, instead of a New York city newspaper that set national standards.
I couldn’t agree more. Once the Sulzbergers decided that their paper belonged in the driveways of Sunbelt gated communities, it was inevitable that it would flatter the perceptions of the inhabitants therein. A small example: their increased coverage of college football, which no one in the Northeast cares about, even (or especially) Rutgers alumni.
A smaller cause, IMO, was the demise of New York Newsday in the mid-90s. They kept the Times honest for about 10 years there.
[…] the spin is in. As a post earlier today discusses, the Financial Times is running a story that claims that the Fed made money on its rescue […]
BTW I love your blog!
“I trace its demise to its decision to become a national newspaper…”. You are on the boundary of real insight into the natural limits of politics and government.
The FED is going to lose on its MBS portfolio I think about 60 billion dollar each time long rates rise 100bp.
The FED pushed down 30 year yields by about 100 bp with its $600 bn MBS purchases. It comes with a price yet to pay.
The WSJ went south after Murdoch took it over.
“their increased coverage of college football, which no one in the Northeast cares about”
as a Penn State alumni and 18 year resident of NYC I take exception sir! :)
but I do agree on NYT – the utility of the paper is not what it used to be. I wonder sometimes if they are on Apple and Google’s payroll.
«the Financial Times has decided to become important paper in the US, and the caliber of the paper as a whole has deteriorated. Yes, it still has some excellent reporters and columnists, but it like the Times has taken to writing up tidbits from influential sources with a notable lack of critical thought.»
The saddest demise is that of the Economist — it has become a “movement” mouthpiece, with tendentious, sometimes racist arguments spread liberally around.
Its articles used to be based on data, with nice graphs, and with witty and cynical insights on them. But it just repeats “movement” talking points nowadays, even if somewhat more subtly recently.
I occasionally still buy it just to see what the most recent talking points are and how cleverly (or often not) are they presented by the Economist.
One of the best recent examples was an editorial on the weirdos on the right, which concluded that there are weirdos on the left too, with the obligatory reference to the Rev. Wright. As if comparing the right *led and made of weirdos* with a pretend left made up largely of conservatives, and whose extreme leftists are in effect Eisenhower republicans, compares, by invoking some idiot on the fringes.
The Economist has been for a long time an unquestioning supporter of USA diplomacy (with some noble exceptions like torture), but recently it has turned up its advocacy by becoming a rabidly sycophantic propagandist for whatever campaign (against Russia, or Palestine, or Iran, …) the USA are engaging in.
The FT too has become more aligned, more “on message” too, as you note, but less so than the NYT or the Economist. I suspect there are common forces at play here, for the NYT, the FT and the Economist:
* As they try to reach a wider public, they are moving right, because most affluent americans are far right fanatics (what in the UK is called the “hang and flog” group) and they buy newspapers that validate their world view. The runaway success of propaganda outlets like Fox has surely taught a lesson to many publishers.
* I suspect also some publisher and editors have been recruited and steer the content of their media quite deliberately regardless of popularity.
The demise of critcal reporting seems to be function of the insidious debasement of the currency. It dates back to the 1970s and since then it has been inexorable.
Costs continue to increase faster than advertising and subscriptio rates. The consolidation and the demise of publications should be leading us to more efficent publishers.
The surviving publishers, however, express no sense of responsibility toward their franchise. And so, we get a lot of pap, palaver and platitudes.
«the Financial Times has decided to become important paper in the US, and the caliber of the paper as a whole has deteriorated. Yes, it still has some excellent reporters and columnists, but it like the Times has taken to writing up tidbits from influential sources with a notable lack of critical thought.»great
“And the public is not as dumb as the Fed assumes it is.”
It’s the professional class in America who are complete idiots. Nobody is dumber than the intelligentsia who have sold out their progeny’s future and theirs…for crumbs.