Bob Pisani covers the NYSE floor for cable channel CNBC.  This morning he observed that he has never seen such “extreme” numbers in his career covering the floor action.

What numbers was he referring to?  These.  More than 96% of all stocks are down on down days, and more than 96% of all stocks are up on up days.  And sometimes these percentages can occur in one day as stocks begin strong and then collapse at day’s close!

This is called gambling, folks.  It has absolutely nothing to do with economic fundamentals.  This is trend trading based upon computer algorithms.  Sell everything.  Buy everything.  Anything unexpected happens, and these programs leave the building, sucking out 60% of the daily trading volume they represent and cratering liquidity.

In short, the inmates are now running the asylum.  Oh, and by the way, the TBTF bank holding companies are major players in all of this steroidal gambling.  And why not, they get their money more cheaply than the competition, and once the computer infrastructure and algorithms are in place it’s ridiculously easy pickings.

Of course all of this is ridiculously expensive for the economy as a whole.  Lack of stability and high volatility in asset pricing makes doing business more expensive, and risky, because productive businesses have to pay more to hedge their various risks.

They will continue to do this until it doesn’t work anymore.  And the most likely cause of it not working will come from an unexpected “shock” to the economy.  Not being able to help themselves, the speculators will ride a huge downside move.  Where, for heaven’s sake, do you think the money comes from for all those obscene bonuses?

CNBC this morning featured former IMF Banker Simon Johnson (co-author of the book “13 Bankers” ) and US Senator Ted Kaufman, both proponents of breaking up TBTF bank holding companies and forcing derivative trading onto public exchanges.

You have to understand that CNBC represents a point of view opposite to Johnson and Kaufman.  In our equity and bond markets today, making money depends on large volume trading and volatility.  Boring, stable markets reduce trader and exchange profits.  And boring, stable markets make CNBC boring as well–or at least the CNBC management believes so.  The cable station is a child of the markets and the symbiotic feedback loop between the markets and CNBC is fairly straightforward.

Nevertheless the CNBC staff took Johnson’s and Kaufman’s opinions fairy well.  Show co-host Joe Kernen did make a stab at placing Fannie and Freddie (government sponsored enterprises that are legally private) as the main culprit for building a housing bubble and, thus, causing the financial meltdown.  This is a Wall Street meme aimed at diverting responsibility from risky, leveraged Wall Street bets to government as the main culprit in the meltdown.

They then went to US Senator Bob Corker, who is opposed to reforming derivative trading and to downizing the TBTF banks.  Corker complained that the derivative reforms will, somehow, limit credit to companies and leave them bereft of any way to hedge currency risk, or product input pricing.  He didn’t explain how this would happen.  He just took it as faith, as did the CNBC staff listening to him.  Those are the official Wall Street memes, of course, which is why Corker quickly followed Simon and Kaufman.

The CNBC crew didn’t ask Corker what he thought about the current situation where more than 90% of derivative trading is done over the counter (OTC)–that is outside of public and regulatory view–by five of the world’s largest banks, four of  them TBTF Wall Street holding companies: (1. JPMorgan Chase, 2. Goldman Sachs, 3. Bank of America, 4. Citibank, 5. HSBC.).

One wonders how our large corporations managed to survive and prosper before the rise of derivatives, and their inherent trading volatility.   Of course they did survive and were quite easily able to hedge currency and material prices without the innovation of opaque, off the board derivative trading and traders.  But those kind of observations challenge the meme’s validity so they weren’t brought up when Corker was on.

Kernen brought up Fannie and Freddie with Kaufman on the air, but made no contrary observations when Corker was on the air.  To be fair, that’s not his job anyway.  He’s there to push the daily Wall Street meme and he does.  That’s what he’s paid to do. 

CNBC needs to re-balance it’s point of view and hire some co-hosts who know finance, markets and trading and offer a different point of view over the day’s events.  This unrelenting, one sided point of view means no one is seriously covering the issues of the day.   Instead of having the occasional, brief appearance, of knowledgeable players who don’t always follow the meme, such people should have a regular chair at the table.  All day long.

Dream on.

In an interview on CNBC Friday, former President Bill Clinton advised that America needs to “..get back in the tomorrow business.”

Beezer agrees wholeheartedly.  

But doing well in the “tomorrow business” takes a willingness to change, said Clinton.  Change is difficult, particularly when the nation is trying to recover from a near death financial collapse.  A large debt bubble burst and that means balance sheets, both private and public, have suffered and need re-balancing.

Today’s world is all about speed and complexity.  We’re learning the hard way that our technology innovations are not an unalloyed benefit.   Unrestrained speed can race ahead of comprehension.  Complexity can do the same thing.  As we’ve all just seen the past two years, in combination, speed and complexity can blindside humanity.

The antidotes to speed and complexity are simplicity, clarity and understanding.  These are the changes we need to make in order to get back in the “tomorrow business.”

Take speed.  Technology has always been about tomorrow.  It’s brought us the internet, which has with blinding digital speed connected the globe in ways unimaginable twenty years ago.  Computational power, harnessed by science, has brought about tremendous advances in just about every aspect of our lives, and no doubt will continue to do so.

Science brings well understood disciplines that enforce speed limits.  That’s not the case in the realm of social man.  For example, the internet produces a flood of information that washes over us daily from all over the world.  But all this information can impede our ability to comprehend.  It arrives and leaves in a digital flash, long before any real understanding.   More is not always better.  Complexity and speed can overwhelm social man’s constructs.

The current difficulties with too much speed and complexity arrived from the financial industry.  Finance is a social construct, not a scientific one.  Financial “innovations” are not the same as scientific “innovations.”  A scientific innovation adds to understanding.  Financial innovation, as we’ve learned, may do precisely the opposite.

In a complex social world, financial products need to be stable and simple enough for social understanding.  We were fooled into thinking complex derivative securities–an “innovation” we were told–would enhance our well being.   In an interconnected financial world, the tools of finance need to be clear and transparent to everyone.  These tools, the common language of finance if you will, are not improved by complexity. 

Complexity is the enemy of finance.  It’s like driving a car with an opaque windshield.   Add to that speed and you’re bound to crash.  Or to continue the analogy of language, complexity turns finance into Babylon where many languages are used instead of one with widespread understanding.

So in finance the “change” needed is one of returning to a common language that uses common tools.  Complex derivatives need to be limited only to those with widespread understanding.  Only those derivatives that are transparent and whose price can be easily and safely ascertained on a public exchange should be allowed.   Remember these necessary social constructs; simplicity, clarity and understanding.

Unfortunately, when a problem is encountered in a social realm (for this post it’s finance, but we face the same problems in complexity and speed with energy, health care, agriculture and even our politics), the necessary changes will run into opposition by segments that benefit from the system that needs reform.

Nevertheless the changes have to be made.  We won’t get back in the business of “tomorrow” until they are.

CNBC’s Maria Bartiromo had a very interesting interview lineup yesterday including Treasury Secretary Timothy Geithner, SEC Chairwoman Mary Schapiro, FDIC Chairwoman Sheila Bair, and Elizabeth Warren, Chair of the Congressional Oversight Panel for the federal TARP program (troubled asset relief program).

The top two takeaways:  The administration isn’t going to break up the bank holding companies, and the administration is working on plans to overhaul Fannie Mae, Freddie Mac and even the Federal Home Administration. 

There’s been a lot of pressure, both from the left and the right, to break up the too big to fail (TBTF) banks.  But Secy. Geithner made it clear that the administration is going to stick to its proposals of stricter capital standards, stronger oversight and developing an estimated $50 billion bailout warchest (paid for by the banks themselves) that will be used to fund a bankruptcy type wind down of any part of the largest banks that fails.

Geithner said the regulations are aimed at making the largest banks financially stronger while allowing the government to set up what he described as “a firewall” around any part of these banks that fails.

What comes after that may have best been described by Bair, head of  the FDIC and probably the person with the most experience in shutting down failed banks.  Bair essentially described the process used by FDIC.  You separate the good assets from the bad, bundle the good ones and sell them off–usually to another bank.  The bad assets are also worked off, over time, and sold for what they can fetch.

Both Bair and Geithner made it clear that bank investors in the failed banks, or portions of a holding company containing bank units, will no longer be protected as was done in the recent bailouts.  The same will be true for large financial but non bank institutions such as credit units within large manufacturing companies.  An example of these would be GMAC, or GE Credit–or an insurance company such as AIG that  decide to form financial product units.

As for credit default swaps, both Geithner and Schapiro said reform will put sunlight on who holds what swaps, and in what amounts, so that regulators won’t be caught off guard not knowing how much leverage is being used.

In terms of the recommendation for a Consumer Financial Products Agency, Warren said one problem now is that there are seven different regulatory agencies that have responsibility for consumer protection, in one form or another, and they haven’t been able to protect consumers from abusive sales practices and unfair contracts.  Putting these employees at one agency, Warren said,  will “concentrate them on one clear mission.”  Such an agency will be “strong, viable and can get the job done,” Warren said.

Warren, a Harvard Law professor who has long championed stronger consumer protection regulation, has been publicly mentioned as a possible chairman for this yet to be formed agency, but she declined to respond when asked if she’d take the job.  What she wasn’t asked by Bartiromo, unfortunately, was whether such an agency could be effective while housed with the Federal Reserve, one of the seven regulators that is supposed to protect consumers now.  Early betting is that the agency will be under the Federal Reserve, an organization whose membership is made up of banks.  And banks don’t like the idea of even having such an agency.

The Freddie, Fannie and FHA reform was not described in any real detail.  But Geithner made it clear there would be major changes proposed by the administration.  The Secretary repeated his assurance that current investors will be protected, but the implication is that reform may change that in some way.

Right now Fannie and Freddie are the biggest recipients of government support–more than $1.5 trillion–in one way or another.  Called GSE’s or government sponsored enterprises, they are hybrids that are investor owned, but charged with a public mission.  In this case a mission to make home mortgages as affordable as possible.

They are two of the least popular organizations in Washington DC because they’ve garnered almost as much taxpayer support between them as all the too big to fail banks combined.   At this point, no one has proposed how the government can safely extricate itself from the relationship.

Warren was the clearest in her opinion of the two.  “I don’t like the public/private” concept, she said, adding that “It’s time to pull the plug.”

So it’s pretty much “middle of the road,” for the Obama administration right now.  They want more effective regulation that will prohibit a repeat of the 2008-09 financial collapse, but they are apparently willing to maintain the concentrated TBTF business model many believe is the root cause of the collapse.

Politically, this will be very interesting.  Will financial regulatory reform turn out to be a bi-partisan effort in contrast to the partisan, and often ugly health care debate?

Probably, if for no other reason that big banks are the bad boys in the minds of most Americans.  Neither party wants to be seen as a lackey for TBTF banks.  But there will be disagreements.  A likely one is that Republicans seem to be positioning themselves as supporters of eliminating the TBTF business model entirely and returning to some form of Glass Steagall where Investment Banks and Commercial Banks were kept separate. 

If this turns out to be a popular position, and it could be considering that both the Democact left wing (Obama’s base support) and the Republican right wing want the banks dismembered, then the administration may have to re-design their proposal radically.  Or at least convince the public that their proposals essentially do effectively separate investment banks and commercial banks, even if they are under the same corporate holding company structure.  That might be a very tough sell, if for no other reason that doing so is a complicated process that most people may not at all understand.

TBTF banks may be the only group more unpopular than Congress.  Kicking this group is an almost no lose position.

The second issue may involve the consumer protection idea.  Here, the Democrats may have the upper hand because it is strongly favored by them.  The progressive wing will want a separate, independent agency, not beholden to anyone who actually produces and sells financial products.  Republicans on the other hand aren’t likely to take on the entire banking industry.  They’ll smack TBTF banks forever, but banks of all sizes depend upon mortgage and credit products–the very core of what this new agency will investigate–and that is probably simply a too populist message for even a Tea Bagger Republican party.

And it is probably a too populist one for Obama too.  He’ll do the agency, but probably cave in on it being truly independent.   Which, from Beezer’s perspective, is too bad.  Obama needs to show his foundation that he too, is progressive.

Watching Fox News and CNBC lately has been painful for Beezer, who was trained initially as a professional print journalist.

Start with CNBC, which bills itself as the world’s premier news channel for business.  While the channel does spend much of its time reporting actual business events, both in the US and around the world, the same people who are reporting spend a lot of time commentating.  It’s as if the journalist who pens a front page news story, also writes the day’s official editorial.

There’s an old adage in journalism.  The editorial writer has an audience of one: The Publisher.  In professional journalism the two writers are kept separate and the need for such a distinction is understood.

When the reporter melds with the editorial writer, you get bad journalism.  Which means you get poor, honest reporting of the facts.  Which means, inevitably, the audience is fed inaccurate, or at minimum, unbalanced, reporting of what’s truly going on.  Editorial writers will subsume facts that don’t support the ideas of the publisher, and highlight those that do.  Journalist are supposed to draw attention to facts that may be inconvenient to one or both sides of a story. 

Journalists do have opinions, of course.  But professional journalists take a sort of grim pleasure in playing the devil’s advocate, even if they agree strongly with the side of a debate that they discomfit with their questions.  They must do this, because not doing so invariably leaves important information in the dark, unseen by the viewer.

Journalists, in a sense, are the world’s referees.  They are supposed to be as unbiased as possible, trained in the art of writing clearly, and knowledgeable enough to challenge questionable assertions by one side or another debating an issue.

Exhibit one for CNBC would be Larry Kudlow.  An economist with experience on Wall Street, Kudlow is much more commentator than journalist.  The facade of honest reporting crumbles almost immediately when Kudlow is at the desk.  Kudlow commented today that “Republicans were put on the earth to cut taxes.”  Which is fine to say if you preface the remark by noting that you are writing an editorial.  But CNBC exists to no small degree based upon the audience’s assumption they’re getting an honest recitation of the facts.    Of course CNBC may exist to get Kudlow’s particularly misogynist form of economics into the mainstream of American thought.

Guests on Kudlow’s show who might knowledgeably present a different opinion appear as foils only.  If they start to make sense (and most do because they are professionals in the area to which they speak), Kudlow waste no time interrupting them, and if that isn’t immediately successful in shutting them up, he literally hollers over them so the audience can barely tell what’s being said by anyone, including Kudlow.  As journalism, as a tool for honest reporting, Kudlow’s show is a total waste of time.  As a platform for espousing Ayn Randian,  conservative economics, it is quite good.

To make matters worse, every segment of the CNBC channel is dominated almost exclusively by Kudlow clones.  They don’t have his chutzpah and are more polite, but given the opportunity they will trot out what amounts to the Kudlow editorial line (the opinion of the publishers).

Experience tells Beezer to be wary of the reportage on CNBC.  People so openly ideological are bound to latch onto facts that might satisfy their preconceptions, but will be relatively unimportant in helping inform the audience about what’s truly going on out in the business world.

Fox news suffers from some of the same ills.  This news channel started out asserting it was going to be “fair and balanced.”  The implication, one assumes, was that the other news channels weren’t fair and balanced. 

That’s possible.  TV journalism has always been held in low esteem by print journalists.  Most TV stories are simply rehashes of a print journalist story.  An “exclusive” for TV is getting to a newsmaker first “live” where the newsmaker repeats what he’s already said, normally many times, in print.

Fox seems to be constructed, instead of fair and balanced, as a counterbalance to its perception of the liberal bias at the other news channels.   Instead of truly being “fair and balanced,” Fox is the conservative counterweight to other news channels.  Here again, honest reporting is tossed in the dustbin as a result. 

For CNBC and Fox, both quite conservative news organizations, it’s partisan debate in lieu of accurate and unbiased reporting.  Sort of like the US Senate, which is partisan debate instead of sensible leadership and legislation.  Under these circumstances the first victim will be honest fact exposition and truthful news journalism.  The second victim will be the audience, who will inevitably end up being ill informed.

Contrast these two conservative channels with MSNBC.  From an editorial perspective, MSNBC is liberal compared to Fox or CNBC.  Other than that bias distinction, there is another important one where MSNBC separates itself from the other two:  MSNBC still maintains the distinction between its journalists and its commentators.  It may be biased, but it clearly identifies it’s biases as coming from “commentators” not journalists.

If you want real business reporting you’ll have to get Bloomburg, which not only does a more thorough job than does CNBC, but also has an extensive reporting organization with desks around the world.  It’s quite a delight early in the morning to hear journalists from around the world explaining their particular geographic area.   And nary a Kudlow, or Kudlow wannabee in sight.  Refreshing, and more informative.

As for Fox news, I have no clue where one can go for respite.  If Fox is correct and everyone else is liberally biased, then there is no alternative to get truly balanced reporting.  Maybe you can watch Public television and Fox to get a balanced mix.  Like mixing oil and vinegar, with a few spices, to get a tasty salad dressing.

I would like to point out one TV show, Fareed Zakaria’s CNN show ”GPS” on Sunday, as a notable exception to this sorry state of affairs.   As I’ve written previously, Zakaria is refreshingly well informed, and fearless in his questioning–no matter one’s bias.  If you want to see how a good journalist works, watch Zakaria.

It would be nice to get a non business focused news channel equivalent to Bloomburg on business.  But such is not the case, at least it seems to this writer.

The real antidote is to read.  Despite the sorry state of financial affairs in the print news business, there’s still terrific journalism being written.   The New York Times is the unquestioned leader in this field.  The New York Times, a generalist newspaper, has become so good at business analysis that many believe it to be superior to that of the Wall Street Journal.  And there’s numerous general and specialist magazines that regularly churn out great news and analysis.

It’s a lot of work, and costs some money.  But reading may be the only alternative available to the sorry state of reporting by big media, particularly television.

Late last week CNBC host/reporter Maria Bartiromo had two guests on to discuss Obama “Pay Czar” Kenneth Feinberg’s various decisions to limit pay and bonuses in those corporations that have received taxpayer subsidies, most of them financial corporations like Wall Street banks or American International Group, an insurance conglomerate.

The thrust of Bartiromo’s argument was that all the smart guys will leave the taxpayer subsidized companies for better paying jobs at non-subsidized companies and, thusly, will weaken the subsidized companies’ chances of getting back on their feet.    This, she concluded, would hurt the taxpayers’ chances of getting their money back.

What was never discussed was the underlying problem:  These highly paid risk takers are still in the enviable position of claiming their winnings when good bets pay off, but pushing off their losses to taxpayers when the bad bet bills come due.  Yet when the Obama administration makes regulatory proposals aimed at ending this game of “tails I win, heads you lose”  CNBC and Bartiromo scream bloody murder about the administration playing “class war” politics and proposing “socialism” regulatory schemes–unless, of course, it’s socialism for the rich when they place bad, risky bets.

If Bartiromo and CNBC were really interested in protecting big pay/big bonus for risk taking, they’d have panels discussing how to end the taxpayer backstops for risk taker losses.   Like that’s going to happen.

The pay czar exists because, lacking any real way to protect taxpayers from picking up the bad bet bills (and they do happen in spades, as we’ve just seen), one technique is to dampen risk taking by lowering the rewards for doing so:  If taxpayers have to pay the bad bet bills, discourage risk taking in the first place.

Before the government exposed taxpayers to these losses (by bringing down the Depression era regulations in Glass Steagall and lifting leverage limits), the risk takers were on the hook for losses as well as enjoying risk’s rewards.  That situation controlled risk taking better than anything.

When CNBC and Bartiromo start pushing for this kind of reform, they can legitimately call for eliminating  a pay czar.   But CNBC is bought and paid for by Wall Street, so this common sense “note” can’t be “heard” by CNBC and Bartiromo. 

It’s tough to have taxpayer sympathy for big bonuses when the recipients also possess the biggest “tin cup” for taxpayer bailouts when things don’t go so well.