March 17, 2009Re: No Siree Nocera[h]. You Are Dead Wrong.
On the weekend of March 7th and 8th, a conference on the ineptitude, inaccuracies, problems of and possible solutions for, the mass media was held at our law school, the Massachusetts School of Law. The panelists included famous names in American journalism, deans and professors at schools of journalism, reporters and others. Two of the speakers and attendees were famous ex-Timesmen, David Cay Johnston, the financial writer and author of impressive books, and Chris Hedges, the foreign and war correspondent and author of deservedly famous books.
I mention the conference and two great Times’ reporters like David and Chris because on Saturday I read a column in the Times that represents some of what is wrong with American journalism. The column, being in the Times, is written on a much higher plane than most of the crap that passes for written journalism in this country but is nonetheless an example of the genus (not genius).
The article is by Joe Nocera. Its title tells you everything you need to know: the title, which Nocera likely did not write but which bespeaks the column very well, is “Madoff Had Accomplices: His Victims.” Not his wife. Not his brother. Not his sons. Not his niece. Not his putative auditor. Not the dozens of Wall Streeters who suspected something was wrong but didn’t tell the SEC. Not the SEC, which publicly announced in 1992 that no fraud was involved and then ignored Harry Markopolos. No, none of these. Rather, his victims . They were his accomplices.
Now, Joe Nocera is often a pretty good financial writer. He is, however, no David Cay Johnston, because he doesn’t research matters as thoroughly or carefully, and instead partially shoots from the hip, as in Saturday’s article. But there is one thing at which he is much better than David. He is much better at wrapping a load of crap in a cloak of apparent even-handedness, a veneer of apparent objectivity, and in trying to get you to swallow bovine defecation because of the veneer with which he surrounds it while unfairly savaging people.
Let me describe some of Nocera’s tricks in last Saturday’s article before getting to the meat of his argument. Read the piece yourself and you will see these tricks in full flower.
Nocera starts by describing how he chatted up a man in line with him at the courthouse, waiting to see Madoff plead last Thursday. The man was “well dressed” but “looked a little haggard.” (So might you look, Joe, if you’d been through what this fellow obviously has been through for the last three months.) The man didn’t want to give his name, says Nocera, “‘unless there is some benefit for me,’ he said dourly, but ‘I haven’t had too many benefits lately.’”
Thusly Nocera establishes the picture of a haggard, dour, selfish victim who won’t cooperate with the prominent Timesman, Joseph Nocera.
But when Nocera asked him “what role he thought the government should be playing, it was as if I had flipped a switch. Suddenly, his reticence fell away.” He said the SEC “‘played a big role in the problem, had a lot to answer for.’” He thought “the tax code should be changed” -- now heed Nocera’s comment after the dash in what follows -- “so that Madoff victims can recoup profits that turned out to be illusory -- no matter how far in the past those taxes had been paid.”
As I say, note that last editorial comment after the dash. In Nocera’s mind, it seems, if you paid the taxes a long time ago, there is something wrong with seeking to get them back, and Joe’s victim is to be condemned for desiring refunds of taxes he never owed because the income paid on them never existed. It is of no moment to Joe that, if the shoe were on the other foot, and it were the government seeking payment of taxes the “haggard,” “dour” man owed but had failed to pay 20 or 30 years ago, the government could recover from him.
Nocera goes on to write that his victim said the Securities Investor Protection Corporation “should give victims more than the current $500,000 maximum.” Notice Nocera’s use of the word “give,” as if it were some kind of charity or bailout -- which is being “given” by the trillion(s) to the Wall Street ghouls who caused the current economic disaster. No mention here that SIPC restitution was deliberately set up by by Congress 40 years ago to try to maintain confidence in investing and thereby promote the investment needed for a healthy economy. No recognition here that the amounts for recovery were established in 1978, 31 years ago, but the cost of living has risen about 350 percent since then. Nope. Just a haggard, greedy guy who wants the SIPC to “give” him money. Nice painting, Leonardo, er, Joe.
That is how Leonardo Nocera initially set the stage for what he wants to say. But then, to paint a portrait of objectivity, of even-handedness, Leonardo proclaims Madoff to be the worst of the worst, and later says “It was hard not to feel sad” for a weeping woman named Sharon Lissauer, or “for all the victims of Mr. Madoff’s evil-doing.”
Leonardo’s major point about investors was, however, “what were they thinking?” “Just about anybody who initially took the time to kick the tires of Mr. Madoff’s operation tended to run in the other direction,” he says. He then quotes the head of an advisory firm, with the hysterically appropriate name of James R. Hedges IV (no sons or daughters of immigrants or holocaust survivors or working class parents here). The aptly named Hedges said “he spent two hours asking Mr. Madoff basic questions about his operation. (Would Madoff himself have given the average investor two hours?) “The explanation of his strategy, the consistency of his returns, the way he withheld information -- it was a very clear set of warning signs,” said Mr. Hedges. “When you look at the list of Madoff victims, it contains a lot of high-profile names -- but almost no serious institutional investors or endowments. They insist on knowing the kind of information Mr. Madoff refused to supply.”
Leonardo admits that “I suppose you could argue that most of Mr. Madoff’s direct investors lacked the ability or the financial sophistication of someone like Mr. Hedges.” “But it shouldn’t have mattered,” natters Nocera. For the first lesson of investment is to diversify so you can’t lose everything to one failed investment or to a crook -- a fair point.
Nocera then quotes a Columbia Business School Professor, Bruce Greenwald, and Hedges again for the propositions that people sought “no professional advice” and “people cannot abdicate personal responsibility” when investing. (The two points seem strangely inconsistent in one way, do they not?) Leonardo is painting a picture, so he finds no investment experts to quote who would point out all the many reasons why ordinary people might have gotten sucked into Madoff. I guess Leonardo never heard of Harry Markopolos. Such one-sided quoting of experts is, I note, something the Times does more generally. (Well, maybe it’s better than the idiotic he said/she said convention of journalism, though one wonders.)
Leonardo subsequently quotes a woman named Phyllis Molchatsky, whose broker advised her to invest with Madoff because that was “a safe place to put her money.” Her story Nocera said “is sure to rouse sympathy,” but due to the fraud plus the failure of the SEC “she felt the government owed her.” Note the pejorative phrase “owed her.” So did Elie Wiesel feel this way, since he too thought the government “should help the victims -- or at least charitable institutions” -- like his, one presumes. Nocera quotes Wiesel as previously saying “The government should come and say, ‘We bailed out so many others, we can bail you out, and when you will do better, you can give us back the money,’”