This is not the time to not know what you’re talking about

Several months ago, I bemoaned T&T’s “apparent lack of reporters who actually understand business, finance, law”.

The absence of sufficiently qualified finance and business reporters from the halls of T&T’s newsrooms is even more galling now, as the global financial crisis deepens.

And make no mistake, it is a crisis – one that few people in the Caribbean seem to have heard of, and even fewer to understand.

A recent post over at Media Watch provides a compelling example of this disconnect. In it, the author of the blog – “Martine” – is taken to task by a reader over her description of the recent declines in the US stock market as a “crash”.

Good. Because while American equity markets have gyrated wildly in recent weeks, and have fallen quite preciptiously from their historic highs, they have not crashed.

But Martine makes two additional errors in that post.

First, she refers to her recent posts on the “US stock market crisis.”

There is no US stock market crisis. There is a global financial crisis – every equity market in the world has been hurt by the fall-out from what started as a meltdown in the US housing market. And the problems are not confined to equities (stocks) – credit (debt) markets have also been seriously affected.

Second, and more serious still, is this statement:

We hope Curtis Rampersad of the Express will take to heart your point as well, since he also referred to the issue as a crash in his story on the AIG bailout in the Wednesday edition.

“There will be no immediate fallout but the crash in the US financial system and a global recession may inevitably affect investors and consumers in Trinidad and Tobago, a financial expert has suggested.”

Rarely do I defend Express reporters, but Mr Rampersad did no such thing.

Rather, Martine is wrongly conflating two entirely separate issues – events that may be reasonably be described as having caused a “crash in the US financial system” and a panic in the US stock market, which is only a small part of the whole.

Mr Rampersad’s article as a whole does a decent job of summarizing a complex topic, and I will comment on it here (my comments are in brackets):

There will be no immediate fallout but the crash in the US financial system and a global recession may inevitably affect investors and consumers in Trinidad and Tobago, a financial expert has suggested.

(May inevitably? Grammatical quibbles aside, it is safe to say that investors and consumers in Trinidad and Tobago will be affected)

In addition, there are new concerns from international companies operating here who may be worried about the effects of the largest financial meltdown in the United States in almost a century.

(Good)

Republic Bank’s senior economist Dr Ronald Ramkissoon said yesterday that the turmoil in the US markets at the weekend arose because people were encouraged to save and invest in a range of products in different countries and while the returns were great, it also meant that risks were higher.

(Not exactly, but a decent effort. The recent turmoil in the US markets – and again, credit as well as equity, to say nothing of commodities and currencies – reflects a collapse in investor confidence in the strength and viability of institutions that are heavily exposed to risky financial instruments, etc.)

The fates of major financial institutions Lehman Bros and Merrill Lynch redrew Wall Street’s financial landscape as the former has filed for Chapter 11 bankruptcy and the latter was forced to sell to Bank of America.

(Very good, but some context would be helpful. What do Lehman Brothers and Merill Lynch do? Why did the latter agree in principle to merge with Bank of America?)

They were brought down by billions of US dollars in losses arising out of risky real estate and mortgage transactions.

(Well done.)

He said there could also be concerns from energy companies operating here about insurance coverage issues following the meltdown in the US.

(Worst sentence in the piece. Unclear. Should have either been better explained or edited out completely.)

Monday’s New York trading also saw the American International Group, the world’s largest insurer, scrambling to raise capital to stay afloat.9

(Good, but context.Why did it need capital? What happened to its billions of dollars in assets? Also no mention that AIG is the parent company of Algico)

Ramkissoon said during a telephone interview yesterday that this was not the first time large institutions failed in the world.

(True, but not since the Great Depression in the US have so many failed so swiftly, and back in 1929 the world was neither so complex nor so interconnected)

At times like this, he said it was useful to take a long-term view as it would not last forever. He noted that falling stock prices could actually benefit investors once the market had bottomed out.

(Statements like this piss me off. Why is it useful? How could investors benefit? When will the market ‘bottom’? What about the interim?)

With regard to the current financial meltdown, Ramkissoon said: “I see this as a correction phase and when you take the long view, there comes a time when you have to roll with the punches.”

(If by rolling with the punches he means, “be spectacularly bailed out by the US government”, sure. The man is clearly a Keynesian – in the long run, we are all dead and what not)

Local investors and depositors at local commercial banks should not be worried “right now” as their investments were safe because financial institutions here did not engage in some of the risky ventures Wall Street firms executed.

(Tricky. How does he know that? And take RBTT – recently bought out by Canada’s RBC – how does you know that RBC has not engaged in risky ventures? There’s no evidence to back up this statemen, and therefore no way to judge its veracity)

He said people’s money was safe but cautioned that the global economic situation would affect locals through recessionary problems.

(Again, really? What about people who have invested in the stock market, which is always a risk? What about people who have invested in funds linked to the performance of overseas stock markets? What, exactly, are “recessionary problems”?)

The fall in prices for commodities like crude oil, the rise in global food prices, plus the negative effects on travel and tourism could affect countries like T&T, he added.

American Chamber president Eugene Tiah was also concerned yesterday about the financial troubles in the US.

“Clearly now there is a complexity in terms of investments. Companies and countries invest in complex ways and one area of concern may be how they are linked” to companies in the US, he said in a telephone interview from his Phoenix Park Gas Processors office at Pt Lisas.

(Now that’s a good quote)

These subjects are not easy to write about, by any means. But they are far too important to get wrong.


  • Martine

    Thanks for pointing out the errors, Sinistra. We will take the 'buff, regroup and press on.
    You have some interesting comments on the media as well.

  • sinistra

    Cheers Martine, I appreciate the feedback.

  • Mike

    Hi,

    You say Mr. Rampersad did a decent job of summarizing a complex topic. Really? Much of what he wrote merely paraphrased reports from other sources. I see no real understanding of the complexity of the situation facing financial markets. He mostly quotes local “experts” opining on the implications of the meltdown for local businesses. This isn't journalism; it's stenography.

    You yourself have highlighted some of the flaws in this story. And as you've pointed out, this is largely due to the vast majority of 'journalists' being out of their depth when it comes to reporting on the law, politics, business etc. They need to go and train, maybe spend a few months at a real newspaper to see and learn how professional newsmen and women go about the very serious business of journalism.

    thanks
    Mike

  • Mike

    Hi — Took a read of the rest of your blog. Good job highlighting the
    problems facing T&T media…

    I just have one problem with some of your observations on one story in
    particular. In praising Camini Marajh for her RBC/RBTT story you say: “Her
    coverage of the deal should be framed and used as a model by editors and
    reporters in other newsrooms.”

    Are you serious? Maybe I've been reading too much FT, Wall Street Journal,
    New York Times and such, but what Ms. Marajh did in this story is fairly
    routine for any such story. In fact, if you've ever used a Bloomberg
    terminal you'd know that stories like these cross the 'tape' all the time.
    And many such stories are written on tight dealine, sometimes in a couple
    hours by wire reporters. Trust me, there is nothing particularly great
    about this story.

    You also say that Ms Marajh scooped international media. I don't think this
    is accurate. At $2 billion, The RBTT deal is a small acquisition and not
    exactly something reporters at Reuters, the FT, WSJ and other outlets would
    prioritise. My guess is that they only paid it any attention when the RBC
    press release hit the wires.

    Moreover, this paragraph that you praise (“wonderful. wonderful.”) is
    incomplete:

    “Both have financial incentives to see the deal through, according to
    financial sources. RBC, Canada’s largest bank is flush with acquisition
    dollars, assets of Can$563 billion and a market capitalisation of Can$69
    billion.”

    Missing detail: How much acquisition dollars does RBC have? Also, citing
    the bank's assets is meaningless without reference to the bank's
    liabilities. Also, we're told that RBC is trailing rivals in the Caribbean.
    How much business does RBC have in the Caribbean? Moreover, why is the
    Caribbean important to RBC?

    You also praise the following paragraphs as “establish[ing] why the deal
    would be beneficial to both parties, are neatly hedged (”if approved by
    shareholders”) and give relevant financial details.”

    “RBTT, Trinidad’s largest bank with assets of US$7 billion, has stumbled in
    recent years on issues related to management, flat earnings and growth
    limitation.

    The RBC offer, comprising 60 per cent cash and 40 per cent RBC stock, if
    approved by shareholders, would give RBTT stockholders a much-needed boost
    with an option of cash and RBC shares – Can$55.26 at the close of trade on
    the Toronto Stock Exchange on Friday.”

    The first paragraph is vague. What is the growth limitation? And if that
    limitation exists, why is RBC seeking to acquire RBTT? How does RBC plan to
    generate growth? (Every acquisition should generate value for shareholders.
    Growth is fundamental to creating value.) Is RBTT bloated? Will there be
    job cuts to generate cost savings? What's the growth strategy underpinning
    the acquisition?

    The second paragraph is also vague and fails to answer a fundamental
    question: Is the RBC offer a fair one? Are RBTT shareholders getting a good
    deal? In fact, I would say that this was the most important aspect of this
    story. Ms Marajh should have gotten an expert opinion about the proposed
    offer. This paragraph reads more like PR than insightful reporting.

    Next, Ms Marajh writes:

    “Still to be worked out, however, is the price of RBC shares which are to
    be listed on the local Stock Exchange under the depository receipt system
    used on the Nasdaq and other major Exchanges where a specified number of
    shares of foreign companies are issued and traded.

    Sources say the listing of a big international bank like RBC on the TT
    Stock Exchange would be a major coup for this country and could well
    catapult Trinidad centre stage and a step closer to the Prime Minister’s
    dream of making this country the financial capital of the Caribbean.”

    You say in response to these paragraphs: “When I got to this point in the
    story, I was tempted to applaud. Ms Marajh clearly had spectacular sources
    on this one, because details like that are gold dust.”

    Really? Do you need to have spectacular sources to state the obvious?
    Details like that are gold dust? Wow… (I also notice that Ms Marajh made
    no attempt to contact RBC to verify her story. Not even a sentence saying:
    “RBC officials declined to comment.” This would have added balance to the
    reporting.)

    I think you're doing a good job with this blog, but we need to be careful
    not to regard routine reporting as excellence. I know that given the sorry
    state of our journalism the temptation exists to do so, but we have to
    resist that temptation if we ever want our journalism to improve.

    thanks
    Mike

  • If you're going to use photographs for your blog posts under Creative Commons, it might be nice to reference who took them (other than you taking them effectively).

  • Hi – thanks for getting in touch. I use a plugin called Tagaroo to
    automatically insert pictures into posts; it only references
    CC-friendly images, and always links back to the source. Per my
    reading (and re-reading, post your email) of the various CC licenses,
    a link back to the source is the preferred form of attribution.

    If you disagree that this is enough (as it seems you do), please let me know what you would prefer and I will amend the post.

  • sin

    Hi – thanks for getting in touch. I use a plugin called Tagaroo to
    automatically insert pictures into posts; it only references
    CC-friendly images, and always links back to the source. Per my
    reading (and re-reading, post your email) of the various CC licenses,
    a link back to the source is the preferred form of attribution.

    If you disagree that this is enough (as it seems you do), please let me know what you would prefer and I will amend the post.

  • If you're going to use photographs for your blog posts under Creative Commons, it might be nice to reference who took them (other than you taking them effectively).

  • sin

    Hi – thanks for getting in touch. I use a plugin called Tagaroo to
    automatically insert pictures into posts; it only references
    CC-friendly images, and always links back to the source. Per my
    reading (and re-reading, post your email) of the various CC licenses,
    a link back to the source is the preferred form of attribution.

    If you disagree that this is enough (as it seems you do), please let me know what you would prefer and I will amend the post.