Debits & Credits: Fortune and The Nation on Same Page

Plus: LAT's Couric flipflop; FT channels Wal-Mart; WSJ covers it; a missing pipeline detail; etc.

Credits to Fortune and The Nation for broad but incisive pieces that explain the credit crisis and the economic slump. These pieces, one from within the temple of capitalism and the other from without, are clear, concise, and put the blame where it’s deserved.

Allan Sloan, in Fortune, invites all comers for a bit of 2008 Financial Crisis 101:

Why is Washington spending billions to bail out Wall Street titans while leaving struggling homeowners to fend for themselves? Why are the Federal Reserve and the Treasury acting as if they’re afraid the world may come to an end, while the stock market seems much less concerned? And finally, what does all this mean to those of us who aren’t financial professionals?

Sloan answers all these questions and more.

The only point that struck us as needing a bit more comment was Sloan’s suggestion that the Fed can’t run out of money—which he qualifies by saying, “at least, I don’t think it can.”

So we turn to The Nation on this point, where Jeff Faux explains that the Fed has only about $400 billion in free assets. Once those are used it must print money or get bailed out itself by the Treasury.

This piece assumes its audience is smart and can follow a complicated tale explained well. We all need to know what we’re paying for and why.

LAT’s About Face

What a difference a day makes.

A Debit to the Los Angeles Times for a Thursday story in which it scrambled to catch up with a Wall Street Journal scoopreporting that Katie Couric would probably relinquish her Evening News anchor spot “well before her contract expires in 2011.”

The LAT relied on CBS itself for its story, including “a person familiar with the situation” who said that “her exit is not in the works.”

But by Friday, the Times had more time to look into the situation and changed its tune, noting that Couric’s “departure is widely considered a foregone conclusion inside CBS News, according to half a dozen staffers bracing for another anchor transition.”

Reporting. There’s nothing like it.

Undue Optimism

A double Debit to Forbes this week, first for a segment in its editor-in-chief’s column that essentially says the U.S. economy will be okay because YouTube is popular and digital medical imaging is improving by leaps and bounds, and, well, a few other things. Advanced bacteria, for instance.

Don’t be misled by stock market gloom and lurid headlines on the credit crisis. The U.S. and, indeed, the global economy are on the verge of another surge of breathtaking innovations.

Like, um, movie downloads. Steve Forbes, in the span of two paragraphs, uses words like “breathtaking,” “dazzling,” “explosion,” “staggeringly”— and that’s not counting his italicized enthusiasms.

We get it. Innovation drives economic growth. Americans innovate a lot. But it takes credit and trust to get just about any company off the ground, and both are in short supply these days.

And that’s what makes the credit crisis so tragic: our out-of-control financial sector is wrecking the rest of the economy.

The wide-eyed Forbesian optimism continues in David Malpass’s column on how things really aren’t so bad.

The sharp U.S. slowdown and the recent loss in housing wealth should be put in the context of 4.8% unemployment and the housing gains of recent years, which are many times greater than the declines. With 138 million people formally employed on company payrolls and millions more working on their own, the biggest asset by far for American households is their future earnings.

With their wages stagnant for years now and unemployment jumping, most Americans see things differently.

Malpass espouses the everyone-is-to-blame line:

It’s easy to grouse about the economy and public policy. Mistakes have been made all around, with heavy penalties for some.

That’s the Wall Street line; if everyone is blame, of course, then no one is. So stop grousing, all you foreclosees!

He also disparages the idea that government should step in to regulate or “subsidize.”

The now popular storyline is that Washington must regulate and subsidize more to avert a 1930s-like depression.

That’s not the popular story line, by the way; the popular line is that regulation would tame Wall Street’s boom-and-bust excesses that hurt the real economy and that government intervention (not subsidies) would help ordinary people caught in the mortgage maw that Wall Street created. No wonder that line is popular.

Malpass, by the way, is chief economist at the soon-to-be-defunct Bear Stearns. We will take this sanguine forecast with a grain of salt.

FT’s recycled Wal-Mart news

A Debit to the Financial Times for a story on how Wal-Mart CEO Lee Scott plans to meet with Chinese suppliers in October to talk about environmental sustainability.

Not only is this not news—Wal-Mart announced all but the details of this conference last month at an event sponsored by The Wall Street Journal—but it comes on the same day the FT published an extensive profile of Scott, and a week after a front-page interviewwith Scott on healthcare (Here is The Audit’s response to that last week).

Seems like a lot of Wal-Mart in the FT to us. We understand the company is trying to change its corporate culture, and that is certainly not a bad thing, but neither is some healthy skepticism on the part of journalists.

New Wal-Mart news from WSJ

A Credit to The Wall Street Journal for an interesting A1 piece by Gary McWilliams on behind-the-scenes video footage from the Wal-Mart boardroom.

For some three decades, Wal-Mart had an outside firm shoot footage of its executives. Until two years ago, that is. Now Flagler has been making that footage available to the public—and Wal-Mart isn’t pleased.

The material is proving irresistible to everyone from business historians and documentary filmmakers to plaintiffs lawyers and union organizers.

Mass neglect

A Credit to U.S. News & World Report for a short piece on the problems mass transit is facing across the country.

This is certainly not the only article of its kind, but it is one of far too few. The U.S. infrastructure is falling apart at an alarming rate, and the national press has not paid nearly enough attention. You’re more likely to see these stories in regional papers like The Philadelphia Inquirer, and while that’s a good start, this is not just a city-by-city issue.

A pipeline too far

A Debit to The Wall Street Journal for an incomplete article on a plan to build a pipeline to ship natural gas from Alaska. The story tells us that the pipeline would bring Alaska gas to the Lower 48, but doesn’t tell us that’s only if a hoped-for phase two goes through, something that’s still in doubt.

A New York Times article explains the two phases, and includes a useful map:

The companies said the initial plan is to build a 2,000-mile pipeline from Alaska’s North Slope to the Canadian province of Alberta; that would add to the total North American gas supply, freeing some Canadian gas for export to the United States. Eventually, the pipeline might be extended 1,500 miles, to Chicago.

Russell Gold, author of the Journal piece, told us that he didn’t consider it important to mention the two phases, because the U.S. will get gas out of the project whether or not phase two goes through. How so? The infrastructure to ship gas from Canada to us south of the border is already in place.

And then there is the issue of the gas itself. According to the Times, Canada would get gas from Alaska and the U.S. would get gas from Canada. But Gold has the U.S. getting gas from Alaska.

Now, we grant that the importance of provenance is a bit academic. As Gold pointed out to us, gas is “fungible.” Canadian, U.S., it doesn’t really mater, he says. Sources intermingle in pipelines anyway. And so whether the “exact molecules” getting to the U.S. come from the North Slope of Alaska “is not really material to me.”

True, but the story leaves off a key detail, leading to an impression that the project is even bigger than it already is. Also, the map with this story shows a pipeline running from Prudhoe Bay to Chicago.

Also recommended:

Business Week gets a Credit for a piece on Nestle’s fight with local residents to construct a bottled-water plant in small-town California.

In what we think must be a first, Artforum gets a Credit for “Accounting for Taste: The Economics of Art,” a piece (not online) on the crazy art market and how it’s different than—but not entirely unrelated to—the crazy stock market.

And finally, a Credit to Harvard Business Review for a great interview (fee required) with choreographer Twyla Tharp—which, despite the interviewer’s efforts, doesn’t have very much to do with business.

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Elinore Longobardi is a Fellow and staff writer of The Audit, the business-press section of Columbia Journalism Review.