Opinion

Felix Salmon

Felix Salmon smackdown watch

By Felix Salmon
July 1, 2009

I’ve been saying for a while that much mainstream financial journalism is very weak, and that one would in many cases be better off reading blogs instead. But Choire is quite right when he notes:

Taibbi at least is explaining (or trying to explain!) complicated financial operations to the real world—while the finance writers and bloggers are often willfully obscure, tradey, impenetrable and even at times useless to any audience who actually isn’t working at (or recently laid off from) a bank. Why are they so willing to abandon us when they should be explaining things to use more than ever?

One reason is that we bloggers are lazy, and don’t want to explain things like bond spreads and CDSs and CDOs and SIVs every time we write about them: we prefer to remain snappy.

Another reason is that we have big egos (and are lazy) and therefore too often make the assumption that our readers have been following much if not all of what we’ve written on a subject. If I write my sixth blog entry in three days on the Community Reinvestment Act, I might well assume that my readers know what I’m talking about when I refer to it.

But there is a real sense in which financial bloggers do tend to gravitate to writing for other financial bloggers and finance-market professionals, rather than the broad mass of the public. We’re niche media, aren’t we meant to do that?

Actually, we’re not particularly meant to do that, and Choire rightfully points to the Baseline Scenario as a blog which makes a real effort to keep things comprehensible to as many people as possible. (Although the posts there can be very dry.)

And really Choire is right: we would be performing a much greater public service if we generally wrote our blog entries in English rather than in financial shorthand. It’s not like we’re incapable of doing so: I appear on NPR’s Marketplace quite regularly and talk in perfectly comprehensible English about just about anything I cover on my blog.

One good solution is to follow Paul Krugman’s lead: he writes for a general audience, yet allows himself to get wonky once in a while. When he does that he gives good warning, by putting a (wonky) warning in the headline. And there’s certainly nothing unsophisticated about Krugman’s blog — accessibility doesn’t mean you have to be banal or patronizing.

Is there a risk that being broadly accessible reduces the quality of one’s comment threads? Maybe, I doubt it. Mainly it just makes blogging a little bit more difficult — we have to think a bit harder about what we’re saying and how we’re saying it. And that’s really no bad thing at all.

Comments
16 comments so far | RSS Comments RSS

Felix, I think there’s also a difference between people who write about financial events from an economic perspective (Krugman), those who write from an investment perspective (mostly stock market/bond/savings – think, for example of Scott Burns) and those who write from a trading/hedging perspective (yourself, Mike at Rortybomb, John Jansen and others).

Of these three, I think the trading/hedging perspective is typically the hardest for non-insiders to follow, but you can’t understand the problems with CDSs and CDOs (and synthetic CDOs, and so on) without it.

Michael Lewis wrote a piece about six months ago where he used an analogy about synthesizing Peyton Mannings. Very few readers (I don’t include myself) would have really understood what Lewis was driving at – a core part of financial engineering is the construction of cash flow streams which mimic one position in a security (short or long) by purchasing or selling a well constructed basket of other securities. Most of us don’t think in these terms easily.

So when someone like Harry Markopoulos comes along and explains why Bernie Madoff’s “strategy” was bogus, most of us can’t follow his explanation, even when it’s reproduced in other publications.

I still want to thank you for your own efforts, though – your blog is one of about a dozen I read just about daily, and I enjoy your writing.

Posted by Andrew | Report as abusive
 

I think the reason is simply that few bloggers are expert enough to communicate clearly on finance. (seriously, with the exception of Felix. But Felix, IMO, is the #1 finance blogger in the world).

You only need a passing knowledge to re-furbish extant expertise (lots of bloggers do this). But to really be plain requires rounding off the rough edges knowingly; you can instantly recognize a blogger who is ignorantly imprecise compared to a writer who is knowingly imprecise.

Because none of the theory applies in practice, communicating finance is largely about speaking to the imprecisions. The few who can do that have large opportunitity costs, why would they blog; e.g., why would Pablo Triano blog often, it’s too expensive. Or, Janet Tavakoli, she loses money writing a book.

 

There’s also the difference that bloggers are writing for an online audience quite accustomed to following the background via links, or jumping over to Wikipedia to find the jargon decoded.

Posted by HS | Report as abusive
 

“Is there a risk that being broadly accessible reduces the quality of one’s comment threads?”

How would this work? If more people understand what you’re saying, then you might well get more people commenting on these matters, and better insights. I comment under the assumptions that I’m showing my appreciation for the blogger, trying to keep him/her going, and that average citizens can engage in economic questions that concern the country and world. I’d like more people to comment, if done civilly and sincerely.

In fact, I now tend to read blogs only if they allow commenting, or don’t delete the comments if they don’t like them. My feeling is that a blog should foster a sense of community and fealty, and that the comments help the blogger understand what their audience is interested in, and allows for a kind of mutual learning process. I think that, if asked, Buiter will concede that many of his latest ideas were originally mine, and that he can’t possibly repay his intellectual debt to me.

By the way, when I read the word “awl”, I immediately think of Custer’s ears being pierced with one at the Little Big Horn. Consequently, I find that blog disconcerting, even though I’m not a fan of Custer. I’d like to suggest that they change the name of the blog to “The Tool”. That name can have certain negative associations as well, but it’s easier to spell and more amusing.

 

For me this is not specific to finance, but in general I prefer a good/decent blog to a MSM publication any time. Why? Because for all that existing major publications claim to provide better or more “quality” journalism, they seldom, if ever do. And they don’t see that the very things they fault bloggers for (subjectivity, accuracy, no sources, senseless sarcasm) have in fact been present in their profession for a very long time (and at the very least are today), in fact, every journalist who claims to be “independent” or “objective” is most certainly not.

Posted by flo | Report as abusive
 

Aww, Felix, don’t run yourself down. You came off rather well in The Awl piece, in my humble. In any event, you are clearly positioned as one of the very few go-to bloggers out there of whatever sophistication level.

Besides, blogging about finance arcana can be fun. Where else could we watch you and John Carney go head to head in a mud wrestling match over the Community Reinvestment Act, for pete’s sake? Besides, we have the best draw: after sex, everybody likes to talk about money.

 

I have no finance background but have, over the past few months, largely through the good graces of financial and econ bloggers like yourself, acquired a fair understanding of the current crisis, its causes, and where we are likely to go from here (no where good, it seems). For this I am deeply grateful.

I agree with Don: sites that allow free exchange are infinitely preferable to those that don’t or that seem to consist of 5 people hanging out at a coffee shop THEY OWN. Sheesh, that is annoying.

What annoys me even more than only understanding 40% of what a blogger says (take Zero Hedge, who I love but need to to treat like something written in French–gist only) is when cool New York new media types (which I am assuming the folks at AWL are) assume that anyone knows who the hell they are or care–and what’s with these guys’ names? What planet are they from?

Posted by Kelli K | Report as abusive
 

The blogs I read talk to me like I\’m an adult. And I don\’t need to understand every word and reference in order to get it, just like you don\’t need to run for your dictionary to translate every word when reading a book in a foreign language. Most MSM (especially TV) talk to me like I\’m five years old, retarded and easily upset by the unconventional – especially on economic issues.

Great blogs, like yours, are what keeps my head from exploding on a daily basis.

Posted by Michael M | Report as abusive
 

IMHO the top finance bloggers are Tyler Durden and Karl Denninger. However, Felix has much more experience interacting with mainstream media, so his voice is certainly essential as well. I am a fan of the Taibbi, but he needs a blog.

But Felix, never forget: Mankiw turned off comments on his blog — and not coincidentally his blog is grotesquely useless, except as an indicator of the Rethuglican lying (talking) point of the day.

Mainstream media (WaPo, CNBC) is far too slanted to be of any use other than lining the bottom of my parrot’s cage.

Posted by Unsympathetic | Report as abusive
 

Bloomberg has a house style which basically requires them to explain every bit of jargon when they use it. For someone who actually knows the stuff (not to mention for the Bloomberg writers), it results in an incredibly painful prose style that breaks up the flow of a news story and makes it harder to find out what’s important.

I think there’s a very important role to be played by specialist bloggers/journalists writing about niche areas in terms that only people involved in finance can easily follow. As we’ve seen over the last few years, there are plenty of parts of finance that were black boxes to most people in the industry. It’s hugely important that non-specialists grapple with these black boxes, and they’re not going to be happy about having to wade through descriptions of a basis point or a currency swap in every post/article.

All that said, if you are writing for a general audience, then of course you should write in language the vast majority of your audience will understand. That’s journalism 101.

Posted by Ginger Yellow | Report as abusive
 

I confess that your recent posts on the CRA left me scratching my head because I wasn’t following the debate and simply didn’t recognize the term. Although I do know what the Community Reinvestment Act is. Surely you can spell out the subject of your posts once per post rather than always use an acronym.

Posted by Curmudgeon | Report as abusive
 

Let’s start with a suggestion: You should ask your IT department if there is any way that a keyword parser can be added to your blog web application. That way, you can create a one-time repository of terms and acronyms along with definitions, further reading and links. Anytime you post a word that is in the “financial dictionary”, that word is automatically displayed as a link so that the reader can then click on it for more information. That way you can preserve the more technical nature of your articles while readers that are less financially literate can educate themselves.

Now I started to write a long rambling comment but it looks like most of the previous commenters share the same sentiment that I do.

In summary, Felix, don’t change your tone. You strike a great balance that not necessarily everyone will follow, but the people that cannot follow are probably not browsing the web for financial blogs anyway.

Posted by Kevin | Report as abusive
 

Calculated Risk does a great job of balancing the two – writing in English, yet explaining very abstruse concepts and not sacrificing depth of coverage. I know firsthand that it is read by both the layperson and professional. The problem with most “general reader” financial coverage is that it is far too shallow.

Posted by Sunset Shazz | Report as abusive
 

There are plenty of great blogs out there and I think it’s useful to have more technical ones and have ones that spend extra time explaining the details to the masses. I read different blgs foor various reasons. Krugman is hopefully obvious. Simon Johnson’s posts at The Baseline Scenario usually offer a different and insightul look at things, Brad Deong’s blog is worth reading just for the crash and burn MSM reports, etc. I think the real question is what do *you* want to do with *your* blog? The format and writing style seem fine to me.

Posted by Argel | Report as abusive
 

I think it is partly “graduate student syndrome” – thinking you have to be incomprehensible to sound smart. Bill Gross is an example of a finance writer who I have a hard time understanding and it’s not because of the financial jargon or concepts. If you combine that type of writing with a lot of jargon it will really be incomprehensible. Feel free to come and tell me that my blog is unintelligble :)

 

Let’s face it: despite many people’s protestations to the contrary, too many folks have an automatic trust of government. When there is a problem, many of us don’t like to think of government as the problem but as the solution. Add to that the near phobia that many have about economics as business and what do we get? Pretty much what we have now: a government going billions of dollars IN debt in attempts to get the economy OUT of debt, We get a government doing such idiotic things as bailing out companies for whom bankruptcy is imminent and buying up banks.

 

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