The Palin-ization of The Wall Street Journal

"Glister," Rupert? Really, "Glister?!?"

You knew that Sarah Palin was running (kind of) for President, but did you also know that she apparently is now publishing The Wall Street Journal?

How else do you explain:

--Headlines like this one, from Friday's paper: 'Behind Gold's New Glister: Miner's Big Bet on a Fund."

--A front page that now features both news leads and ad leads ("The Wall Street Journal's lower right front page . . . brought to you by AT&T").

--An Op-Ed page that, instead of showcasing the day's leading conservative ideas and voices, more often than not now serves as a house organ for Republican sophists and apparatchiks (not that the Left doesn't have its counterparts -- and then some).

Rupert Murdoch: Journalism Trailblazer

But back to "glister."

If you look hard enough, you'll actually find a dictionary that includes the noun version of "glister" as a permitted -- albeit archaic -- usage.

However, what it really seems to be is a mash-up of the words "glitter," "glisten" and "luster" -- much in the spirit of Sarah Palin's "refudiate" ("refute + repudiate").

Once upon a time, institutions like The Journal served as bulwarks against bastardizations of the English language and sloppy thinking, not necessarily in that order.

Now, apparently, The Journal has decided to become an abaser itself.

Ads, Ads, Ads

On to issue #2: ads.

Old-time advertisers -- and advertising policies -- were positively genteel compared to today's ubiquitous (and creepy/stealthy) commercialism and line-blurring.

So, instead of discreet segues like, "Now, a word from our commercial sponsors," you get a search window in the upper right corner of The Journal's online home page with this (very) faint disclosure: 'Search Sponsor: Goldman Sachs Asset Management.'

Apparently, it's not enough that Goldman Sachs and their Wall Street ilk are front-running everyone else's stock trades (through an arcane practice called "high frequency trading"); now, they're also front-running our online searches and very thoughts -- or at least, typed ones.

Which, ironically, might actually argue for subscribing to the anachronistic print version: at least when The Journal runs ads on its print home page, as it now does, it can't monitor what its readers are looking at.

Another Name for "House Organ?" How about "Tool"

Last item: the decline of The Wall Street Journal's Op-Ed page.

Once upon a time, The Journal's Op-Ed page was a must-read for political thinkers of all stripes.

It showcased writings not just by Milton Friedman, Peter Drucker, and Norman Podhoretz, but by icons and leading lights from all over the political spectrum.

Now, it largely serves as a forum for . . . . political hacks and second-rate thinkers like Michael Boskin, my old economics Professor at Stanford, who went on to become Chair of the Council of Economic Advisors under the first President Bush.

Just like the joke about one of Milton Friedman's students who fell asleep in class and awoke to a perturbed Friedman looming over him ("I missed the question, but the answer is 'increase the money supply'"), a large and increasing percentage of Journal opinion pieces these days have a predictable premise ("government is screwing things up") and foregone conclusion ("reduce its scope and power").

How? By cutting taxes, of course!

The only real suspense is the tortured logic the author will adduce to connect the beginning and end points.

That's "adduce" -- a real word, not a made-up one.

Look it up: "adduce: \ə-ˈdüs: 'to offer as example, reason, or proof in discussion or analysis.'

P.S.: My one Michael Boskin-taught economics class at Stanford (in 1979!) had about 400 other students in it, so I hardly got to know him personally. But I do remember his snarky policy on re-grading exams.

According to Boskin, anyone who felt their exam had been graded too harshly was welcome to appeal.

However, if so, Boskin promised that he would review their entire exam, and was "highly likely" to find an equal number of deductions to exactly offset any additional points the student was entitled to.

There you have it: Michael Boskin -- a record for intellectual honesty going back over three decades!

"I survived the 2:45 p.m. Crash"

"The Flash Crash"

Imagine a beef processor that was linked to an e.coli-tainted shipment that ultimately killed 100 people.

A week after the outbreak, the authorities were still trying to determine how e.coli got into the beef processor's facility.

In the meantime, the facility was operating "normally," and continuing to process and sell beef to all its usual customers.

Wall Street Dysfunction

Of course, in the real world, none of the above would have been tolerated.

Now compare that with what has happened on Wall Street after the major stock averages did a 10% bungee jump in the span of 5 minutes on May 6.

Nothing.

While the SEC and various stock exchanges look for a culprit, the exchanges continue to trade, "normally," with no change in their structure or business practices.

Just one more thing that's disturbing about modern day Wall Street . . .

P.S.: would it be bad form to point out that the "crash survivor" is missing something? Like his head??

Wall Street "Bungee Jump" Culprit? Mrs. O'Leary's Cow

Lots of Dry (Financial) Tinder

Want to know who -- or what -- caused Wall Street's melt-down last Thursday?

It was Mrs. O'Leary's cow. Or at least the 21st century, financial equivalent.

Huh?

It was Mrs. O'Leary's cow, of course, that got the blame for causing the Great Chicago Fire of 1871 (it turns out the story was made up by a journalist).

But while a cow kicking over a lantern might plausibly have started the fire, it quickly developed into a conflagration for other reasons.

Like a city full of highly flammable wooden structures all built too close together, protected by an antiquated, overstretched fire department

So, too, the spark for last Thursday's stock market bungee jump might well turn out to be a clerical error on an especially large trade.

But it's hard to believe the resulting fire would have been so big if there wasn't plenty of dry tinder nearby.

"Fat Fingers", HFT, & Yesterday's Stock Market

"Lurching From Port to Starboard"

My favorite quotes assessing yesterday's market action follow.

(Note: 'HFT' stands for "High Frequency Trading"; "fat finger" refers to the rumor circulating that someone at Citigroup mistakenly entered a trade with "billion" instead of "million" entered.)

Personally, I find it hard to believe that a clerical error could be the culprit.

If this wild ride continues, it will provide further evidence that markets need adult supervision.

--Floyd Norris, The New York Times

What happened today was no fat finger, it was no panic selling by one major account: it was simply the impact of everyone in the HFT community going from port to starboard on the boat, at precisely the same time.

--Tyler Durden, Zero Hedge Blog

Good thing we never let the adolescents and greedheads on Wall Street get their hands on the housing market . . .

P.S.: Continuing with the theme of "taking responsibility" . . . . how about if, a trading glitch was at the heart of yesterday's melt-down, the head of the NYSE (or whoever else is in charge) gives a press conference explaining exactly what happened?

Wall Street Transaction Tax

Wall St Still Pushing Back on Reform

Transactions costs have declined significantly over the past 10 years, thanks to the many structural changes in equity markets, including trading in decimals instead of eighths, the proliferation of scores of trading venues that function as exchanges, and an explosion of high-frequency trading. Vanguard has estimated that total transactions costs on an average trade have fallen by more than 50%, resulting in approximately $1 billion of annual savings to its investors. When magnified across the whole investment industry, investors have probably saved tens of billions of dollars in transactions costs

--Burton Malkiel and George Sauter, "A Transaction Tax Would Hurt All Investors"; The Wall Street Journal (12/9/09)

I'm not sure I've seen a more egregious example of "missing the forest for the trees" in quite awhile.

After all the financial tumult the last 18 months -- and the negative returns on stocks the last decade(!) --- I don't think investors' problem with the stock market is inordinately high transaction costs.

Check that.

I'd volunteer to pay dramatically higher transaction costs if that damped down the speculative, hyper-liquidity driven trading that has captured most equity markets (actually, given that I seldom trade, I pay practically zero transaction costs).

Speaking for investors everywhere, I think I can confidently say how I grateful I am that Wall Street has cut its commissions billions annually -- as stocks have lost trillions (and gyrated wildly, to boot), and Wall Street's pay has exploded.

Sadly, if you want a quick shorthand as to whether a given proposal is sensible, good for the broader economy, etc. -- just ask, is Wall Street for it or against it?

If Wall Street opposes it . . . it's a good idea.

P.S.: you might know Burton Malkiel as the author of "A Random Walk Down Wall Street," which argues that markets efficiently price equities by incorporating all known information. If you weren't aware . . . that notion has been thoroughly discredited the last decade or so -- and so has Malkiel.