This is financial and investigative reporting 101.

From Citizen reporting beats legacy media on a crucial, complex story (yet again) by Alex Berenson.  The subheading is While the New York Times et al offer puffery on Sam Bankman-Fried and the FTX collapse, expert outsiders sift through the wreckage and get to the truth; this is Twitter and Substack at their best.  

Covid-19, Ukraine War, FTX, election results - we are seeing this pattern again and again.  My old mainstays New York Times and NPR, but all the legacy media, have their narrative driven stories which are neither timely nor accurate/complete.  You want the best and most complete version, you resort to selected substacks, selected Twitter accounts, selected blogs.  That portfolio of substacks, accounts, and blogs is always evolving based on what the issue might be and it takes time and effort to sort the wheat from the chaff.  

But done well, you eventually end up with an informational ecosystem which is fast, reliable and more complete, accurate and balanced than anything we used to get from the old mainstream media.  The old MSM was easier.  You just payed a few hundred or thousand dollars a year and consumed what they served.  Now you have to work to cultivate the ecosystem and it takes constant tending.  

The outcome is approaching the quality we used to enjoy from the mainstream media.  And compared to the remnant husks of the New York Times and NPR?  Far superior.  In both cases you barely get five paragraphs or thirty seconds in to their reportage before they are offering declarative statements about things which are clearly highly contingent and disputable.  

From Berenson.

Fourteen years ago, when Bernie Madoff’s massive hedge fund collapsed, the New York Times and other elite media aggressively dug into what had happened - and why and how regulators had failed to stop it. I know - I was part of the Times team.

By this point, business reporters were experienced covering financial collapse. Along with al Qaeda and Iraq, Wall Street’s various meltdowns were the story of the 2000s, starting with the technology stock crash in 2000, running through Enron and the other giant accounting frauds, and culminating in the bank crisis and Madoff.

The most crucial element in covering these failures and frauds:

Don’t believe what they tell you.

Financial companies depend on leverage - borrowing from other institutions against their customer deposits. Leverage inherently means risk. Even a solvent company can break if too many customers or counterparties want their money back all at once. Management has to make sure that doesn’t happen; it has to keep confidence high at any cost.

Frauds depend on opaque accounting, accounting that no one from the outside can challenge or in some cases even understand. Complexity is the grifter’s friend.

Yet at its heart the fraud always runs the same way: cash leaves the balance sheet, and assets that aren’t really assets take its place. Those “assets” can be crypto tokens or prebooked profits on future electricity sales or capitalized software development costs or almost anything else. What they have in common is that they cannot be turned back into cash quickly - or sometimes at all.

Thus managements at complex financial companies have both the motive and the opportunity to spin, if not outright lie.

And if a collapse comes, they have every reason to hide their roles in what’s happened, and to blame malign outside forces for their problems - everything would have been fine if I’d just had a little more time, time to unwind my losing position, time for my investment to recover, time to raise more cash, time to flee to Argentina…

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This is financial and investigative reporting 101.

But the Times and other elite media outlets have failed miserably at it in the case of FTX, the cryptocurrency exchange that collapsed and filed for bankruptcy last week, and Sam Bankman-Fried, FTX’s founder and majority owner.

Worth reading.