Hiltzik: Stories that turned their believers into idiots

It’s the holiday season as we experts look back at the most uplifting moments of the past year and look forward to what may delight our hearts in the year to come.

Not this time.

The year 2022 was a year in which observers from finance, politics and society saw their most valuable narratives bursting at the seams. In short, it was the year of the Big Fail.

If you are incompetent you must be honest and if you are corrupt you must be smart.

– Game rule allegedly ignored by Sam Bankman-Fried of FTX fame

I take a page from esteemed wealth manager Barry Ritholtz, who released his list of narrative failures for 2022 a few weeks ago, noting with regret that he narrowed it down to 10 because “otherwise the list would have become too long and unwieldy to manage.” I know that feeling.

My list overlaps somewhat with his, although I have a few choices myself. Let’s get in.

The Musk Mythology: The notion that to be a billionaire you have to be brilliant, or at least smart, has become a smoking ruin thanks to Elon Musk’s misadventures as a buyer and Twitter’s chief tweeter.

His erratic decision-making and relentless embrace of far-right madhouse politics has not only alienated countless users and advertisers from the social media platform, but it also appears to be undermining his support among core Tesla EV buyers. the shares thereof are his most important personal fortune.

Up until this year, Musk’s role as Tesla’s CEO was the key factor in the company’s rise, despite questionable profitability and ongoing problems with delivery schedules and product quality. His behavior on Twitter has opened the floodgates for long overdue coverage of his managerial skills, my colleague Russ Mitchell pointed out in November.

Just in the last week, some of Tesla’s most trusted cheerleaders in finance turned on Musk, shockingly suggesting that Tesla’s sycophantic board should rein him in or even find a new CEO.

That’s unprecedented but not surprising given that the automaker’s shares, once valued more than the country’s legacy automakers combined, have plummeted a sickening 65.5% this year.

Farewell to crypto: In an episode of the great 1980s Britcom Yes, Prime Minster, banker Sir Desmond Glazebrook explains “the cardinal rule of the City” (i.e. London’s Wall Street): “If you’re incompetent, you must be honest, and if you If you’re crooked, you must be clever.”

Sam Bankman-Fried, founder of collapsed cryptocurrency firm FTX, appears to have broken the rule on both ends. According to an indictment filed in New York federal court, a bankruptcy court statement from the company’s receiver, and charges brought against him by federal authorities, he was both dishonest Spirit incompetent.

It may be wrong to call FTX a Ponzi scheme, which is a specific type of cheating game, but it certainly looks like a scam judging by the Justice Department’s indictment; The evidence and Bankman-Fried’s own admissions suggest that customer deposits that were about to be confiscated were used to bail out the firm’s hedge fund.

FTX claimed it had the most sophisticated computerized accounting system in the entire crypto world, but in fact its system was run by “a very small group of inexperienced, inexperienced and potentially compromised individuals,” as John Ray puts it, who is acting as bankruptcy trustee.

Yet much of the coverage of the FTX collapse makes a category mistake. It treats FTX as a crypto aberration as if crypto were fundamentally sane except for Bankman-Fried and his merry band.

That’s wrong. Cryptocurrencies are scams. They are wannabe assets with no intrinsic value other than what their owners can make pay a fool for them.

Bankman-Fried is portrayed as a former billionaire who has lost his fortune; In fact, he never had any fortune – the claim was always based on fake values ​​of his own created cryptocurrencies and others.

It’s true that he was briefly able to convert his crypto holdings into dollars in time to make lavish political donations and pay for stadium name deals and a Super Bowl commercial, but values ​​were built on quicksand and have now been swallowed him up.

Will FTX Fall Carry Crypto Myth With It? Unfortunately, that is doubtful. The legion of gullible signs never goes away. Count on crypto marketers to find a way to portray FTX as an outlier and keep trying to convince investors and politicians that they are legit. You are not.

A watchdog falls for a COVID conspiracy: The independent journalist organization ProPublica has built a reputation for smart, meticulous research over the years.

That reputation collapsed in October when it inexplicably teamed up with a Vanity Fair conspiracy theorist to peddle a long-defunct claim that the COVID virus escaped from a Chinese biology lab before spreading globally. This claim contradicts the prevailing scientific opinion, which states that the virus reached the human population via infected wild animals.

The article was based almost entirely on a Chinese government document translated by an American who claimed to have a unique ability to understand the convoluted Mandarin of official cables. He led ProPublica to claim that the lab had experienced a mysterious crisis right before the first COVID outbreak.

However, as I reported, numerous other experts found that ProPublica’s source mistranslated, selectively quoted, and misinterpreted the document. ProPublica also gave undeserved credence to a report by the US Senate committee in which it concluded that the virus escaped the lab without adequately informing readers that the report was the product of the committee’s GOP minority and was a rehash of the old disproved lab leak claims.

ProPublica responded a month later to widespread criticism of its article with an editor’s note, saying it had consulted three (unidentified) Chinese language experts. Two questioned the translation, and all found the quoted passage “ambiguous”. Curiously, ProPublica pronounced its article “Sound.”

Unfortunately it was nothing like that. ProPublica has failed its readers by spreading a right-wing, partisan claim about the origins of COVID, while damaging its own reputation in the process.

The red wave that wasn’t: The notion that Democrats would certainly be slaughtered in the November midterm elections became an article of faith almost as soon as President Biden spoke the final words of his inaugural address.

It persisted even after the Supreme Court delivered its flimsy and dishonest decision in June’s Dobbs v. Jackson Women’s Health Organization, which quashed Roe vs. Wade and, in doing so, overturned a longstanding civil right almost unique in the history of American jurisprudence.

That the verdict sparked nationwide dismay and anger went unnoticed by political reporters, except to the extent that they were certain it would not affect the election. It was just a political trend that the insular, Northeast-based reporting and polling class overlooked; another was that the anti-democratic rhetoric and actions of the Republican candidates turned voters off.

We know the harvest. The Democrats actually increased their Senate majority and retained a sufficiently solid minority faction in the House of Representatives to up the ante on the disorder that emerged in the narrow GOP majority.

Donald Trump’s power over the Republican Party has been severely undermined by the electoral losses of most of his supported candidates. Have political reporters awakened to this emerging new reality? Next year will tell.

The roar of the Russian bear: British journalist Andrew Cockburn identified the Russian bear as a paper tiger in his book The Threat – in the 1980s when the Soviet Union’s military might was at stake. Cockburn documented how the power of the Red Army was systematically exaggerated by Western generals who needed a powerful enemy to justify their budgetary demands.

Contemporary events indicate that Vladimir Putin is among those who have not read The Threat, or at least ignored its teachings. The Russian prime minister trusted in the might of his army, foisted on his people a myth about the restoration of a long-defunct Russian empire, and believed his own propaganda about the meekness and cowardice of a Ukrainian people faced with overwhelming power. Obviously his confidence was misplaced.

A few weeks ago I asked a Russian émigré lady of my acquaintance how long she thought Putin would remain in office now that the facts of the invasion are becoming known to Russian families through the bodies of killed soldiers and their sons’ ridiculous phone calls in the field. “Days!” she exclaimed. But he’s still there.

As I write this, the endgame of the Russian attack remains uncertain. The devastating consequences of his losses on the battlefield are inevitable, as is the damage done to the Russian economy by global economic sanctions.

The best that can be said is that the attack did not go as Putin expected. Geopolitically, it’s the biggest failure of 2022.

It’s tempting, if unwise, to speculate on what the biggest failures of 2023 might be. My highest expectation is the hiss of Ron DeSantis as a national figure.

Supporters of the brutal Republican governor of Florida consider him the second coming of Donald Trump. He looks to me like a gritty reincarnation of Scott Walker, a similarly smug and seedy culture warrior who, like DeSantis, had all the charisma of a painted wall.

Anyhow, it’s hard to imagine DeSantis’ campaign against “Wokeness” having any legs nationwide, since voters have signaled they don’t have much patience with candidates who don’t offer solutions to real problems.

Then there’s the Anthony Fauci probe, which the GOP majority in the House of Representatives says will start in the new year. Prediction: Efforts to turn this widely respected scientist into a villain will dissolve into a miasma of ignorance and stupidity, as will talk of his “charge,” most recently promoted by Elon Musk, the paragon of sober judgment.

Also, crypto will still be dead. See you in the same place in a year.

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