We mourned when Larry Ribstein gave up his weekly eviscerations the Sunday ramblings of Pulitzer Prize winning New York Times columnist Gretchen Morgenson—better known to DealBreaker readers as Gret-Gret.. This week, however, even Larry couldn't stay away (as Joe pointed out this morning in Opening Bell). And the errors of this past Sunday's column on the subprime mortgage "meltdown" shone so brightly that they are attracting critics like moths to a flame.
(Whoa. That's the wrong metaphor. Because the moths get burned by the flame when what we mean is that they're burning Gret. Hmmm. Let's try that again.)
And the errors of this past Sunday's column are attracting critics like bees to honey.
(Wrong. Bees like honey. Honey is sweet. Why don't we just quit it with the clichés? One more try.)
And the errors of this past Sunday's column seem to have provided a bright target for the slings and arrows of outraged critics.
(That will have to do.)
One our favorite business writers is called Felix Salmon. (We've known him for years and that's his real name.) His take on Gret-Gret gets right to the heart of what's wrong with so many of her columns: she doesn't seem to know what she's talking about.
The world is full of people desperate to know what Gretchen Morgenson thinks about the market in mortgage-backed securities, or MBSs. The problem is that her column last week on the subject is hidden behind the Times Select firewall. So we can all be very grateful that she has now rewritten it, at even greater length, and republished it under a "News Analysis" slug. (No firewall!) The headline? "Crisis Looms in Market for Mortgages".Or, you know, we can ignore it, on the grounds that Morgenson adduces no evidence whatsoever that any crisis is looming at all. For one thing, she doesn't seem to understand the difference between two entirely different types of investment: equity in subprime mortgage originators, on the one hand, and debt backed by pools of subprime mortgages, on the other. It's certainly true that originating subprime mortgages does not seem to have been a very good business to invest in over the past year or so. But Morgenson never connects the dots and explains why that means that the market in subprime MBSs is likely to implode.
But, you know, understanding your subject matter or clearly explaining it to readers is apparently not a qualification for a Pulitzer.
Is there a looming crisis in the mortgage market? [FelixSalmon.com]
Posted by Another Reason to Ignore Carney, Mar 12, 2007 3:07PM
You guys are full of it. My guess is that Felix and Carney can't tell the difference between a default swap and Monopoly money. Felix writees, "And the second point is that if you actually look at the prices for those subprime MBS tranches when they do trade, guess what? They haven't actually fallen much in price at all. If investors were marking to market, it really wouldn't make much difference." This is completely wrong. The ABX Home Equity CDS Index BBB tranche fell off a cliff, which has now driven New Century Financial into bankruptcy. This idiot is complaining that "Morgenson never connects the dots and explains why that means that the market in subprime MBSs is likely to implode" while the imposion in the subprime MBS market is now old news.