Spawning Salmon

How the financial blogosphere gave birth to Felix Salmon

The gravitational change in the media that has left some formerly influential journalists floating weightless in the ether while others have been crushed under the load of new expectations  has also opened up opportunity. The Web’s Big Bang, especially during a financial crisis, has created new, influential voices that might have been starved for oxygen in an earlier media galaxy.

One of these new voices—Reuters’ free-form finance blogger Felix Salmon—appeared virtually out of nowhere when Portfolio.com launched early in 2007. He is perhaps the most dramatic example of someone whose reputation has been made entirely by the almost overwhelming and nearly unbelievable transformation of both the media and the economy in recent years.

But Salmon is quick to claim he has little or no influence, not much traffic, and barely rates in terms of importance. His pet example: Ben Stein. Beginning in May 2007, shortly after he started writing for Portfolio.com, Salmon began making cracks about Stein’s Sunday New York Times column. The posts evolved by the end of that summer into a running gag called the Ben Stein Watch.

It was all harmless fun, if you consider this harmless: “Stein lives in a world,” Salmon wrote in March 2009, “where flying commercial is always a chore; where few hotels are as well-appointed as his own homes; where every day he spends in a vaguely public place is a day he risks being accosted and held to account for the uncountable gallons of extremely harmful drivel that he has inflicted on his readers and viewers for years.”

By his own estimate, Salmon has devoted about 35,000 words to kicking Stein. But it wasn’t until mid-July of this year that Salmon considered Stein beyond the pale. The sonorous economist had begun appearing in ads for Freescore.com, a credit-report company. “It’s simply unconscionable for a newspaper of record to employ …  someone,” Salmon wrote, “who is surely making a vast amount of money by luring the unsuspecting into overpaying for a financial product they should under no circumstances buy.”

At first, his attack seemed to get little traction, thus proving Salmon’s claims of insignificance. “If I had any influence in the world,” Salmon said to me over a late-July lunch in Midtown Manhattan, “do you think Ben Stein would still have a column in the New York Times? Seriously.”

Yet barely more than a week after making that quip, the Times fired Stein for the conflict of interest. But even with his Stein trophy, there’s good reason to take Salmon at his word and assume he has little clout. He doesn’t have the massive traffic of the biggest business bloggers. He estimates he gets a few hundred thousand page views a month, hardly what the big dogs in the space like zerohedge or Barry Ritholtz are pulling. What Salmon does seem to have is a knack for getting attention.

Part of that stems from a flamboyant personality somewhat at odds the with the prevailing business culture. Indeed, while at Portfolio, the blogger reveled in his bohemian status. The first time I met Salmon late last year, he appeared at lunch on a second-hand bicycle having pedaled over from the East Village wearing a puffy powder-blue jacket made from wispy fibers that gave him the air of a costumed-animal character at a theme park.

Before landing at Portfolio, Salmon was, by his own admission, a journeyman who had trouble keeping a job. After a stint at a British financial trade magazine, Salmon came to New York in 1997 to help open the New York office of a U.K. think tank. From there he went to a “doomed financial newswire” called Bridge, where he was a kind of proto-blogger covering Latin American debt; he would gather, annotate, and pass along the most relevant bits of information.

Here’s where Salmon developed whatever expertise he might passably lay claim to. The restructuring of sovereign debt and the defaults of the late 1990s turned out to be an ideal training ground for the credit crisis of 2007-08. And not just for Salmon. While working on Latin American debt problems, he came across the work of Nouriel Roubini and Brad Setser.

Salmon went to lunch with the academics to tell them he disagreed with everything in their book, Bailouts or Bail-Ins. The spirited conversation led to his proposal that Roubini’s consultancy RGE host a blog. What followed was a free-for-all of opposing views, at times pitting Setser, Roubini, and Salmon against one another. It was just the sort of atmosphere Salmon thrived in.

Roubini continued to post at RGE, but no one would cite that as the source of his fame or influence. Setser moved his blog to the Council on Foreign Relations before canning it upon joining the Obama administration’s economic team. Naturally, Roubini and Setser see themselves as academics and policy men. Salmon is a dyed-in-the-wool blogger. And it is his mastery of the form—vectoring the facts and observations of others into his own opinionated but open-ended mini-essays—that amounts to his real expertise. Print and television journalism have their defining faces and voices. Salmon can lay claim to being the blogosphere’s signal personality despite his position in the traffic rankings.

In hiring Salmon, Reuters, one of the original one-way communications systems, has acknowledged the importance of fostering open-ended conversations. Salmon’s ability to repackage, recontextualize and reorient the work of other writers is surely the thing of value he brings to the organization.

“I may, at times, disagree with Felix and his views,” Roubini says today in between flights to his next speaking engagement, “but I have the greatest respect for his professional abilities: smart, sharp, witty, a great engaging writer. Also, he is intellectually honest and when he makes a mistake, he is willing to admit that without being defensive.”

“I have no equity in being right,” Salmon told me, apropos his willingness to take the other side of an argument just to see where it goes. Salmon’s genial engagement has been the secret of his success. Read Salmon’s take on any of the wide range of topics—from myriad credit issues to the economics of South Spanish wine to the travails of Annie Leibovitz’s loan officer—and you’ll see detailed reasoning, deliberate counterargument, and a matter-of-fact pronouncement of Salmon’s own sometimes over-the-top views.

Here’s how he handled an invitation to speak to a prestigious gathering of bankers and economists in Zermatt, Switzerland, recently: “[A]fter all the high empirical seriousness of the past couple of days, I think that the attendees enjoyed me blowing off steam by telling them that we had to do something which of course we won’t do at all: abolish the tax-deductibility of interest, move in general from a world of debt finance to a world of equity finance, and, insofar as there is credit in the world, encourage that credit to be in the form of loans rather than bonds.” It was the equivalent of telling a convention of Episcopal priests that they should seriously reconsider value of the New Testament.

At times it is hard to tell whether Salmon is taking a position wholly on the merits. He takes ideas and his own opinions seriously enough that he can come off as supercilious in print. But he actively wants you to argue with him. Yet he has, for the most part, eschewed appearing on television—the usual route to punditry.

He feels blogging is a better arena. “If you blog, you’re part of the conversation. You get instant feedback. You learn things much more quickly.” The idea is to harness the collective intelligence of “the rest of the blogosphere, basically. Anyone who links to me; anyone who comments on my blog.”

But every writer scribbles with an ideal reader in mind. Salmon is no exception. He may not covet the biggest audience but he does yearn for the best and most influential reader: “It’s a known fact,” he says, “that Larry Summers reads a lot of blogs.”

If that sort of audience is what he’s after, I ask, why not become a regular on CNBC? “Because Larry Summers doesn’t watch CNBC and say,’‘Oh my God, that’s interesting, I should actually think about that when conducting economic policy.’ CNBC is people shouting at each other. If we were to get into a screaming match about health care reform, it doesn’t matter how smart we are, we’re not going to be shedding any light. Whereas the blogosphere is really good at drilling down very quickly to the nub of the question. People talk about it like it’s the best graduate seminar ever invented.”

The blogosphere might not be the best seminar but it is proving to be a remarkable place for a kind of wonkish journalism that didn’t exist even five years ago. Salmon’s arrival at Reuters to spearhead the launch of a new Reuters opinion product—still in the skunk-works phase—is evidence of that. “Felix is not what you’d expect to see at Reuters, historically,” says Jonathan Ford, the former Lex columnist at the Financial Times and veteran of Breakingviews.com, “and he is here to signal change, to some extent.”

Change is the prevailing trope in media today, even the still well-funded financial media. But that doesn’t mean Salmon is any more sanguine than others in the business. He reacted aggressively in July when the Times’ Dealbook reported that Thomson Reuters was in conversations with Breakingviews.com—a potential competitor to the Reuters initiative Salmon was hired to play a featured role within.

Under the leadership of Jonathan Ford, Reuters is recruiting a team of columnists and bloggers to build upon the reinvigorated Reuters name. Nearly left for dead just a few years ago, the wire service with a sterling brand has been transformed by Thomson’s purchase. In an instant, it became a global rival to the money-spinning Bloomberg.

Fueled by the same subscriber-driven revenue base, Reuters is adding blogs, columnists, and opinion pieces in an attempt to create another layer of value. “The blog is there to provide an instant reaction, a force multiplier, if you’d like,” Ford says. “It allows us to tackle subjects and themes that we wouldn’t normally get around to. It’s quite a time-consuming process, writing an edited opinion column. So it gives us the ability to cover more subjects, because it’s a huge world out there.”

If you ask Felix, it’s not just coverage that blogs provide. Ironically, they give you depth. Not in the individual pieces but in the overall hashing-out. “I think the public conversation about economic policy broadly is taking place at a much, much higher level during this crisis,” Salmon says, “than it ever has in the history of the republic, precisely because of the blogosphere, and this is crucial. The nation and the world is a better place for it.”