The sensationalist WSJ

By Felix Salmon
February 26, 2010

Here’s the front page of today’s Wall Street Journal; I think it says a lot about where owner Rupert Murdoch and managing editor Robert Thomson are taking the paper.

SNV33421.JPGThere are three main items on the page. The big headline splashed across the top is “Hedge Funds Pound Euro” — a story which, in its online telling, is weakened significantly to “Hedge Funds Try ‘Career Trade’ Against Euro”, although the headline on the home page remains the same.

The story is accompanied by a chart showing the recent deterioration in the value of the euro, for all the world as though it were caused by the hedge funds in question. There’s even hints of conspiracy: the story begins with the tale of a few fund managers having dinner — together! And talking about the euro!

There’s only the vaguest hint, in the ostensibly-sober WSJ, that it’s ridiculous to think that hedge funds could cause a large medium-term change in the value of the euro against the dollar. They can certainly bet on such a move, and make money if it happens, but you can’t manipulate the largest currency pair in the world, when it’s freely floating and does over a trillion dollars in volume per day.

But that doesn’t stop the WSJ from trying. After talking about nothing but currency trades for the first 11 paragraphs of the story, there’s then a screeching of gears and those demons du jour – credit default swaps (CDS) – are shoehorned into the story, which suddenly starts talking about bets on Greece’s creditworthiness.

While it’s true that worries about Greece can have an adverse effect on the euro, again it’s pushing the limits of credibility to suggest that hedge funds are deliberately trying to manipulate the market in Greek credit so as to make money on their foreign exchange plays.

Especially when, as the article concedes, the only named player in Greek CDS — John Paulson — is now reportedly bullish on the country.

Basically, the article is long on sensationalism and short on news — much like the big photo on the page, a human-interest picture from Haiti, underneath which we find a crypto-denialist story about climate change carrying the headline “Push to Oversimplify at Climate Panel”.

The story loves that “oversimplify” word, using it in two headlines and twice in the body of the article, but in all cases the shorter and more objective “simplify” would be much better suited.

The story talks about “institutional bias” at the the Intergovernmental Panel on Climate Change (IPCC), but there’s clearly an institutional bias at the WSJ on this issue too, as evinced by things like the paragraph which begins with this:

Even some who agree with the IPCC conclusion that humans are significantly contributing to climate change say the IPCC has morphed from a scientific analyst to a political actor.

That kind of language makes it seem that there’s a pretty symmetrical argument about the existence of anthropogenic climate change, and that even some people on the IPCC side — the side of the believers — are still critical of the U.N body. But of course there isn’t a serious scientific debate over the existence of anthropogenic climate change, not that you’d ever learn that from reading this story.

And just look at the smoking gun that the WSJ presents as evidence of oversimplification in IPCC reports:


This is oversimplification? It’s simplification, yes — it’s taken four different time-series of historical temperature, and averaged them.

But I don’t think it’s oversimplification: they all show pretty much the same thing, that temperatures stayed pretty constant, within a 0.5-degree range, from the year 1000 to the beginning of the industrial revolution.

Since then, temperatures have been rising sharply, and all the different scientific scenarios for the future show them continuing to rise dramatically. The final report shows projections for the future, as well as historical data from the past, making it clear which is which. In that sense, it’s much more useful than the historical data alone for the purposes of policymakers.

In any case, it’s clear from the photograph and the two main stories on the WSJ’s front page that the paper is aggressively becoming both sensationalist and political. That might be a sensible move, from the point of view of selling copies, especially on the newsstand. But it will also inevitably serve to erode the trust that many people, on Wall Street especially, have in the reporting of the WSJ.


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pretty shameless, isn’t it. makes the perceived value of the FT paywall that much better every time…

Posted by pholstein | Report as abusive

On the WSJ web site, I perceive an increase in “Breaking News” banners for ho-hum stories.

Posted by Steve12 | Report as abusive

increased sensationalism + $435 renewal bill = me canceling the print WSJ.

Posted by david3 | Report as abusive

A move towards the tabloid end of the spectrum is what everyone predicted for the WSJ when News Corp. bought it. I’m curious to see whether the trend continues. While a more sensationalist approach at the WSJ will probably benefit them overall (just look at the site), I’m sure it will be a negative with readers looking for hard news.

I suppose the big beneficiaries in that segment would be the Financial Times and perhaps the New York Times business section. Maybe The Economist? Which other publications do you see as the leading sources for in-depth business news these days? Personally, I find myself getting more and more information from blogs like this one.

Posted by gentschev | Report as abusive

don’t you think economics and finance, should read like a 2nd rate hack covering a 3rd football match. Those lacking excitement in their real lives will seek drama in other areas. purple prose and headling tarts are the bread and circuses for the masses. Murdoch knows how to feed the masses. Infotainment uber alles. Are we fully Weimered yet?

Posted by Nick_Gogerty | Report as abusive

I agree that the WSJ is turning into a tabloid and has less and less value. However, I don’t see a real alternative yet. Maybe some of the online publications will get there, maybe soon, but for now, the WSJ is what the financial community reads.

Posted by JeffM | Report as abusive

“Since then, temperatures have been rising sharply, and all the different scientific scenarios for the future show them continuing to rise dramatically. ”


Why don’t you stick to covering your domain of expertise? It could save you some embarrassment in the future.
FYI, the scientific debate over the theory of man-made global warming is far from over.
You might be interested in reading this: O3O820100225

Posted by yr2009 | Report as abusive

I’m waiting for half-naked women on Page 3.

Posted by jonhendry | Report as abusive


Posted by csodak | Report as abusive

Sorry, Felix, but in this case they are right. Even CRU’s Phil Jones has admitted that
(1) There has been no identifiable statistically unusual warming periods in the past 150 years.
(2) Global climate patterns during the alleged Medieval Warming Period are not known – making both temperature charts above wrong.
(3) Tree rings have been an inaccurate proxy for direct temperature measurement for almost 50% of the period when we have had both.
(4) The most compelling argument in favor of anthropegenic climate change is not that there is a solid theory for it, but that there is no reliable alternate theory that attributes attributes it to natural causes. Kinda like a religion.

From: e/8511670.stm e/8511670.stm

Q: Do you agree that according to the global temperature record used by the IPCC, the rates of global warming from 1860-1880, 1910-1940 and 1975-1998 were identical?
A: Temperature data for the period 1860-1880 are more uncertain, because of sparser coverage, than for later periods in the 20th Century. The 1860-1880 period is also only 21 years in length. As for the two periods 1910-40 and 1975-1998 the warming rates are not statistically significantly different… I have also included the trend over the period 1975 to 2009, which has a very similar trend to the period 1975-1998. So, in answer to the question, the warming rates for all 4 periods are similar and not statistically significantly different from each other.

Q: Do you agree that from 1995 to the present there has been no statistically-significant global warming
A: Yes, but only just. I also calculated the trend for the period 1995 to 2009. This trend (0.12C per decade) is positive, but not significant at the 95% significance level. The positive trend is quite close to the significance level. Achieving statistical significance in scientific terms is much more likely for longer periods, and much less likely for shorter periods.

Q: Do you agree that from January 2002 to the present there has been statistically significant global cooling?
A: No. This period is even shorter than 1995-2009. The trend this time is negative (-0.12C per decade), but this trend is not statistically significant.

Q: If you agree that there were similar periods of warming since 1850 to the current period, and that the MWP is under debate, what factors convince you that recent warming has been largely man-made?
A: The fact that we can’t explain the warming from the 1950s by solar and volcanic forcing.

Q: Let’s talk about the e-mails now: In the e-mails you refer to a “trick” which your critics say suggests you conspired to trick the public? You also mentioned “hiding the decline” (in temperatures). Why did you say these things?
A: This remark has nothing to do with any “decline” in observed instrumental temperatures. The remark referred to a well-known observation, in a particular set of tree-ring data, that I had used in a figure to represent large-scale summer temperature changes over the last 600 years. The phrase ‘hide the decline’ was shorthand for providing a composite representation of long-term temperature changes made up of recent instrumental data and earlier tree-ring based evidence, where it was absolutely necessary to remove the incorrect impression given by the tree rings that temperatures between about 1960 and 1999 (when the email was written) were not rising, as our instrumental data clearly showed they were. This “divergence” is well known in the tree-ring literature.

Posted by mario_sanchez | Report as abusive

You left this part out:

E – How confident are you that warming has taken place and that humans are mainly responsible?

I’m 100% confident that the climate has warmed.

Posted by Pragmatic | Report as abusive

Maybe more people will now wake up and read the FT.

It is such a better paper, in so many ways, that it is completely mystifying to me why its circulation in the US is so low.

Posted by chadnyc | Report as abusive

I regret that I’ve only subscribed to the WSJ in the Murdoch era, and missed the golden age when the stories had substance. The paper gets worse every day. The sports section is a travesty – less clever and less informative than the Post, and a waste of space in a business paper. They try for an arch tone that reads like a second-rate Details (which is already a second-rate Esquire, which isn’t that good either). Details digression: Conde Nast saw fit to send to me Details when Portfolio went under. I would have rather recieved Vanity Fair, but I assume they knew that and didn’t want to spend the money to send me one of their few remaining decent magazines. I had no idea that a magazine as bad as Details could survive in today’s media market – is there really someone out there who wants to read about “douchefags” (simultanously offensive to a gay audience and uninteresting to a straight audience)?

On the WSJ, I agree completely about the Euro article – ridiculous. Also the alcohol writing has trended sharply downhill with the end of the anachronistic cocktail column and the departure of the wine writers. Finally, the column last week about Greek swaps was completely incomprehensible – the writer obviously didn’t know how the pieces fit together and couldn’t explain the transaction. The bubbly piece about the Greek expat woman at GS who put the deal together made sense, but the actual financial news was useless, even with an (incomplete) diagram.

Posted by najdorf | Report as abusive

Um, yeah, I don’t follow. As for the Euro article, that’s pretty clear. Did you think the Wall Street Journal would reveal actual positions taken by some of these hedge funds? And FYI, the Euro is a currency, so it makes pretty good sense that an article on currency returns discusses currency returns.

I mean, it seemed quite clear to me when I read it: hedge funds are short the Euro, and big. Now, I realize most people don’t remember anything past a couple years ago, but here’s a little bit of history for you. Greece is not the first country to default on its debt (see, for example, the period 1970-2000, in particular emerging markets, China, Japan, pretty much all of Asia actually, Latin America, Mexico, Russia, etc.). And every time some country goes belly up, usually always after a great run and years of media adoration, low and behold we find out there were some big mean bank or hedge fund that bet on the collapse and made some money. Aghast!

This time though, hopefully everyone won’t be so shocked and downright appalled when this happens, because, well, you just read about it in the WSJ. My guess is you will nonetheless feign astonishment–that way you can then go and crank out a couple dozen “Goldman Sachs/SAC/whoever are Evil and Greedy” articles that are always so newsworthy. Speaking of which, I know one thing, I am a better person now that I know the average salary at Goldman Sachs for the last seven years. Much rather know that than say, the impending financial troubles that the continent of Europe has been experiencing for months now.

Posted by stevenstevo | Report as abusive

I’ve been a subscriber before and after the acquisition by Rupert Murdoch. It has absolutely turned into a tabloid rag. The depth of the business reporting that was the WSJ is gone, even the website which now include crappy Fox News video, which cover national business news like a local TV station covers traffic reports. I’m dropping the WSJ when my subscription is up this year. I think I’ll give Financial Times a try.

Posted by TJGodel | Report as abusive

I dropped my subscription the day Murdock acquired them, on general principles that he can’t help it – he is incapable of owning a quality paper because quality papers do not fit his political agenda.

I am occasionally amazed at the “Well, sure he has done this, but he wouldn’t do it to *me*. He *respects* me!” quality of people and institutions. Of *course* someone that has betrayed the promises they made to every other paper they acquired will betray the promises they make to you.

Sigh – Jonnan

Posted by Jonnan | Report as abusive