Watching the CBC cover the international stock market turbulence is reminiscent of watching the FOX news coverage of the run-up to the American invasion of Iraq. The difference in this case is that the CBC seems to be working overtime to convince its viewers that there is no weapon of mass destruction hidden in the bourses—despite the existence of a 2.5 trillion dollar mass of toxic waste oozing around the credit markets, a record volume of unsold housing stocks, and record rates of defaults in the US none of which anyone knows how to evaluate including the US FED–hence the 75 basis point cut.
It is curious to watch the national broadcaster shill for the markets, as their mandate is to represent the public interest. On both TV and Radio the CBC has trotted out no end of starry eyed pundits—mostly brokers who make their living off commissions—counselling viewers to buy deals created by the 5 day old sell-off (save for one exception; the analyst from Merill Lynch who argued that this was no short term correction and counseled that investors head to the sidelines).
Let us be clear this is not a market you can out-clever all the putative “geniuses” on Wall and Bay St. and the City and, and, and…are getting or have been burned and are busy trying to get out with their pants on—they are not simply loosing their shirts, their shirts are being corroded-off by that 2.5 trillion dollar mass of potential toxic ooze creeping around the globe. As an aside, it looks like even the Chinese banks are exposed to 100 billion of the stuff.
And this is where sadly you, the national broadcaster and that train of pundits come in. In a market like this the job is wealth preservation. For those at the top the trick is to get out of the market—i.e., sell their equities before prices bust through the floor—hence the panic. Enter the pundits: “relax, stay clam, think long term,” they say. “Maybe make some defensive adjustments but surely and for god sake don’t take a pass on RRSP season,” they say.
Great! In the meantime, while we prop up prices and keep commissions coming in for our brokers, the top gets out and leaves us, our pension funds our children’s education savings etc., holding the bag. In short, a classic pump and dumb in the context of a bear market. It all makes me cry for the relatively transparent scams run out of the now defunct Vancouver stock exchange.
It is time that all the hacks and sycophants who staff the pages and studios of the print and television business media (I would call them business journalists but they seem singularly incapable of removed sober analysis) be muzzled and laid-off until it is time for all those little miss sun-shines to be taken out of retirement and allowed to cheer lead a bull market right back into another speculative bubble.
Nothing could be more counter to the public interest than giving brokers free media time to sucker investors. It smacks of the same problem that caused the bubble: originators, insurers, sellers and risk analysts (debt rating agencies) all making money off of the same garbage with no incentive to take a hard look (in the case of the former three acting as the same agent; e.g., CIBC). No, what we have here is a massive market failure that stems from the basic instinct that governs markets—self interest.
Allowing brokers on the National broadcaster to emit more self-interest masquerading as the public interest makes FOX news look fair and balanced. It would be funny if there were not so much blood on the floor and plenty more coming down the pipe.
Don’t be fooled by a bear market rally even if our national broadcaster is.