Debits & Credits: Hold the Brass Band

Plus: Names, please?; too easy on boards; vivid scenes from Calcutta; and an east Texas courthouse, etc.

Debits to Dow Jones and Bloomberg for being a bit too rah-rah after a big stock rally on Tuesday. In these pieces, which appeared the same day of the rally, there’s too much short-term Wall Street think and not enough common sense.

Dow Jones quotes an analyst in the second graph who talks about “healing.” Bloomberg has a quote in the third graph about the market “getting a little more comfortable that the crisis is over.” These quotes are up high and not sufficiently contextualized.

Compare this to the The New York Times, which in another same-day story keeps its head. Its piece, by Michael M. Grynbaum, starts with a reminder that Wall Street has its own bizarre rules under which up can be down and then has a nice and cautious quote from a now-repentant bull in the fourth paragraph:

”Nobody’s kidding themselves,” said Ed Yardeni, the investment strategist. “The financial crisis isn’t over.”

And later:

And though some observers will take Tuesday’s rally as a sign of recovery, this type of investing strategy does not have a good track record…

Last fall, as Citigroup became one of the first Wall Street firms to acknowledge its mortgage-related assets had lost billions of dollars in value, markets rallied in the hopes that the worst was over. The Dow has since fallen 11.6 percent from its October high.

Perspective: we like it.

So name one

A Debit to The Wall Street Journal for a Thursday article on how some value funds, which pride themselves on prudence, have been experiencing losses on par with their more unapologetically rash colleagues:

When the technology-stock bubble collapsed, ‘value’ managers smugly tsk-tsked, saying it would never happen to them because when they bought a stock, they understood the business model. Now, some value funds are posting losses rivaling those suffered by go-go ‘growth’ funds in 2001 and 2002, thanks to hits to stocks whose earnings were inflated by the real-estate bubble.

But the Journal never tells us by name which value funds plummeted. We only hear about funds that steered clear of disaster. Why not air a little dirty laundry?

A story about funds getting caught in the housing bubble should include at least one.

Good local reporting—from India

Credit The Atlantic for letting reporter Robert D. Kaplan wander around Calcutta and tell us what he saw. The piece might surprise you: It’s as much about a rising, upwardly mobile segment of the population as it is about the poor.

Kaplan has a strong reaction to this economic divide, made more glaring by the close proximity of rich and poor: “Calcutta is, frankly, obscene.”

Why? Take this example: “1.5 million poor Calcuttans live within a few feet of air-conditioning, even as they will never experience it.”

But Kaplan also warns us not to only see what we have long been trained to:

…too often, our Western fixation on the visual brutality of its poverty has obscured its harsh, unsentimental upward mobility.

Kaplan doesn’t ignore either aspect of life in Calcutta.

More from off the beaten path

Continuing with the shoe-leather Credits, we liked a NYT’s piece on the resurgence of silver mining in Idaho.

With the real-estate market down and prices of silver up, William Yardley reports, “Miners are feeling less like fading local color and more like the backbone of the local economy.”

This situation might not last, of course, but it is a testament to the idiosyncrasies of the uneven process of de-industrialization.

Too easy on boards

A Debit to the Journal for George Anders’s column Wednesday on the staying power of bank boards despite the credit debacle, which so many of them failed to foresee. Anders lets them off way too easily.

But even though shareholders in the U.S. could toss out lots of bank directors, don’t look for that to happen. A union-led effort to trace culpability into the boardroom is running into skepticism from investment heavyweights.

Okay. But then Anders goes on to support this inertia. His reasoning?

…Morgan Stanley and its kind aren’t Tyco. The financial sector’s stumbles are mostly about managers’ hubris, sloppy analysis and a poor awareness of what happens when bull markets end. Those are pretty standard failings on Wall Street—and they’re a long way short of systematic fraud.

That’s the standard?

Also, Anders writes:

Directors can spot some trouble early, but they can’t protect against everything. Their main recourses are to ask tough questions, replace problem bosses and help build better safeguards, all of which are happening at the more-resilient banks. Kicking out legions of directors just means that a new generation of boardroom novices has to learn those lessons afresh.

Frustrated investors might be better served by asking how banks can build stronger boards in the future.

One way is to start making directors accountable—now.

More context needed on Wal-Mart

A Debit to the FT for a front-page story on Thursday that uncritically allowed Wal-Mart’s CEO to pontificate on health care.

The headline immediately flashed red: “Wal-Mart chief scolds business for avoiding health care debate.” First of all, Wal-Mart isn’t in a position to be scolding anyone on, well, much of anything—but especially health care. This, after all, is the company that leans on Medicaid to help pay for its employees’ health-care costs.

And yet in the FT we get:

The chief executive of Wal-Mart (NYSE:WMT) has criticised US business for not taking a lead in the debate on the future of US healthcare ahead of the presidential elections in November. Lee Scott said in a Financial Times interview that he was ‘not particularly encouraged’ by the public debate on the issues.

This story isn’t the only time we’ve noticed the FT allowing CEOs to weigh in on broader public policy debates, without providing much if any context. It’s a disturbing tendency.

Good reporting on patents

We noticed two stories on patent trolls this week—both of which earn Credits.

The first goes to BusinessWeek, and its colorful piece in the April 7 issue on the outing of a blogger who anonymously attacked patent trolls. Dry, the story is not. In addition to trolls, we get bounties, death threats, and defamation suits.

Reporter Michael Orey opens with some background:

Of the many blogs born last May, Patent Troll Tracker seemed as innocuous as any. Its focus: the obscure but controversial subject of “patent trolls,” a derogatory term used to describe businesses that make money by purchasing patents and then suing big companies for infringement. The author was clearly no fan of the practice, but his or her identity was a mystery.

And then the problem:

Through regular, copious posts, Troll Tracker quickly drew a devoted following in patent law circles, even among those who disagreed with its point of view. What readers didn’t know, however, was that the blogger was Rick Frenkel, in-house patent counsel at Cisco Systems (CSCO), the Internet infrastructure giant. Cisco didn’t sanction the blog, but it, like other tech firms, has waged a long, public battle against so-called patent trolls. And in its pointed commentary, Troll Tracker advanced views squarely in line with the company’s own agenda.

This piece is relevant beyond the rather specialized niche of patent law, raising the issues of anonymity on the Internet and the corporate use of what many people still see as a grassroots medium. Both of these topics should be tired by now, but Orey invigorates them with a story that will keep you reading.

Our second troll Credit goes to The American Lawyer for a nice look into the shifting tide at a federal court in east Texas from a magnet for patent plaintiffs to one that gives more verdicts to the defense. The reporter, Nate Raymond, immersed himself in east Texas and did some terrific on-the-ground reporting.

Harper’s gets milk

Finally, a Credit to Harper’s for an interesting piece on bacteria in milk. In “The Revolution Will Not Be Pasteurized,” reporter Nathanael Johnson gives us a tour of the raw-milk movement, and in the process offers some enlightenment on the U.S. dairy industry in general, something we probably don’t read about enough.

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