Cojones at Standard & Poor’s

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You’ve got to hand it to the folks at Standard & Poor’s. It took cojones to stand up to the Treasury Department and give an honest assessment of U.S. debt and the problems of dysfunctional government. The downgrade to AA+ doesn’t make up for the misses the outfit was guilty of in the financial crisis and doesn’t atone for its seemingly willing blindness to the fool’s paradise we were living in. But its clear-eyed view of the shadows on our horizon now is worth a bundle.

The big question, though, is whether it will make a difference. The U.S. will not default, no matter how keen the GOP pols are to use threats such as that. Investors know that and they won’t flee Treasury securities. Where would they go anyway? Investors have known the same things S&P has known for months and still the yields on Treasurys are at historic lows. Putting money into the government bonds is safer than any bank, and that won’t change anytime soon, as even our tut-tutting creditors in China know.

Still, the grand game of “chicken” will continue in D.C. for the rest of the year, at least, and the downgrade could make a difference in how the game is played. The Gang of 12 – the bipartisan panel that is supposed to decide our financial fate – will have S&P’s jaundiced judgment to bear in mind as they go through their ideological faceoff. As they try to resolve problems that should have been dealt with in recent weeks, the prospect of a continued low rating, or even a further downgrade, could focus their minds on the consequences of fiscal mismanagement and dithering. Their debate, too, could keep a dead hand on the markets.

Politics, and the prospects of ousting a President, will weigh heavily on those folks, no doubt. The temptation to deny President Obama a victory – a financial resolution that would serve the country well – will be just about irresistible for half the panel. Maybe S&P’s independent judgment will prove to be a bracing slap of cold water, a reminder that the bloodsport that politics has become does have real consequences outside the Beltway. Voters could make judgments about mismanagement similar to that S&P folks made and simply throw all the bums out.

But it is too easy to cast this drama as simply a matter of gaining political advantage. This is much more than just naked opportunism. This fight is over the real and yawning ideological gulf between the parties. It is all about the longstanding argument over the size and role of government that has colored every election since at least the Reagan days. The Californian shook up prevailing wisdom in D.C. and made people believe government was the problem, not the solution – a view that is echoed decades later by the likes of Rep. Eric Cantor and, of course, the Tea Party movement.

The “two different worldviews” that divide Washington are too far apart for anything more than an armistice, Cantor suggested in a Wall Street Journal piece today. The Virginia Republican argued that expanding the welfare state and redistributing income are the central plays in the Democratic playbook. “The assumption … is that there is some kind of perpetual engine of economic prosperity in America that is going to just continue,” Cantor said. “And therefore they are able to take from those who create and give to those who don’t. We just have a fundamentally different view.”

Beyond that is the Keynesian-supply-sider divide. Keynesians such as New York Times columnist and Princeton economist Paul Krugman say Obama and Washington aren’t doing enough to use government money to stimulate the lackluster economy. By contrast, the GOP leaders invoke economist Arthur Laffer’s dictum – the Laffer Curve – to argue that tax cuts would be far more effective than government spending, especially when so much of the government money is borrowed. Variations of this debate are as old as the Great Depression and economists still are split on whether the government pulled us out that 1930s slump or prolonged it with government programs.

These are serious disputes, and unresolved economic questions. It comes to a matter of faith, of whether you worship at the Church of Laffer or the Congregation of Krugman. And, lately, it comes to a matter of who has the power to either turn on the government spigot or choke it off and, in theory, let the economy heal itself. Problem is, with a 9.1% unemployment rate, an outrageous amount of debt and the never-ending political campaign that Washington has become, the power centers and the course are anything but clear.

That’s partly why we should tip our hat to S&P. The outfit, the economic engine of my former longtime employer, McGraw-Hill Cos., didn’t bow to what had to have been enormous pressure from Washington in coming to its judgment. We can only imagine the debates that raged at company headquarters: Will this downgrade lead to higher interest costs for all Americans? What are the consequences when the economy is so weak? And what of the unlikely possibility that vengeful government regulators could make life tougher for S&P and McGraw-Hill, especially at a time when McGraw-Hill is facing pressure to reorganize or sell itself?

In fact, it’s a remarkable thing about our system that Washington can’t dictate terms to S&P. One can’t imagine that kind of independence in some other major global economies. Wall Street and Washington intersect at crucial points but neither can dictate to the other. That’s a priceless strength of our system and it would have been a sorry statement if S&P had caved to Treasury.

It is fascinating, of course, to see these warring economic visions collide. But this is no classroom exercise, no parlor game. The entertainment value is far outweighed by the size of the stakes. What Washington does will affect the livelihoods of millions, the legacy our kids inherit, and the role of the U.S. in the world. It doesn’t get much more serious than that. It will take smart and independent people to help the pols to chart the way.

Spitzer, News of the World and The Tree of Life

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I just saw the Terrence Malick opus “The Tree of Life,” the 139-minute meditation on God, evil, love, death, evolution and a tortured upbringing in the 1950s. No date movie this, but it certainly gives a viewer something to chew on. Kind of like “2001” meets a dark, dark version of the Hardy Boys. It does have a ring of truth to it, despite its grand self-importance and distinct lack of humor.

The peculiar thing is it puts me in mind of two unsettling developments in the news business this week, the cancellation of Eliot Spitzer’s effort at redemption, “In The Arena,” and the shutdown of the News of the World. The connection may seem remote – chalk and cheese — but bear with me, dear reader.

First off, both these deaths of journalistic enterprises were sad but perhaps inevitable, much like the death at the center of the movie. The movie revolves around the loss, at 19, of a young man whose problem seems to be his innocence, sensitivity and talent in a life that values such things too little. The boy’s passing was crucial to explore the movie’s central tension – the question of whether life is about grace and wonder or torment and struggle. Are we all doomed to life as a matter of “nature red in tooth and claw” or is there a divine force that brings love and justice to the chaos?

To bring this idea round to the end of the Spitzer program and the British tabloid, the question is, were these journalistic deaths just? Further, what do they say about the nature of the world of journalism today? What do they say about the torments and struggles of individuals and enterprises? And what do they say about the evolution of our media?

In Spitzer’s case, the cancellation at base was a matter of ratings and viewership. The show was just pulling too small of a viewership for CNN, which is struggling to compete with the ideologically driven appeal of Fox News, as well as the glut of “content” that afflicts all media in the Internet age. On one level, the show’s fall is yet another example of the evolution of journalism, with the inevitable deaths of outmoded approaches this brings.

A guy sitting at desk commenting on the news of the day, with interviews – especially of other CNN pundits – just doesn’t cut it these days. Viewers need more or they’ll turn away and troll for news and information on the Net or elsewhere on the tube. This is part of the reason that conventional TV news is struggling. Such is true also of print news operations.

But Spitzer’s fall was more than that. Spitzer is a tragic figure, someone every bit as tormented and driven as the character Brad Pitt plays in “The Tree of Life.” The Pitt figure longs to be a musician but instead is a would-be entrepreneur stuck in a deadend factory executive role. He’s tortured and in turn torments those around him, including his wife and sons, as he wrestles with a life where he sees only deception and money as the driving forces. He’s cold and distant, an angry and intense figure, a sad archetype of a certain kind of 1950s father.

Spitzer, it seems to me, is every bit as cold, and someone constantly at war with inner demons. By some accounts, during his tenure as Attorney General in New York he bullied defendants, especially corporate executives. He beat them into submission, often by going outside the rules of the courtroom. He likewise brought an intensity to “In The Arena” that reflected no humor, no grace, only a penetrating and cold intellect. He’s a smart guy and a relentless questioner, but every night was a painful struggle with issues of political venality and ideology.

How much of that can an audience take? It proved too much for most viewers, it would seem. Indeed, “The Tree of Life,” with its relentless intensity, is likewise too much at times. It has all the subtlety of a sledgehammer.

More than that, Spitzer lacked something indispensable to journalism. He had no innocence, something crucial in a news person. He carried far too much baggage as a disgraced former governor whose dalliances with prostitutes may never be forgotten. His demons made him fascinating in a way, as one could imagine the torment that underlay his aggressive questioning of guests. But it ultimately distracted from the core mission of a journalist – to be a reporter or analyst of the news, not a center of attention oneself but rather someone focusing the limelight.

Spitzer, much like the Brad Pitt character, is akin to a figure in classic Greek tragedy. Spitzer was done in by his own grand flaws in the end. He rose to great heights only to fall, twice. The Pitt character is more the tortured victim of outside forces, but his personal flaws figure into his failed home life.

Tragedy is too grand a word, however, for the News of the World case. Certainly it is discomfiting for the people tossed out of work there. And it’s a disappointment, perhaps, for the hundreds of thousands who bought the paper each week, however trashy it was. The world will be poorer, perhaps, for the silencing of yet another once-powerful journalistic voice. But by most accounts the paper was garbage. Its voice was shrill and vengeful and no exemplar of quality in the field. The loss is hardly worth grieving over.

It may be that News of the World demonstrates that there can be justice in the world. It was killed for its journalistic sins, its inability to draw lines about what newsgathering approaches are appropriate and what are not. Paying off cops and hacking into phone mail, as alleged of the paper, is just not right. Fleet Street in general should learn from this sorry case and one hopes that Rupert Murdoch’s commitment to quality papers, such as The Times, Sunday Times and The Wall Street Journal, will only be deepened by this. Maybe it could even make Fox News less shrill.

Sometimes, deaths are appropriate. That was not true in “The Tree of Life.” It may be so for “In The Arena” and the News of the World, sorry cases whose passing will help journalism evolve.

Private flaws, public failings — Spitzer and Edwards

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It was surreal watching CNN this past week, as former Presidential hopeful John Edwards was hit by a federal indictment in connection with his extramarital affair during the 2008 presidential campaign. The Edwards news was old hat. What was bizarre was watching a genuine expert in the realm, former N.Y. Gov.-turned-pundit, Eliot Spitzer, report on it all.

How rich can it get in the land of pols-turned-quasi-journos? Here was Edwards, a former U.S. Senator looking pathetic but still well-coiffed as he offered regrets but a denial of legal guilt. And there was Spitzer at his anchor desk for his prime-time showcase, “In The Arena,” recounting it all and soberly assessing the prosecutors’ chances. Here was one marital cheat talking to a national audience about the failings of another, while never mentioning his own perfidies, of course.

How can it be that national TV journalism has descended into a hall-of-mirrors world such as this? Where are Walter Cronkite, Tom Brokaw or Katie Couric when you need them? Even Lou Dobbs – whose former CNN show, with its dubious emphasis on point of view, seems to be Spitzer’s model – would have been better. At least, it would have been free of hypocrisy.

Don’t get me wrong about rehabilitation. I believe in second chances. And people do have a right to make a living, a right even to regain lost dignity. What’s more, Spitzer, unlike Edwards, was never indicted as a result of his secret dalliances. Spitzer in fact had the good sense to resign as governor in 2008, stepping out of that arena with an appropriate mea culpa and sequestering himself for a while as he presumably tried to get his hungers under control and keep his family together. He’s also a smart guy with some real experience that could be valuable – maybe outside of journalism.

But there remains something odd when one serial adulterer who plunged sullied from high public office sits at a gleaming high-tech news and commentary desk and opines about the misdoings of another. A viewer might have half-expected Spitzer to declaim, “well, back when I was stepping out on Silda, here’s how I stayed clear of prosecutors…”

As it was, Spitzer instead interviewed a former prosecutor-turned-journalist, CNN legal analyst and New Yorker writer Jeffrey Toobin, about the prosecution’s risky case. That gave Spitzer a chance to hint, albeit briefly, that maybe prosecutors were abusing their discretion in pursuing the case (which has to do with the misuse of nearly $1 million in donated funds to conceal the affair). It would not have been out of place for Spitzer to compliment the enforcers who passed on pursuing him, even as he dallied with prostitutes first as New York’s attorney general and then as its governor.

One has to wonder what was going through Toobin’s mind. The guy, an author of much-praised books on the Supreme Court and other legal matters, is a professional journalist, not a pol. One imagines Toobin saying, “Well, Eliot, you’re right. The prosecutors who combed through the wiretaps in your case may have taken an unpopular stance in declining to charge you, but in legal terms …”

Of course, nothing of the kind happened. Instead, it was as if the ex-Gov. was just another journalist, another honest purveyor of the craft bringing truth to the benighted millions. The sad part is that CNN has plenty of legitimate journos – Anderson Cooper sits atop a long list. But for reasons that one suspects have to do with ratings, it chooses to be the vehicle for Spitzer’s return to the limelight.

As for the pathetic l’affaire Edwards, the doings of the former North Carolina Senator, onetime Democratic vice-presidential nominee and two-time Presidential aspirant offer still more lessons for journalists. This aw-shucks pol with the boy-next-door good looks is a bona fide member of quite a club of the ethically challenged. Members — some prosecuted, some not – include former governors, such as Spitzer, Rod Blagojevich of Illinois, James McGreevy of New Jersey and Mark Sanford of South Carolina, as well as former Idaho Sen. Larry Craig, former President Bill Clinton, former Israeli President Moshe Katsav and current Italian Prime Minister Silvio Berlusconi.

Each member’s tale is sordid in its own way and together they are interestingly nonpartisan. But the common denominator for all these disgraced leaders is the heady pursuit of sex, money or power – their outsize cravings for such things — and the blurring of the lines between right and wrong that can come with that. For reporters, these folks, including Spitzer, are the embodiment of the idea that vigilance is mandatory. Of course, that idea goes for real reporters – the Cronkite and Couric type — not the ersatz cable-host variety.

Do you remember when …? No? Join the club

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A confession: I’m terrible with names. I can meet people at parties and forget their names in two sips of a gin and tonic. I’ve tried associating qualities with names: Sally is long and tall, Roxanne leaves a red light on, Bruce favors blue jeans and white T shirts. No luck. Faces are fine. Names, a problem.

I suspect I’m hardly alone in this. But, believe me, it’s not a good thing in a journalist. It’s no better in a teacher, who has to contend with as many as 50 new fresh-faced undergrads every semester. Making matters worse, half the kids sport the same long dark hair-dos and rarely wear anything but jeans.

So, it was interesting the other day when a group of us were talking about the tricks of memory. One fellow vividly recalls watching the Beatles debut on Ed Sullivan in a relative’s house, even remembering his position in the TV room. Problem is, his relatives didn’t live in that house at that time. Another friend mentioned how memories can’t be divorced from the words we use to describe them, so they’re shaped – perhaps distorted – by language. For my part, I fretted that I have few memories of my deceased parents’ faces, but instead recall photos of them.

It’s as if we don’t remember things first-hand. Incidents, people and places are all mediated through words or images. As Paul Simon might say, thank God for Kodachrome. It brings us those nice bright colors (or used to).

More peculiar, I think, is that many of us tend to recall bad things more easily than good or, at least, are affected more by nasty recollections. I have clear memories of slights or troubling childhood events and can summon up unpleasant images in a flash. It takes a bit of work to bring up the happy events.

Does this say something about one’s attitude toward life? Is a naturally happier person more likely to live in a world of upbeat memories? My friend, the Beatles fan, is a happy sort and has no trouble summoning up such a happy time, even if it didn’t quite happen that way. By contrast, does the dour person plague himself with bad recollections just to keep some dark guilt-inspired cloud hovering?

Perhaps we can blame the teachers, nuns, priests, rabbis, etc., who tortured us into profound feelings of guilt about our faults. They could take the tiny flaws in our character or behavior and grow them into gaping holes, making them loom large in person and in memory.

Certainly, personality seems to play a role in what we remember. I know several people who’ve grown up in the same houses with the same parents and yet seem to have had very different childhoods. Their recollections vary wildly, as the happy person bubbles over with cheery memories while the dour one only recalls the bleak moments.

As I chew over these things – oddly enough, on Memorial Day — I’m looking at a group of photos my wife and younger daughter have gathered. They’ll be used in an upcoming bridal shower for our older daughter. In one picture, that blonde-haired blue-eyed beauty, not quite of walking age yet, looks intently at a camera, dandled on the knee of a grinning dad with a full head of hair. Can that possibly have happened? Why is that sublime moment, an ordinary one really, lost to time except for a photo?

In another photo, all three kids stand before a fence with the Statue of Liberty far off in the distance. My gosh, were they cute. The youngest, who just beamed at her college graduation, flashed a smile to die for some 17 years ago or so. And can that handsome little guy on the left possibly be a military officer today, all grown up and serving at the moment in a dangerous place?

Lately, I’ve been photographing lots of things, in part because I need to develop a better facility with multimedia techniques. Job requires it. But my younger daughter and I just got back from a trip to the Grand Canyon in which she got pretty irritated at the camera. Why ruin the experience, she asked? Why do we want to take pictures anyway? Why not just enjoy the moment?

These are fair questions. But, graybeard that I am, I argued that pictures are not for showing friends where you’ve gone – nobody does that anymore. No, pictures are the ways we freeze time, which otherwise passes all too quickly. For a 22-year-old, the passage of time is inconsequential. For her father, it’s a different story.

Someday, she’ll dig through all those photos in our basement or troll through image banks on Facebook or its equivalent. She’ll laugh and weep at the memories they’ll conjure up. Will they be accurate memories? Probably not. But will they be true? In their own way, no doubt. Now, about those names, if anyone can recall some good tricks for keeping them in mind for just a semester or so …

Food bills rising? Let’s blame Wall Street.

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Wonder why prices for food and other commodities are higher now than they were a decade ago? Forget the rise in population to nearly 7 billion souls. Disregard the astonishing expansion of economies in China and elsewhere. No, it’s the sinister folks at Goldman Sachs who have made wheat so costly.

We know this thanks to Foreign Policy, published by the Slate unit of the Washington Post Co. The revelation appeared April 27, under the headline “How Goldman Sachs Created the Food Crisis.” The subhed: “Don’t blame American appetites, rising oil prices, or genetically modified crops for rising food prices. Wall Street’s at fault for the spiraling cost of food.”

I share this because I continue to be amazed at how those evil folks, speculators, keep popping up as piñatas for politicians, conspiracy theorists and the ill-informed. Even smart people believe this pap. Witness President Obama’s recent attack on speculators for boosting gas prices, a fresh assault that includes a federal investigation. Clearly, the appeal of a bogus idea can be irresistible.

In the FP piece, Frederick Kaufman argues that the Goldman Sachs Commodity Index lays at the center of a nasty web of big-money players who have cast farmers into near-irrelevancy. Even “bona fide” big players –- including corporations that buy and sell cereals for use –- have been sidelined by speculators, he tells us. The speculator –- who “neither produces nor consumes corn or soy or wheat,” and thus is evil by definition, has risen to be a menace, Kaufman suggests. Speculators now vastly outnumber the legit folks thanks to the GSCI and the popularity of investment products based on the index.

To market-watchers, these ideas may pluck familiar strings. Kaufman sang the tune in a July 2010 Harper’s cover story, making few friends at Goldman. Steve Strongin, the firm’s head of Global Investment Research, fired back at the time: “Long-term trends, including increased meat consumption by the growing middle class in the emerging markets and the increased use of biofuels in the developed markets, have created a backdrop for global food shortages and, as a result, millions are left desperately exposed to the vagaries of the weather for their survival. It is a shame that the plight of these millions appears to merit a cover story in your magazine only when it is exploited as a pretext to launch unsubstantiated attacks against the financial industry.”

As his latest effort shows, however, Kaufman remains unbowed.

“Today, bankers and traders sit at the top of the food chain – the carnivores of the system, devouring everyone and everything below,” writes Kaufman, an associate professor of English and Journalism who can turn a phrase well. “Near the bottom toils the farmer. For him, the rising price of grain should have been a windfall, but speculation has also created spikes in everything the farmer must buy to grow his grain – from seed to fertilizer to diesel fuel. At the very bottom lies the consumer.”

Further, he suggests, people across the world are starving thanks to this system. Some 250 million people joined the ranks of the hungry in 2008, bringing the total of the world’s “food insecure” to 1 billion, a number never seen before. This, it appears, is the fault of the speculative fury that followed creation of the GSCI in 1991 and, worse, deregulation of futures in 1999. Prices have soared thanks to the rush of money, including a lot of dumb money, in the markets.

Finally, the author argues that the evil geniuses at Goldman Sachs rigged the game by devising the index as a long-only product. “Every time the due date of a long-only commodity index futures contract neared, bankers were required to ‘roll’ their multi-billion dollar backlog of buy orders over into the next futures contract, two or three months down the line,” he says. Evidently, none could ever cash out their stakes, a notion that may surprise those who have done so.

Kaufman offers a few nuggets of data — sort of — to buttress his argument. Mainly, he zeroes in on 2008 when commodities were lofted in a short-lived bubble. Hard spring wheat, usually $4-$6 a bushel, topped $25 at one point, he says. And he notes that the worldwide price of food rose 80% from 2005 to 2008 and has kept rising, though he doesn’t say what is being measured as food or who is doing the measuring.

But all that is beside the point. Kaufman omits the inconvenient truth that in the last decade prices have fallen, as well as risen, in commodities and commodity-linked investments. The iShares S&P GSCI Commodity-Index Trust jumped from about $50 a share in July 2006 to above $76 in June 2008, but plunged below $23 by February 2009 before clawing its way back to about $40 now. The wheat he refers to now fetches about $9 a bushel at the Minneapolis Grain Exchange, a far cry from $25. Long only or not, investors have made or lost money as prices roller-coastered. This escalator doesn’t have only an up button.

Certainly it’s possible that the surge of money into commodity-related products has made pricing more volatile. The growth of buyers and sellers in any market might do that. But, could they force an unbroken upward climb detached from basic supply and demand issues? That would ignore the global surge in demand for food and commodities. Moreover, it would be blind to drought, blight, excessive wetness at planting time and other weather-related factors — some of which figured into the February 2008 surge in wheat prices. Blame the billions of hungry folks out there, not Wall Street’s thousands.

Of course, Kaufman’s logical flaws don’t end there. His fingering Goldman’s index as the root of evil, especially because of its long-only nature, is at best silly. Plenty of other vehicles for commodity investing beckon. “Just because you cannot short through this fund does not mean that you cannot short elsewhere nor that you cannot sell your shares once you think prices have peaked,” says Craig R. MacPhee, an economist at the University of Nebraska-Lincoln who specializes in global development and trade. “There may be speculative buying that drives up prices at least temporarily, but I doubt that the GSCI has anything to do with it.”

Goldman isn’t taking Kaufman’s broadside laying down. Managing director Lucas Van Praag in a May 3 rebuttal argues that the writer “does not present any credible evidence that commodity index investing is responsible for the rise in food prices. Serious inquires, such as one conducted by the OECD in the wake of the 2008 price spike, have concluded that ‘index funds did not cause a bubble in commodity futures prices.’ Rather than destabilizing futures markets, commodity index funds provide them with a stable pool of capital, improving farmers’ ability to insure themselves against the risks inherent in agricultural prices. This, in turn, can allow farmers to produce more food at a lower cost.”

And, by the way, Goldman has not owned its index since 2007, when S&P acquired it. Goldman’s folks noted this in 2010 and reiterated it again in the rebuttal.

Regrettably, facts sometimes do get in the way of a good story. And suspicion of the futures markets may be inevitable. Farmers have cast a wary eye on Chicago sharpies for decades, resenting them for seemingly setting prices growers had to settle for. Never mind the underlying supply and demand curve or the combat among shorts and longs at the exchanges.

Today, most people don’t have a clue what goes on in these markets. Players who rely on opaque math and hunches are likely disinclined to share the secrets of their successes (or failures). And, yes, occasionally bad actors do try to game the markets. But if the folks at Goldman could pull off half the manipulation ill-informed writers suspect them of, they’d be a heck of lot richer than they already are and that’s saying something.

Gas prices and politics are a volatile mix

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Electoral politics and rising gas prices are a combustible mix. But President Obama, disappointingly, is all too happy to use the $4-a-gallon-plus prices to his advantage by, again, demonizing players in the financial markets. Feeling pinched at the pump? It’s all the fault of those mysterious gnomes at the New York Mercantile Exchange who gamble on price moves.

Forget the plunging dollar, Middle Eastern tumult and fiscal deadlock in Washington. The president would instead pillory the sharpies in the oddly colored jackets at NYMEX. That’s why he created a financial fraud enforcement working group to look into “the role of traders and speculators.” Guided by Attorney General Eric Holder, Cabinet department officials, federal regulators and the National Association of Attorneys General will unleash their wrath on those bad boys.

Even before the group puts a single trader under the hot lights, Obama has made it clear that he won’t stand for the supposed abuses and manipulation anymore. At a renewable energy plant in Reno, Nev., on April 21, the president declared, “we are going to make sure that no one is taking advantage of the American people for their own short-term gain.”

The line, ready made for a president disturbingly fond of using class warfare to rally his base, will play well with the faithful. And his probe, virtually guaranteed to go nowhere, will no doubt be popular among the ill-informed.

But the sad part is that this bright man should know better. Surely, this Chicagoan has been schooled by the folks at CME Group, owners of NYMEX. Leaders there, who have played host to him at times and even contributed to his campaigns, must have given him some insights into the workings of the futures world. Indeed, his former chief of staff, now Chicago Mayor Rahm Emanuel, served on the board at CME.

If Obama hasn’t asked for a tutorial, he should have. The president, a former teacher who often lapses into lecture mode, should then take what he learns and educate the American public. Gas prices, he could say, reflect a host of factors – including demand rising in a recovering economy – as well as the latest financial ineptitude in Washington.

As Chicago Sun-Times financial columnist and CME director Terry Savage has told CNN, the sinking dollar alone drives up prices of everything from gold to oil simply because such commodities are priced in dollars. Sure, people might try to game the prices, Massachusetts Institute of Technology economist John Parsons told The Huffington Post. “But it wouldn’t be central to the price movement,” he added.

Yes, the president could tell the public, there are traders who do make money on price rises. Some also lose on rises. That’s the way the markets work.

If he really wanted to shed some light on gas prices, he should tell voters that traders are like the oil world’s pilot fish. Such brightly colored little fish hang around sharks and dine on parasites that pester the bigger host creatures. Do they manipulate, steer or direct the sharks? No. But some of them do profit by the relationship. And the sharks do well by it, too.

If the president believes the pabulum that he is offering up, though, he seems mesmerized by the fish. All those bright colors at the NYMEX have blinded him. And that’s troubling for a Harvard-educated University of Chicago classroom veteran who has a vast array of smart people in Washington at his disposal. Is there no one with the cojones to tell him how things work? Where is Austan Goolsbee, the Chicago business school economist who leads his Council of Economic Advisers?

Sadly, though, this is all too familiar. When gas prices climbed in 2006, President Bush acted much the same way as Obama. He ordered Justice and Energy department officials to probe price manipulation and speculation. He sent letters to state attorneys general urging them to move against “anticompetitive anticonsumer conduct in the petroleum industry.” The villain then was Big Oil.

Nobody from ExxonMobil or Shell went to jail as a result of the Bush folderol. It’s doubtful anyone will as a result of Obama’s efforts, which are being roundly slammed by economists. “This is a transparently political fishing expedition that insinuates that fraud or manipulation is distorting oil prices without providing even the flimsiest factual basis for such a suspicion,” University of Houston finance professor Craig Pirrong told Fox News.

Like any arena where there is big money to be made, where uncertainty reigns and where transparency is rare, the oil markets are prey to skulduggery of all sorts. And there will be people who profit while others struggle. Those folks are more likely to be lucky than evil, though. Surely this president is smart enough to know the difference.

Driven to distraction in the academy

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Here are a few surprising things about life in the academy. Grading is nearly a fulltime job, distraction is the steady state of things, and knowing whether your students have learned anything is a lot easier than proving it.

On the first point, there’s never enough time during the work week to do a good job of grading and critiquing student work. Now I know why elementary-school teachers spend good chunks of their weekends cozying up to student papers.

It’s a matter of adjusting your calendar. I’ve taken to giving my kids deadlines at 5 p.m. on Fridays. That way I figure I may get their work back to them in timely fashion. I’m not whining about this (though it taxes my wife’s patience). But few folks outside the academy understand this. All they see are summers off and a few lectures a week. Would that it were only so!

Grading, by the way, may be the most challenging part of the job. In journalism instruction this amounts to editing a lot of stories every week. That means finding holes, looking for the great quotes, checking for the sound structure, the seductive lede, solid nut graf, good kicker, etc., even as you suggest — but avoid dictating — rewrites. By comparison, my editing buds at Bloomberg Businessweek work intensely on two or three pieces a week – including takeouts – which now sounds like a day at the beach.

Many of the papers, moreover, are the work of, um, loving little hands that have a long way to go. They’re novices and that’s why they’re in school. Our job is to be tough but encouraging, which is a challenging balancing act. I had to give a 22 to a piece the other day and offer a detailed criticism to explain the poor grade. But will that student come back with something better or shrug it off as a blown assignment? So far, on her first rewrite, she’s done mostly the latter. That led to me kicking the piece back to her and suggesting she take a closer look at all those margin notes I made. We’ll see how it turns out soon.

Taking a hard line with students isn’t easy. Some of my colleagues make Marine drill sergeants look like pushovers. One started a basic reporting class this semester with a full classroom of students and is down to nine. The kids who couldn’t handle the tough grading washed out; they must hope they’ll take the class again with someone they expect will go easier or they’re just leaving journalism. Another colleague who has taught for a couple decades can count those he failed on one hand with several fingers to spare. The Gentleman’s C was a saving grace for many, I suspect.

I figure there’s got to be a middle-ground, a golden mean. Sure, most of our kids aren’t ready yet to handle the growling city editors and magazine section editors I ran across. And some never will be. But I figure part of my job is to make them ready for that. And I don’t have to be an SOB to get them ready for SOBs. I just have to point out the flaws in their work and grade them accordingly, showing them how to make fixes. They’ll learn whether journalism is for them even without a high washout rate, I figure.

Indeed, some of the work that the kids do can make your day. I live for those moments when a piece comes in that almost ready for prime time. One fellow this week did a story comparing drinking-related crime in Lincoln with other places, quoting the local police chief and making it all timely by talking about a recent expansion of the drinking day to 2 a.m., an hour more than before. Good stats, disturbing records of car accidents with booze involved. The piece is solid.

Other students have done pieces that surprise and delight. One looked into a Northwestern University study that showed that religious people tend toward obesity. She looked at local churches and how they’re trying to foster fitness among their members. Another student looked at a new gender gap, the imbalance between women and men in high school graduation rates and college attendance (57% girls on campus nationally and in Nebraska). Such intriguing efforts can make grading far more palatable, even on weekends.

Part of the reason there are not enough hours in the work week for the grade book is that every day is a laundry list of distractions. Some days, this is great. It reminds me of John Lennon’s line from “Beautiful Boy” that life is what happens to you while you’re busy making other plans. There are, for instance, the kids who walk in to talk about their schoolwork (a pause that refreshes because it’s fun to help them iron out assignments and ideas). Our policy at Nebraska’s J School is no set office hours, but an open door whenever we’re not in class. That can mean many surprise visits.

Then there’s email, that modern scourge. The damn computer delivers something else to deal with every few minutes, it seems. And each note requires a prompt response, of course. I do respond quickly to the dean’s notes, I must say. My wife and kids, too, get priority. For others, it’s a challenge.

It reminds me of a high school history teacher who taught us time-management long before Day-Timers made a bundle on the concept. Make a to-do list early in the week, update it often and hope you’ll have checks next to most items by week’s end. Works pretty well, though mine seems to expand every day. I have found that I can’t abide unchecked items, which means a good many-mile run each morning to work off the self-imposed pressure. I hope my kids do something similar and figure the ones who meet deadlines must be doing so.

Finally, there’s another area of academics that is a real challenge. It’s the proof of success. “Assessment,” a term of little endearment, isn’t easy.

Let me spell that out. Take my biz-econ journalism students, for instance. I know they are learning something. They knew nothing about publicly traded companies, earnings, Form 10Ks and 10Qs, etc. They couldn’t write about a company’s quarterly results before spending a couple weeks on the topic (indeed, developing a grasp of income statements, balance sheets, stock market performances, etc.) Hell, they didn’t know the difference between Nasdaq and the NYSE, or the many different animals in the stock and commodities exchange worlds, before we dealt with all that. It’s clear they’ve learned something.

But how much did they learn? What will they take away? How can I prove to outsiders, especially tenure-review committee members, that the kids have moved from Point A to Point B? Even defining those points, as well as measuring the gap between them, is a challenge. Lots of documents. Lots of rubrics and graphs.

Fortunately, at Nebraska some of us have help. A group of us – mostly tenure-track newbies – are working on a peer-teaching experience this semester that is aimed at getting at such answers. We met on Saturday this weekend (no time during the work week for such things) to draft a preliminary version of a statement aimed at measuring our progress.

I picked three students – one star, one middler and one challenged student. I monitor their progress via reporting and writing assignments and tests. Will it become clear that these kids have grown between January and May? Don’t know. Certainly, they’ve learned something, but quantifying and demonstrating their achievement isn’t as simple as recording how they’ve done on an end-of-term test – it doesn’t work that way in journalism or other writing fields.

For folks in the teaching game for most of their careers, a lot of this is workaday stuff. It’s routine. For me, it’s all new. I’d like to think I’m doing A work. But between the grading challenges, the many distractions and the challenge of measuring it all, it’s damn hard to prove that. There are many days when it makes running a national correspondent system for a magazine look easy.

Face of the new journalism

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Business reporter John Rebchook’s face is worth studying. It may be the face of the new journalism – or at least one of them.

Let’s get to know him a bit. Some 30 years ago, John cut his teeth in journalism at the El Paso Herald-Post. While there he wrote a lede that proved memorable enough to be included in Mel Mencher’s Reporting and Writing textbook, one a lot of us grew up on. The lede went like this:

In less than three miles, Joseph L. Jody III ran six stop signs, changed lanes improperly four times, ran one red light, and drove 60 mph in a 30 mph zone all without a driver’s license. Two days later, he again drove without a driver’s license.
This time he ran a stop sign and drove 80 mph in a 45 mph zone. For his 16 moving violations Jody was fined $1,795.
He never paid. Police say that Jody has moved to Houston. Of the estimated 30,000 to 40,000 outstanding traffic warrants in police files, Jody owes the largest single amount.
Still, Jody’s fines account for a small part of at least $500,000 owed to the city in unpaid traffic warrants.
In February, Mayor Jonathan Rogers began a crackdown on scofflaws in order to retrieve some $838,000 in unpaid war¬rants. As of mid March, some $368,465 had been paid.

Clever, eh? It’s a classic example of the delayed lede, one that teases the reader a bit before getting to the point, or nut graf, of the story. Today, however, I suspect that such a lede would suffer a swift death in an editor’s keyboard. Even John, in his new life as a Web journalist, would likely spike it as ill-suited to our impatient, get-to-the-point times.

Nowadays, John’s prose goes more like this:

Colorado Attorney General John Suthers announced today that his office has filed a lawsuit against Western Sky Financial, a South Dakota-based online lender, and its principal, Martin A. Webb, for making unlicensed, high-interest loans to Colorado consumers.
According to the lawsuit, filed in Denver District Court, the company made more than 200 loans to Colorado consumers since at least March 2010, during which time it was not licensed with the state. The loans to ranged in value from $400 to $2,600 and had terms ranging from seven months to 36 months. The loans’ annual percentage rates ranged from 140 percent to 300 percent.

John’s reporting today can’t dally or tease. He gets to the point in part because he’s not writing for a newspaper any longer, but rather for his own blog, the pleasantly green-logoed Inside Real Estate News: Colorado’s Real Estate News Source.

John’s readers, like Net readers generally, have little patience for cleverness or meandering. They want the news at the top, so they can move on quickly if it doesn’t grab them. They don’t graze languidly, but rather rush to pull out the news that is relevant to their business. They take what they need and dash off to the next meeting.

John, who worked at the Rocky Mountain News for some 26 years until it folded in 2009, is an example of a new kind of journalist. It’s not just his prose that makes him interesting. It’s his business.

When the Rocky died, John took his expertise as the paper’s longtime real estate editor and created his Net product. It’s a vehicle for and about players and projects in the real estate industry in Colorado. He has a few sponsors who pay for ads on his site and, he says, help him make a living (albeit not quite as cushy a living as when he was a veteran editor at the Rocky.)

As Inside Real Estate News grows, however, John expects that the returns will grow, too. He’s so confident in it that he recently turned down a job at a local weekly in Denver. He likes being his own boss, he says.

Lots of journalists may wind up running their own shows in coming years. Online reading is surging as traditional print newspapers struggle. And the fate of outfits such as The Huffington Post, recently sold to AOL for $315 million, suggest that the appetite for well-devised Web products is hefty. (John, would you settle for 1/315th of that?)

Of course, would-be Web journalists do have to bear a few things in mind, and John’s experience underscores them. First, he offers content that is in high demand, at least in certain circles. Much of what he does is specialized and it isn’t commodity news readily available in lots of other places. What’s more, he works fast, getting his news out ahead of the pack.

Finally, John is able to handle the business side of his operation, taking time to market his services to advertisers even as he stays on top of the news. He stays on top of the growth of the Net, too, putting out the word about his blog on Facebook.

John’s grinning punim isn’t the only look of journalism in the future. TV, magazines, and other vehicles will likely have a place, alongside some newspapers – on the Web or not. But take a close look at him anyway. Whether in textbooks or on the Net, he has plenty to teach us.

Few straight lines in life or work

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Career choices used to be simple. Go to school to be, say, a doctor, lawyer or reporter. Get your degree, apprentice as an intern, an associate or a budding Jimmy Olsen, and then ply your trade. In medicine or law you would make a lot of money and learn golf for when you retired at 55. But for growing numbers of us life rarely moves from point A to B anymore. Instead, we follow a long and winding road with some fascinating forks.

Consider Lynde McCormick, a colleague at the Rocky Mountain News in Denver in the 1980s. While working as a business reporter, Lynde wielded a deft touch with words. He had a sharp eye for big, broad stories and wrote weekly takeouts for a supplement we called Business Tuesday, doing packages the rest of us all wanted to do. Later, he rose to business editor, where — among other things — he waged war on adverbs. If it ended in an “ly,” he’d say, kill it. A Californian, he also had a weakness for fast cars and from time to time turned his hand to new car reviews.

Lynde’s career has taken some stunning turns since then. He left the Rocky for the bright lights at a TV channel the Christian Science Monitor experimented with and then joined Monitor Radio. An adventurer, he landed a job with CNBC in Hong Kong, a spot he loved. When CNBC pulled the plug in ’96 on its Hong Kong operation and merged with Dow Jones TV in Singapore, Lynde says, he moved back to Boston to serve as business editor at the Monitor’s newspaper. Meantime, his equally adventurous wife, Andrea, started a company that imported Chinese antique furniture.

Then things got interesting. After a couple of years, he joined her business. The pair drove around the country, towing a trailer and doing antiques shows, as many as three each month. Eight years ago, they opened a gallery in Manhattan, The Han Horse on Lexington Avenue, to market furniture from the late Qing Dynasty (1700-1900) and pottery artifacts from as long ago as 206 BC. They continue to run it, even though the antiques business has been a tough go in recent years.

By something of a back door, the McCormicks also got into the restaurant business. They backed a friend who opened a spot in the Greenpoint section of Brooklyn and wound up running it when he ran into personal problems. The Brooklyn Label serves espresso drinks that Lynde says are “amazingly good.” It’s gotten some good notices from, for instance, New York Magazine.

As his career has unfolded, Lynde’s reporting skills have come in handy. “I have constantly tried to gather as much information as possible, going to expert sources, listening to what they had to say, and then using the parts that made sense for our restaurant,” he says. “It’s a lot like writing a story – you gather the best information possible and then use your own judgment and intelligence to figure out how to use it.”

He also has developed a good sense of marketing and customer service — which might be helpful for journalists. “With both businesses, our philosophy has been that when someone walks through the door, the goal is not to sell them something but to make them want to come back,” Lynde says. “The result is that people, generally, like us… which has a lot to do with why we are still in business.”

Today, the Rocky is no more, a victim of the Internet and the great newspaper consolidation wave. The Monitor serves up its news coverage mostly online, a route many news outfits may wind up taking. And CNBC soldiers on. But the skills Lynde mastered at such places are helping him in ways he likely never imagined. I expect he has few regrets for the time he spent learning them.

For many journalists and journalism students, the road won’t be straight. But the views can make it damn interesting.

Student journalism — not just for laughs

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Some 38 years ago, Jim Vallely was a New Jersey college student who had a knack for humor and a nice touch with a pen, but he wasn’t sure how to put the two together. Nourishing what he recalls as “a very faint ambition” to become a writer, he’d hang about the school newspaper office. Once, we published a piece he did called “Suicide note from a dog.”

Sadly, the piece seems lost to history. That’s sad because Jim, left in the photo, today is a prolific comedy writer in L.A. His credits are stunning: writer and co-executive producer of Emmy Award-winning Arrested Development, exec producer on Running Wilde, consulting producer on ‘Til Death, as well as various producing spots on The Geena Davis Show, The John Larroquette Show and The Golden Girls.

Jim is a big deal in the world of writing and production.

And this weekend he sent me a touching note crediting the launch of his stellar career to our paper and the piece about the dog. “I was published!, and I decided then and there to pursue comedy writing,” he wrote.

School newspapers can make a huge difference in people’s lives. That’s obvious for future journalists – as employers tell us when they’re considering intern candidates. Outfits ranging from local papers to the likes of Bloomberg put such experience at the top of their list. They want to see the clips. They know there’s nothing like getting out, covering things and having to put your work out – on deadline and with an editor’s oversight — for the world to see.

But school papers also matter whether journalism is in your future or not. Writing, editing, getting a platform for commenting on the world is invaluable for anyone who plans to do anything involving pecking at a keyboard. It teaches you how to look carefully, think critically, organize your thoughts and subject them to the cut and thrust of public debate. Such skills are central to law, politics, teaching, business – really just about anything professional. It’s just also a hell of a lot of fun.

Jim went on to do standup work in New York in the 1980s. That, I’m sure, was his crucible. He honed his craft in a lot of tough rooms. He then found his way to L.A., where he’s been writing for TV for the last 25 years.

Thanks to the wonder of the Net, he tracked me down and wrote to remember our time as fresh-faced undergrads. We had spent a lot of time talking about writing, trying to figure out where our dreams would lead us. He recalls my urging him to specialize in something. “I asked you, ‘you mean, like humor …’ and you said yes,” Jim wrote. Thus, the dog piece.

Jim went on to specialize – in spades. He figured out what fit him and pursued it, despite, I’m sure, huge challenges. His gambles and his stick-to-it-iveness paid off.

But a school newspaper did mark a big turning point in the road for him. Students who don’t make room in their crowded college lives for it may never know what opportunities they are giving up. Think about that the next time you see a hilarious, award-winning show. Look, too, for Jim Vallely’s credit.