On August 12, 2009, PBS aired an exercise in introspection and navel gazing by the media hosted by Marvin Kalb focusing on how the media covered the financial meltdown.
At one point, panelist Alexis Glick attempts to patronize the audience by saying "We tend to underestimate the intelligence of the audience" while giving the media a pass by saying "This is a really complex problem". She then goes on to elaborate how she worked at one of these firms handling MBSs in the early 1990s and things a decade later are "WAAAAAAAY more complicated" -- CEOs and senior executives can't even understand the instruments being used / sold now.
Maybe that should be your first clue. Most executives are stumped by anything longer than a five-page PowerPoint presentation or a two-paragraph email on their BlackBerry. Throw in a little compound interest and some statistics and WHOA!!! Time to get outta here, I have a flight at 4 to Pebble Beach for a, ahem, "strategy conference."
If you understand:
* compound interest and exponential mathematics
* fiat money and fractional reserve banking
* equity ownership risks / privileges
* debt ownership risks / privileges
* income statements
* balance sheets
* the basics of tax impacts at corporate and personal level
* how stocks are issued and sold
* how loans / bonds are originated and sold
you possess 85 percent of what is required to invest in business. If you possess the above skills and can write at approximately a 12th-grade level and (for TV) look like a supermodel, then you have 85 percent of what's required to cover business as a journalist.
While hundreds of journalists were dazzled by the intricacies of the vast fraus apparatus of Wall Street, thousands of dilapidated, barely habitable SHACKS you wouldn't board your dog in were selling for $400,000 in California and Florida.
How much does it take to look at those facts and decide the numbers not only DON'T add up but CAN'T add up? Something other than sound lending is involved with a shack selling for $400,000. Millions of mortgage backed securities built upon stacks of $400,000 loans on dilapidated shacks CANNOT be AAA rated securities.
If these journalists possessed even basic qualifications to cover their beat, they could have reverse engineered just a relative handful of these transactions, figure who was bringing money to the table (no one), figure out who was LEAVING the table with paper profits, figure out where the risk went and realize the picture was not merely one of a speculative bubble but a systemic fraud -- from the consumer loan application to the retail mortgage origination to the re-packaging of the loans to the ratings of those securitized mortgages to the flawed compensation schemes for the traders and executives of the firms acting as the wholesale chop-shops for the paper.