Streetwise Professor

December 30, 2013

Here Comes the Cavalry

Filed under: Commodities,Derivatives,Economics,Energy,Exchanges,Politics,Regulation — The Professor @ 9:39 pm

The NYT hatchet job has elicited quite a bit of discussion on the web, and on Twitter.  Several major bloggers have saddled up and ridden to the defense of Scott Irwin and I.  Pride of place goes to Felix Salmon, who wrote a long and thoughtful post at Reuters. This is particularly gratifying, because Felix and I have had our differences in the past (e.g., over the empty creditor problem) but I have always found him to be extraordinarily fair and open minded.  Felix wrote his piece before I posted mine, meaning that his was based on publicly available information (including his past interactions with me) which confers a considerable degree of objectivity: most importantly, it shows that information that the NYT ignored or distorted was there in plain sight.  Felix is like a judge entering a summary judgment motion against the NYT, with prejudice, making it unnecessary for the defense even to present its case.  I think it’s correct to say Felix’s verdict is pretty brutal, but eminently fair.

Other members of the cavalry include Jeff Carter’s Points and Figures blog (who was the first to arrive on the scene), Peter Klein at Organizations and Markets, Sonic Charm (or is it Crimsonic?) at Rhymes With Cars and Girls (who always cracks me up, whatever he’s calling himself these days), and John Hinderaker at Powerline. Peter and John point out the double standard under which academics who work with private business are often accused of being corrupt, whereas the motives of those who accept money from the government are almost never questioned.   Peter focuses on the Fed, John on climate research.  The common conclusion of all is that the NYT piece was a deeply biased smear written in bad faith with ulterior motives.  Crimsonic calls for a retraction.  Interesting idea.

Felix’s post and mine also unleashed a torrent of tweets.

Thanks to all.  I’m sure this isn’t over yet.  So keep your horses watered and your powder dry.

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  1. Kocieniewski should be ashamed. Maybe the bad PR will end up being good PR. Good luck. P.S. I have actually read some of your research on speculation which makes this guy’s accusation so shameful.

    Comment by David Hoopes — December 30, 2013 @ 10:12 pm

  2. If the NYT wants to take down a supposedly paid-for academic, why don’t they:

    – define speculators, just so we know they aren’t farcically misinformed on this;
    – identify the arguments you have supposedly raised in their support; and
    – explain which ones are wrong and how?

    The article fails to do any of these. I don’t think they’d get past the first. Never mind Trafigura – I don’t even agree that funds are speculators. A pension fund, for example, should be long of whatever price risks its annuitants are short of. If I’m a senior citizen vulnerable to cold, I want my pension fund in oil, so I get paid more if home heating costs rise.

    Salmon’s article is good. This point in particular resonated:

    “Kocieniewski has a bee in his bonnet about the effect of commodities speculation on commodities prices. He has not only convinced himself that speculative flows caused substantial increases in commodity prices; he has also seemingly convinced himself that anybody who disagrees with that position must be lying.”

    This last point reminded me of something, and after a few seconds, I remembered what:

    “The Catholic and the Communist are alike in assuming that an opponent cannot be both honest and intelligent.”

    George Orwell, of course.

    The NYT has exhibited the classic leftist attitude that there can be only *one* permissible view on something. Any other views, even other views on the left, are evil heresies that will simply not be tolerated.

    From the NYT’s perspective, you don’t agree with the NYT’s house view on something. Theirs is the only view they will tolerate or can imagine anyone holding. In disagreeing with them you cannot be both honest and intelligent. They can’t seriously imagine you’re unintelligent. Therefore this leaves dishonesty as the only possible basis for your view. Hence their article. QED.

    This is also why the left’s best argument against people who dispute the need for multi-trillion dollar ineffective action against supposed climate change is always “You’re an oil-funded denier. I hate you.” You disagree with them; so you’re dishonest; so you should be hated.

    Same thing.

    Keep on keeping on. Maybe lose the beard though. 🙂

    Comment by Green as Grass — December 31, 2013 @ 5:40 am

  3. Bear in mind when reading the Salmon post that negative comments are not welcome at Reuters or other similar venues like FT’s Alphaville. The fact that Salmon, who sometimes pretends to be a journalist, would criticize the NYT for even making FOIA requests says a lot. The fact that Salmon ignores the results of the FOIA requests says even more.

    Just to be clear, when you say that John focuses on “climate research” in highlighting your cavalry of defenders, are you actually suggesting the powerlineblog is a respectable and authoritative source of clime research commentary? Because that pretty much makes the NYT’s point for them.

    Comment by Sherlock Trollmes — December 31, 2013 @ 8:37 am

  4. @Professor, not sure if you noticed, but Salmon’s article links to this piece:

    “In every instance of Pirrong’s involvement with the position-limits rule, he identified himself as a professor of finance and as the energy markets director for the Global Energy Management Institute at the Bauer College of Business at the University of Houston. While Pirrong has disclosed at times that he has contracted with private exchanges in the past, including work on soybean futures in 1997, what he has not revealed is that the institute that employs him is underwritten by the largest speculation-industry players in the country.

    Pirrong’s Global Energy Management Institute has been funded by Citigroup, Merrill Lynch Global Commodities (a unit of Bank of America) and the New York Mercantile Exchange (owned by the CME Group), among others. Charles River Associates is also a sponsor. In a now-deleted portion of the University of Houston website, corporate sponsors of the Global Energy Management Institute are invited to enjoy “access to [its] activities” and “an opportunity to influence its policies and direction.” Pirrong did not respond to a request for comment for this article.

    And then the punchline:

    “Please support our journalism. Get a digital subscription for just $9.50!”,2

    Comment by Ivan — December 31, 2013 @ 12:27 pm

  5. @green. Thanks. I will keep on keeping on. I keep thinking of a line that an NBA player (Olden Polynice) used about his coach, the notoriously combative Jerry Sloan: “If you hit Coach Sloan, you’d better kill him.” That’s the approach I’m taking here. The NYT hit me, but didn’t kill me. Their mistake. Re the beard; I wouldn’t recognize myself. Had it since 1979. It’s on for the duration. The rest of your comment is spot on 😉

    The ProfessorComment by The Professor — December 31, 2013 @ 1:39 pm

  6. The Calvary came out of its own volition. No Journolist needed. If I thought Craig was wrong, I’d say so. Maligning him was incorrect. What really got me steamed was the insinuation that the University of Illinois (my alma mater) colored its research because the CME gave them 1.4M dollars. Joke. But, certainly the NYT can be bought off for less.

    Comment by Jeff — January 2, 2014 @ 9:00 pm

  7. @Jeff. $1.4 million. Isn’t that what the NYT’s market cap is these days?

    The ProfessorComment by The Professor — January 2, 2014 @ 9:28 pm

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