NOT THE SHARPEST KNIVES IN THE DRAWER: Dismal Reporting On Derivatives
How many Washington Post reporters does it take to explain to readers what a financial derivative is in an article about the Senate Agriculture Committee approving a bill to regulate the over-the-counter derivatives market?
Apparently more than three, as Brady Dennis, Paul Kane and David Cho did not bother to include even a single sentence in their 532-word article defining the term and telling readers why Wall Street brokers and financial speculators trading derivatives need the feds looking over their shoulders by requiring derivative contracts to be traded on public exchanges and approved by a clearinghouse. A fourth writer, Robert O'Harrow, explained the “highly complex transaction” in a separate article that readers of the first article may or may not have seen or had time to read.
To be sure, The WaPo isn’t the only paper guilty of this particular lapse, and financial journalists and their editors should not assume that their readers are sophisticated enough to understand this very slippery financial instrument when the pros have repeatedly lost their shirts – and had to borrow ours to cover their losses - because they didn’t fully appreciate the risks involved in how specific contracts they bought were structured. For this reason, financial journalists should take the trouble to explain terms of art in each article - like their colleagues covering science and medicine, who routinely weave explanations of, say, quantum mechanics or translational genomics into their articles. That few MSM financial writers break complex material down for lay readers suggests to The Stiletto that they themselves don’t fully understand their beat. Note to The Wall Street Journal’s Daisy Maxey, et al.: It’s not enough to simply tell readers that “Derivatives are complex financial instruments.” That much, they know and y’all have got to work a little harder to earn your paychecks.
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