What Gretchen Morgenson is good for

October 27, 2010

New York Times business columnist Gretchen Morgenson is Terry Gross’s guest on Fresh Air today. I caught about ten minutes of the conversation while out driving this afternoon, and it reminded me of why I’m not a big fan of Gretchen Morgenson’s work. She’s just not very interesting to listen to, or read: Too flat, too broad-brush, too predictable, lacking in cleverness and nuance and curiosity. That’s why I’d take a Joe Nocera column (or a Felix Salmon blog post) any day over a Morgenson offering.

But then talk on Fresh Air turned to the ongoing brouhaha over foreclosures of homes where it’s not clear that the foreclosing bank can actually prove that it owns the mortgage. Morgenson pointed out that this is a problem she’s been writing about since 2007. Has she been writing about it well? Not necessarily. Morgenson’s columns and articles on this and other topics have been a favorite Felix target through the years. And remember how Tanta, Calculated Risk’s late, lamented mortgage-banker co-blogger, used to get absolutely apoplectic over Morgenson’s real-estate-related work. The anger comes about because Morgenson so often gets basic facts wrong, seemingly misunderstands the businesses she covers, offers assertions that she fails to back up with evidence—that kind of stuff.

Which makes it only more aggravating when she so often eventually turns out to have been far closer to right than her critics were. For example, Morgenson claimed in March 2007 that the mortgage market was headed for a big crisis. What a wild assertion! As one Felix Salmon wrote immediately afterward: “Morgenson adduces no evidence whatsoever that any crisis is looming at all.” (I figure it’s okay to pick on Felix for this because I came very close to writing exactly the same thing at the time but was just too lazy to actually do it.)

If this had just happened once, okay. But Morgenson was also among the first and most persistent on the case of the Wall Street scandals of the early 2000s. She also really spotlighted aspects of the financial crisis of the past few years that the rest of the media only got around to months later. Forget Nouriel Roubini or Bob Shiller; Gretchen Morgenson may be the most reliable early warning device around.

How does she accomplish this? I think it’s partly that the same bullheadedness and simplistic approach that drives readers like me and Felix crazy actually enables Morgenson to zero in on targets that those more interested in nuance totally miss. It’s also that Morgenson suffuses her work with a sort of high moral dudgeon—and disgust for the evil ways of Wall Street—that more “sophisticated” journalists won’t allow themselves. The results speak for themselves: Sometimes battering rams work better than X-Acto knives. And I say that as someone who vastly prefers X-Acto knives (stylistically speaking).


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It’s also that many of her regular sources are Wall Street regulars who know what is being done and who is doing it.

Posted by klhoughton | Report as abusive

What makes this guy think anyone cares about his opinion of Morgenson as a writer? It’s that kind of intra-journalistic ankle biting that readers find most boring of all, not to mention cheap.

Posted by Jboy609 | Report as abusive

I discovered Gretchen Morgenson shortly after the new millennium. I kept an eye out for her byline because she had good insights. I don’t imagine she has stayed ahead of the pack without cleverness and curiosity. I have no problem with her style, though I didn’t know about any factual errors.

Re: nuance: the Times is not a white paper for the financial industry. There are nuances to credit swaps and currency hedges that I expect to see discussed in Reuters, Bloomberg, and blogs but not in a mainstream newspaper. There is value in looking from a higher level and showing that “this” is harming the economy even without getting into the micro reasons that “this” evolved.

You come off like an elitist writing with sour grape juice about someone who “shouldn’t” be as successful as she is primarily because her substance is not presented in the “correct” style, aka as you define it.

Posted by buybk | Report as abusive

I think there may also be an element of the predictive effectiveness of dyed-in-the-wool industry antagonists and scolds; i.e., “Morgenson has predicted 5 of the last 3 crises in the financial sector.”

She is looking for malfeasance, sees it under every bush and behind every hedgerow, and therefore “discovers” it even when the substance and depth of her own reporting come up short.

Either that, or she is like a stopped watch: exactly right, twice a day.

Posted by EpicureanDeal | Report as abusive

As recovering male chauvinist pig, I can smell sexism a mile away.

She can’t possibly be either that clever or that wise, so what is the explanation? A “bullheaded and simplistic approach”? I guess that must be it.

I have a better explanation. Good people in every field are able to digest information and come out with a simple (and mostly correct) story to tell. This is true for hedge fund managers and physicists too. Less talented people tangle themselves in a web of unprioritized data and are unable to climb out of that web with anything useful.

How unfair to say her talent for drawing good conclusions is actually an outcome of negative character traits (‘bullheadedness and simplicity’). I think Ms. Morgenson is actually pretty smart. I tend to think that someone who manages to hold the big picture in their head while faced with details is smarter and definitely cooler than someone who can’t keep track of where they are.

If she was helped by having good inside sources, even better! She is a reporter for goodness sakes! Felix is a clever writer and often fun to read, but as far as I have seen he has mainly represented entertaining commentary with few scoops. Like him helpfully prognosticating a housing crash after the housing crash.

Posted by DanHess | Report as abusive

Well here are some questions being asked by mortgage bond investors to UBS in Jan 2005:

1) Aren’t underwriting standards dropping?
2) Won’t the housing bubble collapse and take us all with it

The note it was posted in had the title “Subprime home equities: On the Brink or safe for another year?”. Remember this was beginning of 2005.

I also remember – I believe it was written the CIO of Insight Investments, the asset management arm of HBOS – an article in the FT in 2005 where warning signs were being raised about subprime CDOs and the magnifying effect of them on any loses the underlying loans took.

As for the article you posted, so what? March 2007, people were pretty concerned about subprime leveling off and even tipping down a bit. I can’t see anything in that article that in any shape or form “predicts” the crisis. Rather you are reading some significance into it knowing what we know now. I would also point out that in 2007 when she was writing this spreads on ABX 2006 BBB tranches had jumped over 1000bips in the preceding 3 months. Credit rating agencies has been getting trashed for such “predictions” on credit movement.

As for the foreclosure without the note issue, Bloomberg was writing about it in 2007 as well. I believe Tanta did a good takedown on that one too and as we are seeing the whole foreclosuregate nonsense is turning out to be a case of press mutual masturbation.

I may be a bit too pedantic here, but I am of the view that getting basic facts right should pretty much be the sine non qua of journalism. I have to agree with another blogger who called her articles the Darwin awards of financial investment.

DanHess, I have to agree. Ms Morgensen is a genius. She has found a niche writing self-righteous BS which once in a while, with the benefit of hindsight, can get shoe-horned into a “prediction”. Far far better than bothering to actually report the facts.

Posted by Danny_Black | Report as abusive

Danny_Black: “I may be a bit too pedantic here, but I am of the view that getting basic facts right should pretty much be the sine non qua of journalism.”

[“non qua”?]

Phil Hartman’s Unfrozen Caveman Lawyer: “Ladies and gentlemen of the jury, I’m just a caveman. Your world frightens and confuses me. Sometimes when I get a message on my fax machine, I wonder: ‘Did little demons get inside and type it?’ I don’t know! My primitive mind can’t grasp these concepts. But there is one thing I do know: ‘Getting basic facts right should pretty much be the sine non qua of journalism.’ “

Posted by dedalus | Report as abusive

Didn’t realise a guy with a handle of a greek myth would have an issue with some pidgin latin:

http://en.wikipedia.org/wiki/Sine_qua_no n

Posted by Danny_Black | Report as abusive

Make that INCORRECT pidgin latin… should be sine qua non – (blush)

Posted by Danny_Black | Report as abusive

Maybe she is just smarter than you guys.
I am a guy and not too prone to finding sexism, but the fact that that simple truth is even contemplated…doesn’t speak well of your big brain.

Posted by fresnodan | Report as abusive

Why do y’all think that economics is complicated?

Economics is very simple. You just have to rise above the morass of petty details. Sometimes people have trouble seeing the forest through the trees. Morgenson takes the larger view — and gets lambasted for failing to give an accurate description of that funny dogwood in the second row.

Keep in mind that it is much easier to spot a looming crisis than it is to figure out WHEN or HOW it will collapse. Those details depend on swings in market sentiment as much as anything else.

Posted by TFF | Report as abusive

Justin may have a point, but it’s poorly written piece (ironic) and comes across as an almost-hatchet job written out of jealousy, even if that’s not how he meant it. Whatever one’s thoughts about Morgenson, this is a post that definitely could have been written better.

Posted by SteveHamlin | Report as abusive

TFF, the details are usually important.

Exactly what do you think she caught that others missed?

Posted by Danny_Black | Report as abusive

The details are VERY important if you want to profit from something. Is a big part of why I don’t risk short positions. You can be right about a bubble but still miss the peak by 5 years and 50%.

I don’t know if others “missed” the housing bubble, but they were largely focused on the short-term (“Will the bubble burst in the next six months?”) while she was looking at the larger picture.

Similar to the bond market today. I don’t see how anybody can look at the current 10-year pricing and believe it is rational, but it is entirely possible that the rally will run for another six months or two years. In the meantime, sophisticated investors might be able to profit from the market. And when the bubble DOES burst, will it follow or precede a collapse in the stock market?

Details, details, details… Just very important if you want to make money. That isn’t Morgenson’s shtick. She’s a journalist, not an investor.

Posted by TFF | Report as abusive

SteveHamlin, I thought his point was what TFF was saying that she is right on the big picture and wrong on the irrelevent details. Kinda the opposite of a hatchet job. Just goes to show how different people can interpet the same words differently.

Posted by Danny_Black | Report as abusive

TFF, at the risk of being idealistic, surely a journalists job is to report the facts. Now obviously you can have different interpretations of the same events – as in how Steve and I basically had polar opposite reads of the same text- but somethings are clearly wrong. Ms Morgensen is usually wrong and usually far far behind the times. Thanks to her, alot of people have a distorted view of how the financial world works.

Details are important in everyday life too. I would say most of the times I have come to a sticky end on something it is over a “detail”. For instance, look at the story du jour, foreclosuregate. Virtually all of the cases were people not reading docs and not signing in front of a notary. A detail if ever there was one. The big picture was that the people being foreclosed on in the vast majority of cases were seriously deliquent and had zero chance of meeting their obligations. I must have missed Ms Morgensen writing about that.

Posted by Danny_Black | Report as abusive

Danny_Black, I must to some degree plead ignorance. I’ve read a bit of Morgensen’s stuff, but certainly not her whole body of work. What I’ve seen has (to me) offered some insight, even if not wholly accurate.

I’m not sure I understand your comment on “foreclosuregate”? To me, a failure of banks to keep their paperwork in order is a pretty big “detail”. These are EASY mistakes to avoid, likely indicative of a culture that habitually believes it can write its own rules.

I do agree with you that the borrowers SHOULD be foreclosed on in the vast majority of cases, and in many cases made obviously foolish decisions when they borrowed the money in the first place. So no sympathy for them either.

Posted by TFF | Report as abusive

TFF, the point i was trying to make is that you could argue that is a “detail” – albeit one that is illegal!!

I must also say that there is some selection bias in what I have read, usually I get to it via someone making fun of her.

Posted by Danny_Black | Report as abusive

Too many financial writers cannot see the forest fires for the trees. Morgenson does. Stop quibbling and start listening.

Posted by Citoyen | Report as abusive

On Sunday, the very first part of the Sunday Times I read is Gretchen’s article for the week. It is always very well written and carefully researched. She often breaks fresh ground. I certainly don’t read Gretchen for investment advice. It is more about understanding our circus of “performers” on Wall Street. Felix (another favorite of mine) must be somewhat jealous. Gretchen only has to write once a week. Felix has to pontificate 5 times a day. Both do a good job but they are very different jobs. Give Gretchen a break.

Posted by tnod | Report as abusive

Citoyen, yeah who cares about whether it is factually correct or not…

Posted by Danny_Black | Report as abusive

The blogger at Economics of Contempt isn’t too fond of her either:
http://economicsofcontempt.blogspot.com/ search?q=morgenson

Posted by TGGP | Report as abusive

Shorter version:

“I was not entertained by some the most important timely breaking news by a Pulitzer-prize winning investigative journalist, so I mostly ignored it.”

I give you credit for publicly admitting it, but geez, Justin — that ain’t pretty.

Posted by Ritholtz | Report as abusive

I agree the article sounds a little like sour grapes. Sometimes people with ethics tend to grasp better, because they choose to allow their conscious to see the underbelly rather then unconsciously agreeing with the loudest, brashest, most lauded or revered that is basically just surface fluff to distract.

In other words, perhaps the chauvenist pigs are only digging for truffles.

Danny Black, you spend more time telling people they are ‘wrong’ and that you are ‘right’ with no evidence to back that up, then adding to the conversation. Are you a lawyer by chance?

Posted by hsvkitty | Report as abusive

Yeah, Ritholtz I believe her Pulitzer is right next to Walter Duranty another NYT “journalist” who didn’t believe facts matter when the big picture is right.

Posted by Danny_Black | Report as abusive

Actually, Mr Ritholtz, given you Ms Smith and Ms Morgensen form the unholy trinity of BS not surprising to see you rising to defend one of the core pillars of misinformation out there.

Just like Ms Smith with her article in the NYT, where like Ms Morgensen, she links to research that simply doesn’t say what she says it does:

http://www.nytimes.com/2010/10/31/opinio n/31smith.html

First paragraph:

“For instance, the International Monetary Fund found that the persistently high unemployment in the United States is largely the result of foreclosures and underwater mortgages, rather than widely cited causes like mismatches between job requirements and worker skills.” Except it doesn’t. The kindest thing you can say is that it says that the housing crisis is another contributing factor and so she is misreading what is written there. A less kind view is she is deliberately misrepresenting the statements in the paper.

http://www.imf.org/external/pubs/ft/scr/ 2010/cr10248.pdf

Relevent pages are 5-15.

As for you, still waiting for those flood of CDO related SEC cases that you claimed ABACUS case was all about.

Posted by Danny_Black | Report as abusive

Also at least from the beginning of 2008, there has been coverage of the issues of evicting people without the original notes:

http://www.calculatedriskblog.com/2008/0 2/lost-note-affidavits-skeletons-in.html

As a bonus it even comes with an intelligent commentary, just to show what a competent and knowledgeable person can do.

Posted by Danny_Black | Report as abusive

When I said …”In other words, perhaps the chauvenist pigs are only digging for truffles.” in a previous comment, it was not to call Justin a Chauvenist pig.

It was meant to be an amusing way to finesse the Dan Hess remark into sublime humour (which obviously failed, but I was laughing)

It was supposed to convey that sometimes, when you are only looking for the one thing (details/truffles) you miss out on the important stuff. EG: On the not so funny side, the pilots who are focused on the faulty instrument as the plane slams into the side of a mountain.

So I apologize if you felt that i was going there when wasn’t, but not for the sounds like ‘sour grapes.’ That I meant=)

Posted by hsvkitty | Report as abusive