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Hacks x Flacks: Globo and the GIGO Fallacy Fallacy

The Fundamental Attribution Error is to explain one’s own behavior and opinions as rational reactions to external circumstances and to the available data, while attributing the behavior and opinions of others to their emotional state and psychological biases. — SkepticWiki

Comunique-se, a trade mag for the Brazilian journalism and PR rackets — under Brazil’s odd industrial classification scheme, the two are considered one and the same racket — reports.

A few years ago, the presiding magistrate of the Labor Tribunal of São Paulo — where my late father-in-law used to practice — was found guilty of involvement in a scheme to inflate the costs of putting up a fancy new building for the court, then skim money off the top.

The federal court hearing the case issued a press release at the time the judge and accomplices were arrested and charged.

The Globo nework’s version of the CBS Evening News with Walter Cronkite, the Jornal Nacional, got the story wrong.

In a follow-up, the JN — its Dan Rather is a guy whose name is pronounced “boner” — attributed its own error to the press release prepared by the federal court’s PR guy.

The flack sued Globo, and won, pointing out that all the other news organizations that received the release managed to Ctl-C, Ctl-V the facts accurately.

Technically, this is a case of the “fallacy fallacy” — fallaciously attributing fallacy or error to another.

Here, the fallacy falsely attributed is the GIGO — “garbage in, garbage out” — fallacy.

A news organization evoking the GIGO fallacy is problematic in the first place, however — as the judge in the libel case points out.

It would seem to imply that the reproduction of facts stated in press releases, with no independent corroboration, constitutes the practice of journalism.

Personally, I prefer to read the original press release on PR Newswire. After all, some very talented and high-paid English majors worked hard to write these things, and write them well. I have written some myself.

And unfortunately, sometimes journalists do garble them in translation — which is why they call us “hacks.” Talk slow and use short words. I majored in journalism.

Na ocasião, a Globo noticiou, no Jornal Nacional, que além do ex-juiz Nicolau do Santos Neto, condenado por desvio da verba destinada à construção da sede do Tribunal Regional do Trabalho em São Paulo, e de Monteiro de Barros e José Eduardo Corrêa Teixeira Ferraz, a mulher de Nicolau, Maria da Glória Beirão dos Santos, também estaria envolvida no esquema e que sua prisão teria sido decretada. Após perceber o erro e ser informada do equívoco, a emissora atribuiu a “barriga” ao então assessor de imprensa da Justiça Federal de São Paulo, no noticiário do dia seguinte.

At the time, the JN reported that in addition to the the ex-judge, later convicted along with two others of embezzling money destined for the construction of the court building, the judge’s wife was also involved in the scheme and that a warrant had been issued for her arrest. After perceiving the error and being informed of the mistake, Globo attributed the error to the public relations director of the São Paulo federal courts in a report aired the following day.

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SEC On “The Issuer Pays”: Ratings Agency Facelift Falls?

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SEC Staff Report on Credit Rating Agencies, July 2008

Rating agencies do not appear to take steps to prevent considerations of market share and other business interests from the possibility that they could influence ratings or ratings criteria.

The SEC (PDF) report on the ratings agencies classified as NRSROs — nationally recognized statistical ratings agencies — tells a pretty simple story.

  1. The major rating agencies — Fitch, Moody’s and Standard & Poor’s — were told to develop and enforce policies to prevent conflicts of interest from potentially throwing a bias into analyst rating reports.
  2. The major ratings agencies developed those polices.
  3. But they do not enforce them.

The issue acquires particular poignancy at a time when the public is looking carefully at the performance of these agencies to determine their “failed prognostication rate” (FPR) — which is actualy just a piece of pseudoterminology I made up myself, but you get what I mean, right?

Freedonia sovereign debt is as solid as the Rock of Groucho, they say.

The Rock of Groucho turns out to have feet of clay. Citibank fires 20,000 employees. Goldman Sachs ponders vacating its Death Star building on Pearl Street and decamping for Tony Sopranoland.  The mayor of New York City — who is in the information and numbers business himself, and is actually quite good at it — looks at his tax revenue projections for the next five years and contemplates jumping out the window.

Each of the NRSROs examined uses the “issuer pays” model, in which the arranger or other entity that  issues the security is also seeking the rating, and pays the rating agency for the rating. The conflict of interest inherent in this model is that rating agencies have an interest in generating business from the firms that seek the rating, which could conflict with providing ratings of integrity. The Commission’s rules specify that it is a conflict of interest for an NRSRO being paid by issuers or underwriters to determine credit ratings with respect to securities they issue or underwrite. They are required to establish, maintain and enforce policies and procedures reasonably designed to address and manage conflicts of interest.35 Such policies and procedures are intended to maintain the integrity of the NRSRO’s judgment, and to prevent an NRSRO from being influenced to issue or maintain a more favorable credit rating in order to obtain or retain business of the issuer or underwriter

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