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This entry assumes you have
seen last Sunday’s 60 minutes about insider trading in congress (if
not, click ‘60 Minutes’ Blows Lid
Off Congressional Insider Trading to watch video). It is one of the best pieces of ‘60
minutes’ investigative reporting in years.
An example of Washington insider trading
Let’s start out with a blatant example of Washington insider trading to
show how bad the problem.
The failure of Bear Stearns and Lehman brothers in 2008 were POLITICAL
decisions. In other words, insiders in Washington knew, before anyone else,
that the government would let those two firms fail without bailing them out.
Was this insider information used to profit from the collapse of these two
firms? Hell yes. Just read this Bloomberg article explaining
how Bringing Down Bear Began as $1.7
Million of Options.
Bringing Down Bear Began as $1.7 Million
of Options
By
Gary Matsumoto - August 11, 2008 16:16 EDT
Aug. 11 (Bloomberg) -- On March 11, the day the Federal
Reserve attempted to shore up confidence in the credit markets with a $200
billion lending program that for the first time monetized Wall Street's
devalued collateral, somebody else decided Bear Stearns Cos. was going to
collapse.
In a gambit with such low odds of success that traders question its
legitimacy, someone wagered $1.7 million that Bear Stearns
shares would suffer an unprecedented decline within days. …
Whoever placed the bet used so-called put options that gave purchasers the
right to sell 5.7 million Bear Stearns shares for $30 each and 165,000 shares
for $25 apiece just nine days later, data compiled by Bloomberg show. That
was less than half the $62.97 closing price in New York Stock Exchange
composite trading on March 11. THE BUYERS WERE CONFIDENT THE
STOCK WOULD CRASH.
``Even if I were the most bearish man on Earth, I can't imagine buying
puts 50 percent below the price with just over a week to expiration,'' said Thomas Haugh, general partner of Chicago-based options trading
firm PTI Securities & Futures LP. ``IT'S NOT EVEN ON THE PAGE OF
RATIONAL BEHAVIOR, UNLESS YOU KNOW SOMETHING.''
`Lottery Ticket'
The
57,000 puts that traded March 11 at the $30 strike price and the 1,649 that
traded at $25 were collectively worth about $1.7 million, Bloomberg data show.
Each put is equal to 100 shares of stock.
``That trade amounted to buying a lottery ticket,'' said Michael McCarty,
chief options and equity strategist at New York-based brokerage Meridian
Equity Partners Inc. ``Would you buy $1.7 million worth of lottery
tickets just because you could? No. Neither would a hedge
fund manager.''
During the next four days, New York-based Bear Stearns
unraveled in the swiftest investment-banking failure in Wall Street
history. …
Schwartz and officials at the SEC declined to comment for this stor
…
On March 11, when the Fed said it planned to make up to $200
billion available through weekly auctions and for the first time lend cash in
exchange for debt that included the devalued mortgage-backed securities that
contributed to the credit seizure, one or more unidentified
traders requested the Chicago Board Options Exchange list the even deeper
out-of-the-money strike at $25.
…
Bankruptcy Put
… on March 14, the CBOE listed a series of put options with less
than five days to expiration. The lowest strike
price, $5, was more than 90 percent out-of-the-money in what options
traders refer to as a ``bankruptcy put.'' Bear Stearns slumped
47 percent that day to $30 in NYSE trading.
The out-of-the-money Bear Stearns puts point to a raid, said Baker, who's now
a securities lawyer whose clients include companies that have filed
complaints over naked short selling.
The $25 Bear Stearns puts, and others obtained March 14
involving the right to sell 630,000 shares at a strike price of $5 by March
22, were ``bizarre,'' according to Haugh,
the PTI partner who spent 18 years as a CBOE options-market maker.
`One Tick'
…
``In just one tick, the company's
share price lost nearly all its value, a steeper drop than Enron's
right before its de-listing in 2001,'' said 63-year-old Olagues, referring to the bankruptcy of Houston-based
energy trading company Enron Corp. ``I've never seen a stock
perform like that in my life.''
Olagues, who was an options market maker at the
Pacific Exchange and then the CBOE from 1976 to 1984, said … he has
found options transactions that convince him BEAR STEARNS WAS THE
VICTIM OF INSIDER TRADING.
…
``I would stake my reputation on that,'' he said.
...
``NOBODY PREPARES FOR THE STOCK GOING FROM $57 TO $3 IN JUST TWO
DAYS,'' he said.
…
Big Bets
…
Gail Osten, a
spokeswoman for the CBOE, declined to say WHO placed the order
for the options.
``Nobody in their right mind would buy
that put UNLESS YOU KNEW WHAT WAS GOING DOWN,'' said Ray Wollney, Olagues's partner at
Truth in Options. On Friday, March 14, a total of 6,303 of the March
$5 Bear Stearns puts traded.
…
Options bets that looked irrational on Friday proved brilliant on
Monday, when the shares traded between $3 and $5. By Wollney's
calculations, the traders who spent $35.8 million on the deep
out-of-the-money puts reaped an estimated $274 million windfall from the
plunge in Bear Stearns.
Peter Chepucavage,
a former general counsel for compliance at Nomura Securities and onetime SEC
lawyer, said the Bear Stearns bets were neither smart nor lucky.
``When you buy $5 strikes when the
stock is trading over $50, you either have to be manipulating, OR YOU HAVE TO
HAVE INSIDER INFORMATION,'' said Chepucavage,
who's now with Washington-based Plexus Consulting.
…
(For more on this insider trading, watch this video)
The lack of action by the SEC and the lack of coverage by the media in the
face of this obvious financial fraud (especially those $5 Bear Stearns puts ), more than anything else, helped me realize how
corrupt the US government and media had become.
Correct reaction to
Sunday's ‘60 minutes’ story
Below are two videos
which show the correct reaction to Sunday's ‘60 minutes’story.
Their worth seeing because of how starkly they contrast with the handling of
the story by the rest of the mainstream media.
DOUBLE STANDARD: Congress Can Legally Trade On Insider Information While
Wall Streeters Go To Jail (Business Insider)
http://www.marketskeptics.com/2011/11/why-mai...eCof10NUlW_zV6O
CNBC Gets It: Congressional Insider Trading Outrage Prominent On Business
Network
http://www.mrctv.org/videos/cnbc-gets-it-c...usiness-network
Context of these two videos: These two
videos are from business news networks whose audience is likely to have
already heard about last Sunday’s ‘60 minutes’ (which means
they didn’t really help spread the story). They are also unfortunately
the exception in the news world. As I pointed out last entry, while blogs and non-mainstream media are exploding
with outrage, higher rating news networks and major newspapers (ie: New York Times) are ignoring the story…or worse
(see below).
The INCORRECT reaction to Sunday's
‘60 minutes’ story
The Wall Street Journal has chosen not to stay silent on the ‘60 minutes’story, publishing a single opinion piece
titled Congress’s Insider-Trading Non-Scandal.
The title alone should be enough to understand what’s wrong
with this.
Let’s take a look at the incorrect reaction to
Sunday’s ‘60 minutes’ story. The Wall Street Journal
reports about Congress's Insider-Trading Non-Scandal.
(Compare this article to the videos above to fully appreciate its
“integrity”)
NOVEMBER 16, 2011
Congress's Insider-Trading Non-Scandal
The scandal isn't what they do with their own money, but what they do with
ours.
By, HOLMAN W. JENKINS, JR., columnist
 [<<< corrupt bastard]
… PUT US IN THE CATEGORY OF THE NONPLUSSED TO MILDLY CONTEMPTUOUS OVER THE
NEWEST FUSS. Congressmen and their staffs AREN'T INSIDERS
in the
classic sense, working for companies and holding a fiduciary duty to
shareholde target="_blank"rs. …
…
In Sunday's now-famous‘60 minutes’ report, based on a book by the
Hoover Institution's Peter Schweizer, the term "insider
information" is used even more loosely. With apologies to our
friends at CNBC, we'll call it the CNBC effect. …
CBS and Mr. Schweizer are taking excessive
advantage of the audience's naiveté [SEE THIS? If you
are outraged by the ‘60 minutes’ reporting, it is because you are
NAIVE]. …
target="_blank"
…
A few
studies purport to show that Senate and House Members earn more than average
on their stock investments, BUT THE RESULTS ARE UNCONVINCING. MORE
PERSUASIVE IS RECENT WORK SUGGESTING THAT CONGRESSMEN UNDERPERFORM THE MARKET
[Later in this blog entry, I will show how this "recent
work" is a case of genuine academic fraud] for all the reasons that most
active traders do…
Context
of WSJ article:
Unlike of other mainstream media like New York Times, the Wall Street Journal
has disproportionally large amount of business men/women readers. These
business people are highly likely to hear about last Sunday’s shocking
‘60 minutes’piece, either through
emails or conversations with their fellow workers. This opinion piece is a
laser guide bit of disinformation aimed at these individuals, and its purpose
is kill the congressional insider trading story by convincing them that there
is no scandal (making them unlikely to watch last Sunday’s ‘60 minutes’
or learn about congress’s corruption).
Furthermore, beyond being insulting and misleading (attacking '60 minutes’,calling people naive for being upset, etc), the column above is also fundamentally dishonest in
its attempt to downplay congress insider trading.
Wall Street Journal Dishonesty
The WSJ article’s dishonesty is best captured in the phrase blow:
“A few studies purport to show that Senate and House Members
earn more than average on their stock investments, but the results are unconvincing.
More persuasive is recent work suggesting that congressmen
underperform the market”
Let’s take a closer look at studies which the WSJ calls
“unconvincing” and“More
persuasive”.
1) The “unconvincing” “studies”:
This refers to two extensive studies by 4 college professors (Alan J. Ziobrowski of Georgia State University, James W. Boyd of Lindenwood University, Ping Cheng of Florida Atlantic
University and Brigitte J. Ziobrowski of Augusta
State University):
A) A 2004 study titled Abnormal Returns from the Common
Stock Investments of the US Senate which showed that US Senators' stock
portfolios annually outperformed the market by 12%. (peer-reviewed and
published in the Journal of Financial and Quantitative Analysis)
B) A 2011 study titled Abnormal Returns From the Common
Stock Investments of Members of the U.S. House of Representatives which found that the investments of House
Representatives outperformed those of the average investor by 6 percent.
(peer-reviewed and published in the journal Business and Politics)
These two studies are credible, peer-reviewed (independently fact checked)
scientific proof that congress engages in insider trading.
2) The “more persuasive” “recent work”
This refers to a paper by two Harvard graduate students (now assistant
professors), Andrew Eggers and Jens Hainmueller,
titled Political Capital: The (Mostly)
Mediocre Performance of Congressional Stock which found that, between 2004 and 2008,
congress underperformed the market by 2 to 3 percent annually and therefore
wasn’t insider trading. The project funded was Harvard's
Institute for Quantitative Social Science (IQSS), with which both authors are
affiliated. (NEVER PEER-REVIEWED OR PUBLISHED)
First off, this “more persuasive” paper has never been
peer-reviewed (independently verified) or published. While the two “unconvincing”studies have both successfully been
through a long peer-reviewed process where their findings are checked by
multiple independent parties, Andrew Eggers and Jens Hainmueller
haven’t even been trying. Instead they just continually update their
paper (at least 7 versions so far) so that it appears “new”.
Second, there are reasons to suspect the integrity of the paper's conclusion.
In all their work, Andrew Eggers and Jens Hainmueller
appear primarily concerned with convincing readers that congress is
corruption-free, discrediting the "previous widely-discussed academic
study" which suggest otherwise, and preventing anti-insider trading
legislation from passing (“it’s not needed”). There are
also other issues: its findings defy common sense, the arguments/theories it
advances are bizarre (congressmen knowingly make losing investment to please
donors), etc… Furthermore, the paper is authored and paid for by
Harvard, where the corruption runs deep (See
*****The Subversion Of Economics*****),
especially academic prostitution (accepting money in exchange for authoring
papers/studies supporting a "desired" conclusion).
Consider how wrong this is: The Wall Street Journal, ignoring last
Sunday’s ‘60 minutes’ and two peer-reviewed studies, is
promoting the unverified work of two Harvard graduate students, calling its suspect conclusion “persuasive”.
There is no innocent explanation for this.
The WSJ’s dishonesty in this case isn’t a harmless mistake that
can be overlooked. The paper authored by these two Harvard graduate students
happens to be a genuine work of academic fraud (see below).
Exposing some Harvard Fraud
It takes little time and effort to debunk Political Capital: The (Mostly)
Mediocre Performance of Congressional Stock by Andrew Eggers and Jens Hainmueller.
A simple look through the various drafts of this the Harvard paper is enough to
destroy its credibility.
Various version of this Harvard paper:
March 27, 2009
April 1, 2009
April 9, 2009
July 16, 2010
September 12, 2010
October 14, 2010
June 15, 2011
A quick glance through the links above shows that these two happy Harvard
graduate students have been having a lot of fun with their numbers. For
example, what happens to the figures for Table 1: Top 50 Members by Number
of Stock Holdings between April 1, 2009 and April 9, 2009 is particularly ugly.
However, it is what Andrew Eggers and Jens Hainmueller
did between July 16, 2010 and September 12, 2010 that destroys confidence in their
work: They rigged their data to drastically alter their conclusion.
I will let their work speak for itself: (if links go dead, they will replace
them)
Political Investing: The Common Stock
Investments of Members of Congress 2004-2007
July 16, 2010
Data used:
4 years (2004-2007)
68,346 transactions
3,132 unique companies
Conclusion:
We find that the Congressional
portfolio performs about as well as the market; the EXCESS
RETURN is an insignificant minus .4 percent [in the period 2004-2007]
Political Investing: The Common
Stock Investments of Members of Congress 2004-2008
September 12,
2010
Data used:
5 years (2004-2008) [increases 1
year (+25 percent)]
111,101 transactions [increases by 42,755 (+63
percent)]
2,581 unique companies [decreases
by 551 (-35 percent)]
Conclusion:
… members of Congress are poor
investors: we find that that the Congressional stock portfolio in this period
underperforms market indices by 3-4% per year.
… even at
the market peak in 2007 the Congressional portfolio was about 10% below the market on a cumulative basis
since the start of 2004.
The
purpose of this bit of Harvard fraud is clear: Andrew Eggers and Jens Hainmueller aim to reassure Americans concerned and keep
them blissfully unaware of what crimes are going on in the halls of
Washington DC. Just read their Executive Summary:
Executive Summary of Political Capital: The (Mostly) Mediocre
Performance of Congressional Stock Portfolios, 2004-2008.
…
OUR
FINDINGS MAY BE REASSURING TO CITIZENS CONCERNED ABOUT CORRUPT BEHAVIOR IN
CONGRESS. Members of Congress may turn their political positions into capital
gains in isolated instances, but THE
OVERALL POOR PERFORMANCE OF THEIR STOCK PORTFOLIOS SUGGESTS THAT SUCH
SELF-SERVING BEHAVIOR IS NOT WIDESPREAD. … CITIZENS SHOULD BE HAPPY …
Anyone
calling to this academic fraud “persuasive” is either corrupt or
criminally incompetent.
Why the mainstream is either ignoring or
trying to kill this story
So why is the mainstream ignoring this story (ie:
New York Times) or trying to kill it (ie: Wall
Street Journal)? The short answer is: TO HIDE THEIR GUILT.
By raising awareness of congressional corruption, Last Sunday's '60 minutes'
also exposes two of mainstream media's big sins.
1) The failure (year after year) to inform Americans about the corruption of
their congress
Washington insider trading has been going on for decades. IT WASN'T A
SECRET. Blogs and alternative media have been covering it for years.
For example, Minyanville reported that Insider Trading Laws Do Not Apply
to Members of Congress ten months ago.
Insider Trading Laws Do Not Apply to Members of Congress. No,
Seriously.
By Justin Rohrlich Feb 17, 2011 1:50 pm
And not only are Senators and Congressmen immune, their aides are,
too.
On March 8, Galleon Group founder Raj Rajaratnam
will stand trial on insider trading charges …
However, if Rajaratnam had been a US Senator rather than a $7
billion hedge fund manager when he made the trades in question, there would
be no criminal proceedings at all. Believe it or not, the Securities and
Exchange Act does not apply to members of Congress, according to Craig
Holman, legislative representative at government watchdog group Public
Citizen.
“Any inside, non-public knowledge they gain can be acted
upon,” Holman tells Minyanville.
“SOME OF THE STORIES ARE JUST… BREATHTAKING.”
Surprised? You may be even more surprised to learn that congressional
staffers and lobbyists are also exempt from insider trading regulations.
…
CONGRESSIONAL INSIDER TRADING IS NOT A NEW PHENOMENON; a handful of
media reports have surfaced over the past several years, but, as Holman says, THE STORY
"NEVER REALLY STUCK.”
…
The reason why the congressional insider
trading story "never really sticks" should be obvious. Just look at
the mainstream media’s reaction to last Sunday’s ‘60 minutes’:
the silence of the major news organizations like the New York Times, the Wall
Street Journal hit piece above, etc… How is a story supposed to
“stick” if all major media either ignore it or attack it?
THINK ABOUT IT: The rampant Washington insider trading shown on
‘60 minutes’ (the criminal trading shown in the video at the
beginning of this entry) has been going on for decades. Clear as day fraud
happening again and again, year after year. This Washington corruption
simply would not be possible without an equally corrupt mainstream media,
willing to look away again and again, year after year.
2) Convincing Americans that “congress is
an honest institution”
Not only has the mainstream media ignored congressional corruption
for decades, it has also actively published/broadcast stories which suggest
the opposite: congress is an honest institution. This subtle propaganda works
because (or as long as) people trust mainstream media. The result is that
most Americans have an unnaturally favorable of view of congress and are
shocked by the reality (last Sunday's '60 minutes').
This constant portrayal of "congress is an honest institution"
hasn’t ended. Below is a short clip from NBC Nightly News with Brian
Williams which was aired Thursday. Four days after the damning expose on
'60 minutes’, this is the story about congress that NBC
Nightly News chose to cover:
NBC Nightly News with Brian Williams: Naughty or Nice? Senate Gets Secret
Santa
Congress is so corruption-free that the only news worthy story to be found is
this ridiculous “Senate Gets Secret Santa”. (After all, if there
were reports of rampant corruption in congress, the honest
mainstream media have covered that instead, right?) The underlying message is
the same as in the fraud Harvard paper above: "There is no corruption
in congress. Citizens should be happy."
The timing of this “congress is honest” NBC Nightly News segment
is no accident: It is declaration that the congressional corruption
revealed in ‘60 minutes’ is non-story.
Unless the uproar created by last Sunday's '60 minutes' dies down, it will
quickly become obvious that mainstream media
is just as (if not more) corrupt then congress itself. That is
why mainstream media wants this story to die so badly.
The media corruption revealed by last
Sunday’s ‘60 minutes’
In order to hide the ugly reality (last Sunday's '60 minutes'), the
mainstream media publishes/broadcasts so many untruth that it can’t be
called lying anymore: It amounts to a “false reality”. The unreal
“Senate Gets Secret Santa” segment is an example of this.
This is far from the first time NBC Nightly News broadcast a "false
reality" (“congress is honest”) to kill an undesired story.
Last year, when 60 minutes did a powerful segment on the heartbreaking unemployment in
Silicon Valley
(Oct 24), NBC Nightly News responded with its own segment titled turning mid-life crisis into
opportunity (Nov
10) which showed that losing your job isn’t that big a deal. (See 60 minutes (Reality) VS Nightly
News (Propaganda)
for more on this)
Also, it isn’t just stories by ‘60 minutes’ that NBC
Nightly News tries to discredit. For example, KTRK-TV/DT broke the story last
year about a man boarding a plane with loaded
gun in carry-on
(Dec 17) suggesting a complete breakdown of the nation’s airport
security. Three days later, NBC Nightly News aired expanding ranks air marshals mind
unfriendly skies
(Dec 17) about what a great job the TSA is doing in keeping America safe. The
way NBC Nightly News shamelessly misleads Americans, telling them
“everything is fine” in the face of terrible problems, is
amazing.
The “false reality
propaganda” extend beyond news networks
Never covered in the media is the fact that all major commercial television
networks collaborate with the government to incorporate the “right
messages”(propaganda) into the story lines of
popular, prime time programs (family guy, Beverly Hills 90210, etc)) (See how the White House and the media
package government propaganda as entertainment).
The gap between the reality and what is shown on popular televisions shows is
particularly bad. Here are three examples:
1) US hospitals in television medical drama like “Private
Practice” are portrayed as being the envy of the world. The reality is
that US hospitals that can't get their hands on a growing list of routine and
life-saving drugs.
Government price controls have created a national drug
shortage which is escalating. (The shortage of cheap cancer
medications is particularly obscene.)
2) In television crime dramas like "Castle," all forensic testing
(DNA, etc…) is done within days, if not hours. The reality is that
police often wait months, even years, to get fingerprint results or
gunshot residue tests (see Backlogged files hamper law
enforcement and Forensic delays put justice on
hold).
3) In television crime dramas like "CSI," the nation's morgues are
staffed by highly trained medical professionals equipped with the most
sophisticated tools of 21st-century science. The reality is extremely
different. Read Medical Examiners In America: A
Dysfunctional System and be astounded at how bad the situation really is.
(Late last year,
a doctor in a suburb of Detroit autopsied the body of a bank executive pulled
from a lake -- and managed to miss the bullet hole in his neck and the
bullet lodged in his jaw.)
Have you ever watched a TV series where congress filled with rampant
corruption? Or a TV series showing the US government co-operating with and
selling weapons to drug dealers? (The US government has been doing both (it
is the biggest scandal plaguing the Obama administration. See *****Update On Growing Gunrunning
Scandal*****).
Most Americans have no idea how badly their understanding of the world has
been distorted…
What Comes Next in the '60 minutes'
insider trading scandal
This process by which shocking stories about government corruption (like last
Sunday's ‘60 minutes’) are killed off is best explained by Gary
Webb’s article, the mighty wurlitzer
plays on, which
describes how his "Dark Alliance" series was discredited.
First some background: Gary Webb was award-winning investigative
reporter (1990 Pulitzer Prize) who focused on government and private sector
corruption. His 1996 "Dark Alliance" series was a piece of
investigative reporting as shocking as last Sunday’s ‘60
minutes’ (CIA involvement in drug trafficking during Iran-Contra).
…
With the help of recently declassified documents, FBI reports, DEA undercover tapes, secret grand jury
transcripts and archival records from both here and
abroad, as well as interviews with some of the key
participants, we will [Dark Alliance] show[ed] how [in the 1980s] a CIA-linked drug
and stolen car network -- based in, of all places, the
Peninsula-- provided weapons and tons of high-grade, dirt cheap
cocaine to the very person who spread crack through LA and from there into
the hinterlands.
…
The first reaction to any major undesired news
report (like Dark Alliance) is dead silence. This will normally kill off the
(making it “quickly withers and dies, like a light-starved plant”)
…
After four months of writing, rewriting, editing, and reediting, my editors
pronounced themselves satisfied and signed off. The first
installment of Dark Alliance appeared simultaneously on the streets
and on the Web on August 18, 1996.
THE
INITIAL PUBLIC REACTION WAS DEAD SILENCE. No one jumped up to
deny any of it. Nor did the news media rush to share our discoveries with
others. The stories just sat there, as if no one seemed to know what to make
of them.
…
… Customarily, IF THE REST OF THE NATION'S
EDITORS DECIDE TO IGNORE A PARTICULAR STORY, IT QUICKLY WITHERS AND DIES, LIKE A LIGHT-STARVED PLANT. With the exception of
newspapers in Seattle, some small cities in Northern California, and
Albuquerque, Dark Alliance got the silent treatment big
time. NO ONE WOULD TOUCH IT.
…
However, sometimes undesired stories (like Sunday's
‘60 minutes’ reporting) are so powerful that they manage to
spread via the internet and other alternative media despite mainstream news
blackouts…
…
But
no one had counted on the enormous popularity of the Web site. Almost from the
moment the series appeared, the Web page was deluged with visitors from all over
the world. …
Once
Dark Alliance became the talk of the Internet (in large part
because of the technical wizardry and sharp graphics of the Web page), talk radio adopted
the story and ran with it. For the next two
months, I did more than one hundred radio interviews, in which I was asked to
sum up what the three-day long series said in its many thousands of words.
…
… This was about the time I realized the wind speed of the shit
storm I had kicked up.
The
rumbles the series was causing from black
communities was unnerving a lot of people. College students were
holding protest rallies in Washington, D.C., to demand an official
investigation. Residents of South Central marched on city hall and held
candlelight vigils. … Black civil rights activists were arrested
outside the CIA after sealing off the agency's entrance with yellow crime
scene tape. The story was developing a political momentum all of
its own, and it was happening DESPITE
A VIRTUAL NEWS BLACKOUT FROM THE MAJOR MEDIA.
…
… and that is when
the mainstream media is forced into attack mode.
… the way the mainstream
press finally did respond to Dark Alliance … [was] … something
columnist Alexander Cockburn would later describe in his book White Out
as "ONE OF THE MOST VENOMOUS AND FACTUALLY INSANE ASSAULTS...IN
LIVING MEMORY."
…
Ultimately, it was public pressure that forced the national
newspapers into the fray. Protests were held outside the
building by media watchdogs and citizens groups, who wondered how the Los
Angeles Times building by media watchdogs and citizens groups, who wondered how
the Times could continue to ignore a story that had such an impact on the
city's black neighborhoods. In Washington, black media outlets were
ridiculing the Post for its silence, considering the importance the
story held for most of Washington's citizens.
When
the newspapers of record spoke, THEY SPOKE IN UNISON. Between October and
November, the Washington Post, the New York Times and the Los
Angeles Times published lengthy stories about the CIA drug issue, but
spent precious little time exploring the CIA's activities. Instead, my reporting and I
became the focus of their scrutiny. After looking into the issue for
several weeks, the official conclusion reached by all three papers: MUCH ADO
ABOUT NOTHING. No story here. Nothing worth pursuing. The series
was "flawed," they contended. … [ie: WSJ’s Congress's Insider-Trading
Non-Scandal is a preview of what’s to come]
… the attacks from the other newspapers had taken the wind out of my
editors' sails. Despite the advances we were making on the story, the criticism
continued. We were being "irresponsible" by printing stories …
suggesting CIA complicity without any admissions of "a smoking
gun." The series was now described frequently as "discredited," EVEN
THOUGH NOTHING HAD SURFACED SHOWING THAT ANY OF THE FACTS WERE INCORRECT. …
…
The funny thing was, despite all the furor, the
facts of the story never changed, EXCEPT TO BECOME MORE DAMNING. But the perception of
them did, and in this case, that is really all that
mattered. Once a story became "discredited," the
rest of the media shied away from it. Dark Alliance was consigned to the
dustbin of history, viewed as an Internet conspiracy theory that had been thoroughly
disproved by more responsible news organizations.
…
Do
we have a free press today? Sure we do. It's free to report all the sex
scandals it wants, all the stock market news we can handle, every new health
fad that comes down the pike, and every celebrity marriage or divorce that
happens. But WHEN IT COMES TO THE REAL DOWN AND DIRTY STUFF -- stories like [congressional
insider trading,] Tailwind, the October Surprise, the El Mozote massacre, corporate corruption, or CIA involvement
in drug trafficking -- THAT'S WHERE WE BEGIN TO SEE THE LIMITS OF
OUR FREEDOMS. In today's media environment, sadly, SUCH STORIES ARE NOT
EVEN OPEN FOR DISCUSSION.
Eric de Carbonnel
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