Gretchen Morgenson is the NYT’s lead attack-dog on issues relating to Wall Street and derivatives, but her pieces are frequently the subject to the kind of criticism that was formerly reserved for Ben Stein.
But her latest piece takes the cake, for right at the top she writes:
Like the credit default swaps that hid Greece’s obligations, the instruments weighing on our municipalities were brought to us by the creative minds of Wall Street.
Of course, Greece didn’t use CDS to hide its obligations. It used currency swaps.
She’s already getting roundly criticised by the likes of Stone Street Advisors, Calculated Risk, and Felix Salmon, so we won’t pile on much. But this inattention to detail basically suggests her thinking is that derivatives are always evil, and thus specifics are irrelevant.
Update: Some folks are (somewhat) fairly calling us out for calling someone else out on making a mistake, given that we’ve made mistakes too.
Here’s the difference: Yes, because we’re an organisation that publishes fast and hard, we’ve made regrettable errors. But this isn’t just a slip of terminology — this reveals a mindset that all derivatives are the same, or that even if they aren’t the same, there’s no good reason to spend much time being specific becuase they’re all evil anyway.
Or to put it another way: Morgenson knows her readers have heard horrible things about CDS, and so it’s easiest to just describe Greece’s swaps as CDS because it’s a shorthand for “bad Wall Street derivative stuff.” That’s not just making an error, it’s a cynical form of presenting an idea.
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