“But eight point one percent. . . . Uh, that’s what you said, right, Zandi?”
“I said eight. I said eight. Eight point one is worse than I expected.”
“I mean, this is bad, right?”
“There’s nothing redeeming about it. . . . There’s nothing good about it. . . . I don’t see anything redeeming about it at all. . .”
“So why are the futures higher? Any idea why the futures are higher?”
“Well, there were articles out yesterday that said if it was just a complete blowout. . . . It’s a capitulation, a capitulation. That this is the worst; that was the, that was the talk.”
“Well, you could now say that February was better than December and January!”
“But we haven’t got the revisions yet!”
“It’s a capitulation . . . but when you look at the private sector forecasts that are out . . . things are still gonna be worsening.”
“It’s very very . . .”
“But the futures . . .”
That is the sound of the CNBC in the moments following the worst jobs report in the history of jobs reports. Eight people with at least as many advanced degrees among them are assembled onscreen on March 6 in the network’s customary “octobox” grid formation to hold forth on this fresh piece of data, the 8:30 a.m. release of which a timer in the corner has been ticking toward by the hundredths of a second. In this economy, the network’s promotional spots remind viewers at every commercial break, the most valuable asset you have is information. CNBC: Now more than ever. How valuable is it now to be told America is screwed? (Now more than ever?) We learn that in February, 851,000 more Americans have been added to the nation’s out-of-workforce and, worrisomely, two hundred thousand have been jobless since December and January but were simply delayed along the path toward becoming statistics, meaning February’s numbers could climb further. The chief appeal of the octobox—its animated eight-way debates—is somewhat limited when there is such consensus about the consensus. “There’s no way that we could or should put a positive spin on these,” White House economic adviser Christina Romer confirms, smiling weakly, as if to a grandchild who hasn’t quite learned to accept that Daddy isn’t coming home.
Exactly a year before this jobs report, the last of the optimistic forecasters on Wall Street “capitulated,” in Wall Street parlance, to the reality of a deep recession. Sixty-three thousand jobs had been lost in February 2008. Angelo Mozilo, the persimmon-skinned former CEO of Countrywide Financial, the subprime mortgage lender, was being grilled on Capitol Hill about the nine-figure compensation package he got peddling the predatory home loans that were upending neighborhoods across the country. The Dow closed below 12,000 for the first time since November 2006. “Godot,” the theretofore relentlessly bullish economist Edward Yardeni wrote in a research report that day, “has arrived.”
A few days later Bear Stearns collapsed. By the end of the year the most salient remaining arguments against the nationalization of the banking system were practical concerns. A consensus began to emerge about the nation’s economic narrative: a few bulge-bracket banks had bilked the broader economy of trillions of dollars with the phony profit margins they booked by inventing new financial “products” that packaged, traded, and placed evermore complex bets on consumer debt. They said they were ensuring the “efficient allocation of capital,” but they were allocating a suspicious amount of capital to themselves. Wall Street, in short, had royally screwed Main Street.
But rarely will one hear this consensus voiced on the deepest-pocketed journalistic outlet covering all these stories. When the subject of taxpayer-subsidized bonuses comes up, for example, CNBC’s sources on the trading floor will assure you they share the outrage, but “level heads”—CNBC seems to hold levelheadedness in the utmost regard these days—must not succumb to “class warfare.” Class warfare has been the subject of several CNBC segments already this year, not that the network seems to have a clearly defined view of what class warfare is, simply that the market doesn’t like it.
And, as ever, the market is paramount. The one question at the forefront of CNBC’s mind and mission, from which every other question follows: Up, or Down? If down: Again? If down: When up? The question is perplexing as ever on the March 6 morning of the jobs report, as Mark Haines, the rotund and ruddy-faced “Squawk on the Street” anchor, plods around the floor of the New York Stock Exchange with a furrowed brow. “The selling has just been relentless,” he remarks. Ron Insana, recently returned to CNBC after leaving to start a hedge fund that failed, explains the market’s continued fall with the fact that “we’ve broken so many technical barriers on the downside already.” To trade like the pros, a promotional spot says, you need to think like the pros. And the pros are telling us that the market is down because it keeps falling down; it has gotten so low because it’s already so low. The pros will stay short until they start going long again.
Watching CNBC one gets a distinct sensation that it is still waiting for Godot. To Buy or Not to Buy (and what to Buy)—that simple line of inquiry pervades every minute of programming for seventeen live hours a day domestically, and the other seven in Europe and Asia. The answer can be elusive in times like these; often the network books guests who do not want to answer it. In February, Power Lunch, the midday show, booked two of the canniest thinkers to emerge in the crisis, Nassim Nicholas Taleb, the options trader and Black Swan author, and the economist Nouriel Roubini—only to find the two men stubbornly averse to saying anything that might risk making viewers any money. Roubini expounded upon the virtues of the Swedish model of bank nationalization and the dangers of a bubble-driven economy but refused to set a date at which he expected the market to turn around. When reporter Roben Farzad asked “Mr. Black Swan” where he would invest his money for the college fund of a hypothetical child born next month, Taleb began unloading on the extravagant compensation schemes that incentivized investment bankers to take excess risk. “But how is this actionable? How is this actionable? Do I stick my money under a mattress?” Farzad pressed. “I’m not here to give immediate investment advice” Taleb shot back. “Yeah, you’re the prophet of gloom and doom, but I need to know where to put my money now,” Farzad continued, and Mr. Black Swan finally offered that all his money was in various currencies, though he wouldn’t say which. The bullying wasn’t personal. The Monday after the jobs report, Larry Kudlow gave the same treatment to Peter Schiff, possibly the only well-known economist with views more comically laissez-faire than his own, on the evening’s Kudlow Report. “Peter Schiff!” he barked. “Is Warren Buffett right to be a long-term bull on American stocks? Yes or no.” Schiff was meek. “It depends on what the long term is,” he said. Kudlow pressed. “Yes, or no? Yes, or no? Yes or no?” he repeated, and another three or four times after that. “Yes,” Schiff finally relented. “But not now!”
On CNBC, information is still an “asset,” and CNBC would not be unloading all these assets on you if they were not, to use the network’s most cherished term, “actionable.” CNBC would not be waking up at 5 a.m. to check the Nikkei and taking calls on four separate cell phones at every commercial break and elbowing its way through the trading pit to catch the 5 p.m. shuttle to Washington if it had any doubts as to the sincerity of your intention to take action. On jobs-report Friday, reporter Scott Wapner begins a segment from the Nasdaq Market Site this way: “One of the best things about living in New York and working here too is that you never know who you’re gonna bump into on the street.” Potentially actionable information still lurks around every busy street corner! Wapner had just had a chat with Arthur Sulzberger Jr., chairman of the nearby New York Times Company, whose stock was hovering around $4 a share at the time. Sulzberger tells Wapner the company will not rule out charging people to read the paper on the Internet. “I asked ‘Just how bad is it out there. Is it the worst you’ve ever seen?’” Wapner concludes his segment, pausing briefly. “He told me, ‘I’m not that old, so yes, this is the worst I’ve ever seen.’ ”
The worst recession most americans have seen has accelerated a full-bore depression in the industry of journalism. About 12,000 journalists have joined the unemployment statistics since January 2007 by CJR’s count; in the business universe, fifty-five weekday standalone business sections have died since the fall of 2007, most recently at The Fayetteville Observer, along with nineteen once-weekly sections, according to Chris Roush, who teaches journalism at the University of North Carolina at Chapel Hill.
All this is part of the reason armchair ombudsmen are so very disappointed in CNBC these days. Serious journalists track down the fudged documents that unscrupulous mortgage brokers used to qualify dementia-stricken octogenarians living on $1,100 for $2,400-a-month adjustable-rate mortgages, as The Washington Post did in November. Serious journalists file Freedom Of Information Act requests with the Federal Reserve demanding the details on the financial institutions that reaped the rewards of the aig bailout, and hunt down the discredited statisticians who built the foolproof model by which the firm catastrophically oversold and underpriced obscure credit derivatives that would take down the global economy. They retrace the chain of events whereby the most egregious abusers in the financial system lobbied to be regulated by the three-martini-lunching slackers at the Office of Thrift Supervision. Serious journalists have worked ninety-hour weeks for a bonus-free sixty or seventy grand a year, only to find themselves released into the running pink-slip party that has already claimed their friends.
CNBC did provide a glimpse of what it could be, in a mostly on-target special report with David Faber, “House of Cards,” on the financial crisis. But meanwhile, CNBC produced a special report on how the crisis has impacted the world’s billionaires; invited former aig ceo Hank Greenberg on air to complain about the punitive terms of his company’s $170 billion federal bailout, heaped disdain upon the nation’s reeling auto manufacturers for asking for a bailout while assailing the Fed for allowing Lehman Brothers to fail; and nurtured the stardom of a trading pit correspondent who called for—in what Gawker editor Alex Pareene dubbed the “least sympathetic populist rage ever”—a “Chicago Tea Party” on Lake Michigan protesting pending mortgage-modification legislation on the grounds that “subsidizing losers” on their payments would turn the country into Cuba.
The Tea Party’s Paul Revere, Rick Santelli, bowed out of an appearance on The Daily Show, sending host Jon Stewart on a crusade against CNBC that Jim Cramer, its messianic, bald stock-picker, took it upon himself to answer. A lawyer and Democrat who used to write for The New Republic, Cramer seemed an odd substitute for Santelli, a libertarian conservative futures specialist. But Stewart’s righteous outrage could have fueled a rhetorical victory against Milton Friedman himself. In an endlessly promoted confrontation the comedian aired an old video clip from Cramer’s subscription investment-advice Web site, TheStreet.com, in which Cramer advises traders to start bogus rumors to manipulate stock prices—and preferably plant them on CNBC. “I want the Jim Cramer on CNBC,” Stewart told his guest, “to protect me from that Jim Cramer.” Cramer mostly squirmed. Stewart continued: “When I watch that I get, I can’t tell you how angry that makes me because what it says to me is, You all know. You all know what’s going on. You can draw a straight line from those shenanigans to the stuff that was being pulled at Bear and at AIG and all this derivative market stuff that is this weird Wall Street side bet.” Within days a group of progressive economists and journalists led by Dean Baker, who co-directs the liberal Center for Economic and Policy Research, launched a campaign to “Fix CNBC,” with an open letter to the network challenging it to “publicly declare that its new overriding mission will be responsible journalism that holds Wall Street accountable.” More than 22,000 people had signed the petition by mid-April.
But there was something sad and anticlimactic about the public shaming of Jim Cramer, partly because he is one of the network’s few personalities who interacts with the investing public every day on his call-in show, and because the difference between the sort of market manipulation Cramer detailed on his Web site and the abuses of aig and Bear Stearns is not one of a “straight line” but about eight or nine zeroes in magnitude. “Absolutely we could do better,” he told Stewart. “Absolutely. There are shenanigans and we should call them out. Everyone should. I should do a better job at it… I’m trying. I’m trying. Am I succeeding? I’m trying.” In the blogosphere, there was general agreement that Cramer was a poor stand-in for the network’s cast of talking heads.
If Cramer does share anything with Santelli, though, it’s that both men fall into what could be called the network’s cast of market transcendentalists, people who believe they can sense the interrelated trades of their respective markets on an intuitive level and seek to transmit its moods to viewers with every molecule of their beings. Which is to say, they are fun to watch: Santelli for his eyebrows and almost operatic (if incomprehensible) circumlocutions on monetary policy, commodity prices, and accounting standards; Cramer for his visible and audible torment on a weak trading day. The coexistence of finance and entertainment was blasphemy to Jon Stewart, who sternly told Cramer, “it’s not a fucking game!” prompting Eddy Elfenbein, who runs the blog Crossing Wall Street, to write, “The dirty secret is that stock market forecasts are fun. It’s odd that people ignore this basic insight. . . . Picking stocks and seeing which way the markets go every day is one of the best things about investing. . . . Don’t take this one simple pleasure from us.” And while professing to be “ecstatic” that his cause had gained a wider audience, the anonymous blogger behind the site CNBC Sucks, which mixes lewd commentary on the measurements of the network’s famously fetching female reporters with angry leftist rants on tax policy, lamented that Stewart was picking on the wrong problems at CNBC.
So what are the right problems with CNBC? i called Taleb a few weeks after his Power Lunch appearance to get his opinion. Few are better positioned than Taleb to answer the question. He is, for one, a professional trader of derivatives, the unregulated securities that accelerated the panic of ’08. If CNBC neglected a journalistic duty, it began with ignoring derivatives and other securities that are difficult to invest in or even get pricing data for.
As it happens, the market for those securities is far bigger than the stock market on which CNBC focuses its energies. It is also far more lucrative; a startling if little-noticed February column in the Financial Times by Citigroup’s chief global equity strategist pointed out that global equities delivered a negative 29 percent return over the ten years prior, in stark contrast to government bonds, which had delivered an 80 percent return. The real action over those ten years, however, took place in riskier bonds and the complicated “swaps” that gained and lost value in tune with the market’s perception of their creditworthiness and the direction of interest rates. The advent of those securities essentially made it possible, and profitable, to speculate on bonds as one would stocks—for those able to play the bond market, which requires not only serious cash but a Bloomberg terminal for tracking prices. And that’s just bonds: the prices of derivatives like credit default swaps, which rise and fall in accordance with underlying bonds, are almost impossible for someone who’s not a derivatives trader to find out; there’s no exchange or clearinghouse for the things, even as hundreds of trillions of dollars in “notional” value were tied to them at the height of the crisis. The problems with CNBC are all rooted in an underlying fraud, an insider game that was not CNBC’s creation.
These days on CNBC strategists incessantly advise viewers to rotate their holdings from stocks to bonds. But other than through bond funds, that’s easier said than done, and so CNBC doesn’t spend much time detailing the specifics of bonds, except inasmuch as they pertain to the broader market. And why should they? Home viewers can’t trade bonds, and CNBC viewers who can know better than to rely on it for anything other than what the broader “market” is doing.
Taleb, for his part, is quick to stress he didn’t actually watch CNBC, and only appeared when he had a book to promote, and when he had been a viewer, back in more active trading years, he usually turned the sound off. Taleb’s chief grievance with the network “all goes back to a chapter in Black Swan, the ‘narrative fallacy,’ ” he says, advising me to revisit his book before I press him further, and I oblige. Put simply, the “narrative fallacy” is the seductive danger of stories we tell ourselves. Narratives almost always conflate correlation with causation; that, of course, is no truer than in the monotonous narratives reported every day about what the stock market did and why. The daily gyrations of the Dow Jones Industrial Average reflect the aggregate of an unfathomably huge multitude of actors and variables and individual decisions—and yet it still comprises merely thirty stocks; it generally defies explanation, and even if one could say with certitude why exactly it moved the way it did one day, it wouldn’t technically mean much of anything.
It was the Dow’s meteoric rise in the 1990s, of course, that transformed CNBC from an obscure cable backwater to a media juggernaut that for a brief period during the tech boom pulled in better ratings than CNN. In 1998 the network produced a three and a half hour special to commemorate the first day the Dow closed above ten thousand, an endeavor Howard Kurtz detailed in his 2000 book on financial journalism, The Fortune Tellers. Because the index shot above ten thousand for many days before it finally closed there, the program’s producer scrambled daily for weeks to book new guests for a special before the thirty stocks finally conspired to rescue her from a “perpetual Groundhog Day” that only served to expose “the absurdity of the entire enterprise.”
A little over a decade later, the Dow was back in 1997.
A small irony at the network concerns the ambitious “I Am CNBC” promotional campaign that has been airing during commercial breaks all winter, for which each of the network’s thirty New York-based personalities filmed a thirty-second, black-and-white spot delivering a brief autobiographical monologue ending in “I am [name]. . . . I am CNBC.” We learn the sweet-faced Squawk Box anchor Becky Quick was an “oil field kid” and a proud Rutgers grad, commodities reporter Sharon Epperson bagged groceries, and Maria Bartiromo was a coat-check girl. We hear about all manner of awards and nominations, die-hard sports-franchise loyalties and harmless eccentricities, and, in the apotheosis of the form, we hear a slightly faster-paced extended riff from the man who is arguably CNBC’s most fearsome reporter:
I am a writer . . . son of an ironworker . . . son of New York . . . Golden Globes prospect . . . a Pulitzer Prize nominee . . . I’m a clothes horse . . . Afraid of heights . . . in love with my wife. . . . I’m a fantastic cook and I can prove it. In college I was a great dishwasher. . . . My mom called me Chucky, but no one else better try it. . . . I brush my teeth at my desk. . . . And if I were to die in the job I would be very honored. I am Charles Gasparino. . . . I am CNBC.
Gasparino taped the spot, and submitted to another hour or so of extended self-revelation for the CNBC.com Web site, on September 15, the day Lehman Brothers filed for Chapter 11 bankruptcy protection, causing a run on a major money market fund that had invested in its bonds that cascaded through the financial system and threatened to tie up the majority of the world’s money supply if not for massive federal intervention. Erin Burnett, the luminous mid-morning anchor who has been perhaps the network’s most visible public face during the crisis, taped her spot that day too. All thirty spots were taped between the fifteenth and the eighteenth of September, arguably the most turbulent four days in the history of finance, and thus one of the stranger allocations of newsroom resources in recent media history.
The week before the October 2007 launch of Fox Business Network, TV Week asked CNBC president Mark Hoffman if the specter of Murdoch would redirect the network’s focus from the high-end Wall Street viewership (for which it competed with Bloomberg Television) toward heartland viewers drawn in by Fox. “Let me tell you how we look at it,” he responded. “CNBC isn’t about Wall Street or Main Street. We’re about any street where people either have wealth or aspire to have wealth.” It was a statement suffused with trademark doublespeak, what Thomas Frank, the Wall Street Journal op-ed columnist, lambasted as “market populism” in his 2000 send-up of the CNBC-abetted rise of the shareholder society, One Market Under God. But as a programming philosophy, CNBC’s stubborn resistance to acknowledge a conflict of interest between financiers and the refinanced has worked well. And as the tour de force of market-populist philosophy that the “I Am CNBC” campaign suggests, the notion that what’s good for the Dow is good for America is inextricable from the network’s corporate culture. (“We would say we’re pro-investor,’ ” explains an anchor earnestly.)
But with investors suddenly jolted back to the late nineties—before the markets learned to cheer every time Alan Greenspan cut interest rates in spite of asset-price bubbles, before they learned to cheer on his valiant efforts to fight the regulation of credit default swaps, before they cheered on the repeal of Glass-Stegall and the repeal of the uptick rule—CNBC seems, slowly, to be reevaluating what it thinks is good for the Dow ergo America.
“What I want to know,” Erin Burnett declares one afternoon on the subject of Obama’s fiscal policy, “is what everyone keeps saying is so radical. Because whenever I ask that question, ‘what’s so radical here,’ they kind of just say ‘increasing taxes, that’s so radical.’” She looks underwhelmed. “You gotta get more specific than that to make the case!” Explaining why he expects China’s stimulus plan to be more effective than ours (“Basically they’re saying, we’re not gonna give you cash, we’re gonna give you a certificate and it’s only good for a washing machine—doh! Is that brilliant?”), Cramer pauses a minute, seemingly to remind himself why he doesn’t just emigrate, and regains composure. “Look, they don’t live in a democracy,” he decides. “A democracy’s got a lot of considerations that make it more difficult. I’ll take the freedom over what they got over there.” And convening to discuss whether Obama’s condemnation of Wall Street’s distribution of $18 billion in bonuses for 2008 amounts to “class warfare,” Charlie Gasparino and Dennis Kneale agree with Melissa Francis and Larry Kudlow that it most certainly does. But when Kneale begins obtusely condemning the compensation packages of auto workers, Gasparino interjects.
“Here’s the difference between what’s going on on Wall Street and in the auto industry,” he says, closing his eyes and shaking his head for a split second of contemplation. “The auto industry did not destroy the economy. . . . The auto industry did not destroy the economy. And that’s the problem that Wall Street has. I have so many friends on Wall Street, and I hate class warfare and Larry, you and I had this discussion three years ago when [former Bear Stearns CEO] Jimmy Cayne made $40 million . . . and you and I said, well, based on the numbers, and what he’s done . . . we thought he deserved it! But in retrospect, when you think about what he did, what they did at every firm, the leverage—and it’s not just the leverage but what they leveraged with—and the fact that: they destroyed our economy.”
It is almost chilling, if you’re a regular watcher of Gasparino, to hear him so plainly assert that the narrative that holds that people make money because they deserve it is utterly false. But like all moments on CNBC it is quickly lost, to Larry Kudlow and the octobox and the Dow futures.
The message of Waiting for Godot was subject in its time to nearly as many interpretations and theoretical frameworks as the modern-day stock market, which was the source of much exasperation to Samuel Beckett, who claimed its theme was simply “symbiosis,” and perhaps there is something in that, where Vladimir is Wall Street and Estragon is Main Street and all of us are throwing our shoes at the TV sets at the sight of Larry Kudlow, thinking we simply can’t go on listening to that guy go on and on. But now more than ever, we can’t go on, we will go on. We are CNBC.