Lehman: The Media Meltdown

What's happened to Reuters? The sober just-the-facts newswire seems to have let the chaos at Lehman brothers go to its head.

This morning Reuters ran an entire story sourced on nothing but a rumor (which turned out to be false) picked up by Dealbreaker; this evening the wire is running the headline "Futures plummet amid uncertainty about U.S. banks" -- with the "plummet" in question comprising a drop of 38 points on the S&P 500. As the story won't tell you, that's a move of about 3%: big, but hardly unprecedented in recent months.

Reuters shouldn't be fanning the flames like this. Leave that to the pros at the New York Times:

In one of the most dramatic days in Wall Street's history, Merrill Lynch agreed to sell itself to Bank of America for roughly $50 billion to avert a deepening financial crisis while another prominent securities firm, Lehman Brothers, hurtled toward liquidation... (continues in this vein for another 2,144 words)

Now these are momentous events. The lasting repercussions for Wall Street will probably be bigger than they were in the wake of Black Monday, in 1987, or in the wake of September 11, 2001. Don Fishback might think the world begins and ends with the Dow, but it doesn't: this is a credit crisis, and the indicators to look at aren't stocks but CDS indices.

But amidst all the noise, one looks to copper-bottomed outlets like Reuters and the WSJ to provide a bit of perspective. Instead, the story is moving so fast that after WSJ published a rumor about the Fed accepting equities as collateral for its loans it then included in that story a link to the very statement which showed that the Fed was doing no such thing.

John Carney was complaining earlier in the day that the Lehman story was being underplayed by TV news stations. But the feverishness normally associated with CNBC just seems to have been transferred over to the normally much more sober print media. Where to go for a bit of perspective on all this? Bloomberg seems to be doing a good job at sticking to the facts of the matter, while newspapers based outside New York, like the LA Times and the Washington Post, also seem to have been able to keep their cool.

That's just as well: there are a lot of very worried individuals out there, especially people with massive annuities or life-insurance contracts who are now for the first time worried about counterparty risk. It serves no one to have those people panic.