Dean Starkman loves Gretchen Morgenson

By Felix Salmon
June 18, 2009

Dean Starkman has a 4,148-word love letter to Gretchen Morgenson in The Nation; it’s far from clear that his feelings are reciprocated, despite the fact that he calls her “the most important financial journalist of her generation”, and dismisses her critics as trying to start “arguments about wallpaper design in a burning house”.

Starkman spends a full 827 words on just one of Morgenson’s stories — the one which which ran in September about Goldman Sachs’s exposure to AIG. Everybody from Lloyd Blankfein to Tim Geithner took issue with the story, and the NYT ran a correction a couple of days later, and it’s quite clear that the story was written without any consideration of Goldman’s counterparty hedging operation — which was, and is, the most sophisticated such operation on Wall Street. Goldman swears up and down that its exposure to AIG, while large, was fully hedged; neither Starkman nor the New York Times has come up with any evidence to the contrary. Yet somehow Starkman has still managed to persuade himself that “the story stands”.

Starkman is also curiously blasĂ© about the conflicts inherent in the fact that Morgenson writes both news stories and opinion columns. This violates a key principle, as laid out by the NYT’s top editor, Bill Keller:

I think you are more likely to present a full and fair-minded story if your objective is not to bolster an argument, but to search out the evidence without a predisposition – including evidence that might contradict your own beliefs. Once you have proclaimed an opinion, you feel compelled to defend it, and that creates a natural human temptation to overlook inconvenient facts or, if I may borrow a phrase from the famous Downing Street memo, fix the facts to the policy.

Starkman, by contrast, skates over the issue, saying only that Clark Hoyt’s disapproval of the Morgenson conflict — he concluded that “I would not have reporters writing opinion about the subjects they cover” was “not very convincing”.

If you’re a columnist who also reports, it’s paramount that you feel free to change your opinions over time, otherwise you are bound to end up writing news stories which are consciously or unconsciously tilted so as not to contradict ideas you’ve previously committed yourself to holding. Morgenson, I think it’s fair to say, is not the kind of person who changes her mind. And that makes her dual status as reporter and columnist highly problematic. The NYT should let her do one or the other, but not both.

Comments
6 comments so far

Felix,
I don’t buy it. GS bought CDS from AIG probably to hedge against something — like a default or a credit event on some of their other contracts.

What they’re saying is “oh we hedged our hedge” ™.
Why? If the world didn’t almost come to end ™, how did they expect to make any money since they’d be paying
a) AIG for the CDS
b) somebody else for the AIG counterparty insurance

I call BS on GS’s hedge story. I actually call double-BS on it: Because whatever position they took against an AIG default, I bet it wouldn’t come close to paying in full. They’d either have to spend a lot of money in legal fees chasing yet another stupid company which sold insurance they can’t pay (AIG’s AIG) or some entity (government, courts) would tell them to take their 40 cents on the dollar and be happy with it.

As for Gretchen, I have no problem with her having more news stories/columns/opinions/whatever and the likes of Friedman/Krugman/Brooks having less. She does a much better job than the folks with not-so-hidden political agendas at the NYT.

Posted by kman | Report as abusive

The deeply-lamented Doris “Tanta” Dungey of Calculated Risk had a whole series of columns “Picking on Poor Gretchen”. The series is worth a look for Tanta’s wit alone, but there’s a recurring theme in her objections; exactly what Felix reflects in his last paragraph – the stretching and squeezing of facts to fit an argument. And this from a lady who has no rivals I’m aware of as the US mortgage industry’s most acerbic and informed critic.

http://www.calculatedriskblog.com/search  /label/Picking%20On%20Poor%20Gretchen

Posted by Paul | Report as abusive

Second on Tanta’s defenestration of GM.

I’m with kman on the GS story, and there’s an easy way to tell if GS was telling the truth: after U/S/ t/a/x/p/a/y/e/r/s/ AIG gave GS the $20B it was “owed,” have GS reveal who the counterparties on the other side were.

The Henry M. Paulson, Jr., Retirement Trust, LLC. is more likely to be on the list than UBS, SocGen, or ING.

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