Waiting for CNBC : CJR

Waiting for CNBC : CJR: "So what are the right problems with CNBC? i called Taleb a few weeks after his Power Lunch appearance to get his opinion. Few are better positioned than Taleb to answer the question. He is, for one, a professional trader of derivatives, the unregulated securities that accelerated the panic of ’08. If CNBC neglected a journalistic duty, it began with ignoring derivatives and other securities that are difficult to invest in or even get pricing data for.

As it happens, the market for those securities is far bigger than the stock market on which CNBC focuses its energies. It is also far more lucrative; a startling if little-noticed February column in the Financial Times by Citigroup’s chief global equity strategist pointed out that global equities delivered a negative 29 percent return over the ten years prior, in stark contrast to government bonds, which had delivered an 80 percent return. The real action over those ten years, however, took place in riskier bonds and the complicated “swaps” that gained and lost value in tune with the market’s perception of their creditworthiness and the direction of interest rates. The advent of those securities essentially made it possible, and profitable, to speculate on bonds as one would stocks—for those able to play the bond market, which requires not only serious cash but a Bloomberg terminal for tracking prices. And that’s just bonds: the prices of derivatives like credit default swaps, which rise and fall in accordance with underlying bonds, are almost impossible for someone who’s not a derivatives trader to find out; there’s no exchange or clearinghouse for the things, even as hundreds of trillions of dollars in “notional” value were tied to them at the height of the crisis. The problems with CNBC are all rooted in an underlying fraud, an insider game that was not CNBC’s creation."