CNBC Anchors on a Mission
In a different place and time, journalists sought to discover information and pass it along to readers. Really good journalists took complex information and helped to explain it. Investigative journalists discovered things the average reader would not have found on his own.
What happened?
Too Many Opinions
Something has gone wrong, seriously wrong. It is an excess of opinion.
Every commentator has so many opinions — strong ones. This is true even among our favorite blog sites. Opinions sell. And if you get on TV, they really want an aggressive position. Wow.
The sites that we admire as gatekeepers regularly feature straight opinion pieces by people who have no expertise on the subject in question. Where are the "Roger Eberts" of the blogosphere?
The CNBC Example
We are choosing an example from CNBC not because their coverage or anchors are worse than anyone else, but because it is typical and prominent. We also do not mean to pick on Erin Burnett, who has done some great one-on-one interviews.
Having said this, we need to make the point with real evidence and Squawk on the Street provided the perfect illustration. Here is the segment for our example.
The Background
The producers had scheduled a segment where Noah Blackstein and Roy Williams (two experts worth listening to) would discuss stocks that might benefit from the Obama transition. Since this is an important subject for investors, we clicked off the TIVO mute button. The segment was a disappointment. After the initial presentation by the two experts, Erin Burnett took them in a different direction. Instead of drilling deeper on their ideas, she questioned whether any program could work. Her comment, via the magic of TIVO was as follows:
One in five
Americans is living in a home with a mortgage that they are paying every month
is worth more than their home will ever be worth again when they sell it. Homes are American’s biggest asset. Until that is fixed, it is hard to see how
people are going to feel good, spend money, buy things from companies who then
put money into plants and invest and hire and wages go back up. So all of this stimulus, you can talk about
it going into biotech or going to building broadband. We have a core problem that isn’t fixed. Are either one of you worried or afraid that
we could spend another trillion and in six months be back having the same
conversation about another stimulus?
She did a repeat performance in the next interview segment, saying "One in five
Americans live in a home where the mortgage is worth more than the home."
What Went Wrong?
We started with a good journalist asking experts questions about something where they had knowledge. A moment later, it was different.
We had a journalist who had recently learned a fact that she found interesting. To her it seemed all-important. She wanted to discuss it with everyone, including those who had absolutely no expertise. What happens when someone talking about the Obama transition and biotech is asked about housing? Nearly everyone in this position just gives an opinion. Everyone involved was out of the Ted Williams happy zone.
Analyzing the Housing Opinion
Careful readers will have noted the slight change from the first rendition of the fact about mortgages to the second.
It is an important difference. One problem on the air is that sources are cited sloppily, if at all. Let us compare the stated opinion with some facts.
- The CNBC anchor took the guests out of their happy zone, asking them questions about something where they were not experts.
- Data about home ownership is collected by household, not by person. Anyone who talks about a "percentage of Americans" is getting a sloppy start.
- Over 35% of households do not own homes, and have no mortagages.
- About 40% of homeowners have no mortgages, so they should not be included.
- There is no evidence that mortgages are higher than the homes "will ever be worth again," a statement that has no face validity.
A more accurate conlcusion would be from Business Week as follows:
mortgage were in a negative equity position as of the end of September
2008. There are an additional 2.1 million mortgages that are
approaching negative equity. These are defined as mortgages within 5%
of being in a negative equity position. Negative-equity and
near-negative equity mortgages combined account for over 23% of all
properties with a mortgage.
The article goes on to state that the problem is heavily skewed to a few states.
Conclusion
None of the interviewed guests questioned the accuracy of the stated facts. That is not what one does when getting a guest spot on CNBC.
The CNBC anchor team has morphed from being expert journalists to being a team of subject area "CNBC all-stars."
Readers should note that we do not question the importance of housing to the economy. It has been a frequent theme at "A Dash."
When analyzing the problem, it is important to be accurate. Let us not make the facts even worse than they are. Since the experts raised no questions, we doubt that the average viewer spotted problems. It is yet another element of Wall Street Truthiness.
Jeff, I know it’s not your intent to pick on CNBC, but their coverage IS becoming more opinionated. With Larry Kudlow at the anchor desk and another eight commentators in Hollywood Square boxes, some segments are nothing more than Hardball shouting matches. It’s so irritating that I hit the mute button or simply walk away. Thanks for the post.
Mike
Jeff,
I enjoyed the post and it is a great reminder to pay attention to the information (or lack thereof) we receive.
However, I don’t see a solution. It seems to me to be the result of our own preferences in a free media mariket. If we wanted to watch a slower, more thoughtful program, where the on air talent were real journalists instead of pretty faces needing to be fed questions by producers, we would. Instead, we get our best information from more deliberate and thoughtful sources, and we watch CNBC (and others) with the mute on just in case there is a breaking news items of importance.
Couldn’t agree more. I written to CNBC several times over the past couple of months complaining about: 1) Dylan and his non-stop ranting about “transparency, consumer confidence, lack of accountability and financial exec bonuses, 2) Kudlow and his “drill, drill, drill” first and incessant “mustard seeds”.
They’re probably all trying to copy Cramer’s now famous “they know nothing” and current “fire Chris Cox” rants. It may be entertainment but it’s definitely not unbiased business news.
Jeff,
Off-topic but in the past you have held up the post-1987 period as the appropriate timeframe for comparison. I believe you have attributed this partly to the success of the Federal Reserve and the rise of econometrics as also witnessed in shorter recessions during this period. You have even commented about this in a recent post .
There is also a lovely Bespoke chart that shows the same.
But Christina Romer has apparently come to a different conclusion .
Any comments?
I should have linked to this post instead.
RB — Good thoughts on the time frame. I have checked out your links — sources that I also follow, but had not caught up yet.
As a regular reader you know my position on time frames for data analysis. Academics get papers published for doing innovative things. The overwhelming impulse is to use all data.
My approach is that one should begin by asking the question of how far back we can go and still be relevant. This is a question that is not often asked by the academic writer, despite the policy relevance. I need to review the paper before saying more.
Meanwhile, it seems obvious to me that many things are different. Stock option trading began in the 70’s, for example. Can we really go back to a time before any financial derivatives, any computers, and whatever economic knowledge has been created, and still make valid forecasts?
BTW, I do not necessarily focus on 1987 for all purposes. I can see the need to write further on this, and you have put it on the agenda.
Thanks for a typically thoughtful and helpful contribution.
Jeff
CNBC has without a doubt gone off the deep end. Their programming has turned into an endless stream of debates, arguments and shouting matches. Of course, they are a business, and their goal is higher ratings in order to attract ad revenue. So aren’t we to blame for their devolution? The solution? Stop watching! Turn on Bloomberg for a change and rediscover financial journalism.
Steve — I had several emails from people offering the same advice. It is good advice for viewers with motives that we share.
Meanwhile, it is all about ratings. This is true not only for CNBC but for newspapers, and blogs. The best way to get a big audience is to find the appetite and feed it. CNBC does this. So do all of the big blogs, if one measures success by readership. Think Rush Limbaugh.
Thanks for the good comment.
Jeff