MSM admits keeping shtum

Edmund Conway breaks journalistic ranks to admit he should've said something sooner.

Wise after the event

I'm stung into a rant by an article I've just read. A classic example of mainstream journalist wisdom here - and only one of very many similar now available, I'm sure.

I'm don't know what the economics editor of one of the UK's most successful papers earns, but I'd be happy for him to earn double if he could tell us all this "it was so obvious" stuff BEFORE the crisis.

Not that it couldn't have been foreseen. In the late 90s, I was so concerned at US debts and the massive zoom in tech stocks driving the FTSE and Dow into the stratosphere, and so apprehensive of what I thought would be the inevitable aftermath, that I warned clients not to get into the frenzy, reminded them they had an option to switch into cash, moved my wife's pension savings into cash, and (despite the awfulness of modern British schools) resumed teaching as well as holding onto the financial advice business.

Am I wise? No, I listened to what many others were saying, and wasn't blinded by greed. But I wouldn't have learned it from the papers.

And the smugness! "Above all, the current crisis will force us to relearn one of the oldest lessons of all, one from neither the Seventies nor the Thirties but the wisdom of the centuries: that what you owe, you must one day repay." The credit bubble was created by banks, permitted by regulators and governments, and exploited by financial engineers and intermediaries - yet it is the private debtor and the taxpayer that will pay. Don't hold your breath waiting to see unemployed bankers selling the Big Issue.

Sprechen Sie Gibberish?

Most days, I read something that reminds me how little I know. And then I read the financial pages.

Let's look at the UK's Daily Mail today, Money Mail section (pages 38-39). The headline is "Storm Warning" - anything from a week to seven years late, depending on your analysis of the underlying trends.

Sub-section: "Will it continue?" Answer: volatility "for the next few months", but "the markets are fundamentally sound in that that they are not over-priced". Yet we've only just heard from Marc Faber, saying that he expects "earnings disappointments" which will show up in the dividends and so alter the p/e ratio for the worse. And on page 66 of the same paper we see disappointments at UBS, Wal-Mart, Home Depot.

The chairman of a large financial advice firm is quoted saying, "You must put this sub-prime mortgage meltdown into perspective. We are talking about £100 billion of losses. [Wait for the punchline.] This sounds like a lot, but it is just one-tenth of the size of the public sector pension liability in this country." Very large, and mostly unfunded, pension liabilities.

Usually, I throw away the money sections of newspapers; I only read them today to see if they'd noticed what was going on. But then I remember that journalists told us for years not to bother with financial advisers, when we could buy our pensions direct from the six-figure wagemen at Equitable Life.