Tuesday, December 8, 2009

Glenn Beck Will Say Whatever He's Paid To Say, Even If Grandma Has to Lose the House Over It

Daily Finance has the story on how Glenn Beck is using his Fox News show to promote gold without telling his viewers that he is a paid salesman for a gold company.

Glenn Beck's dual embrace of gold -- as an investment vehicle for his listeners and a personal moneymaking opportunity for himself -- has drawn boos from various journalism watchdogs. And now it looks like the talk-show host's close relationship with one purveyor of gold coins has gotten him in a bit of trouble with his employer Fox News.

Beck is prominently featured on the website of Goldline International, a vendor of "gold, silver, and platinum coins and bars as well as rare and collectible numismatic coins." According to the site, Beck is a "paid spokesman" for the company. "This is a top notch organization," a thumbnail photo of Beck's head declares.
Beck regularly does "live reads," or live commercials, for Goldline on his syndicated radio show, and has even interviewed Mark Albarian, Goldline's president and CEO, twice on the show, most recently on Nov. 12, 2009.
Critics including Media Matters say it's a major conflict of interest for Beck, who has often advised the viewers of his Fox News program to buy gold to protect themselves against the collapse of the dollar -- and of Western civilization -- without informing them of his Goldline deal.
Fox News must be pretty pissed off. One of their big stars is ruining the integrity (try not to laugh here) of their network so he can promote some company that he's shilling. Surely they must have some rules about this?
Like other news organizations, Fox News prohibits its on-air personalities from making paid product endorsements. But it makes an exception for its commentators who are also radio hosts, who are allowed to perform live reads, says Joel Cheatwood, senior vice president for development.
So, Fox News think it's a conflict of interest for their "journalists" to be paid to promote points of view. And their response is to ban these payments, unless...well, unless they decide to make an exception. Here's Joel Cheatwood, Fox News senior vice president for development.
"When we hired Glenn at Fox News, we hired him with the understanding that he had a well-established, burgeoning radio business, and we had to be accepting of certain elements of that," Cheatwood tells DailyFinance...
Translation: We knew he was corrupt, and we decided we didn't care.

When asked whether Beck was capable of covering the show in an impartial way, Cheatwood replied:
"If gold declines and the dollar goes up," Cheatwood added, "I absolutely guarantee the reporting will be that on the show."
 So, if you listen to Glenn Beck, believing that he is objective, and go out and put your retirement into gold, which subsequently crashes and destroys your life savings, everything will be fine.

Because you have an absolute guarantee from Joel Cheatwood.


Presumably, Beck owns gold himself. This should be enough to get an SEC investigation moving. You are not allowed to give investment advice about stocks or commodities which you own without informing your viewers that you own them, and that you have a potential conflict of interest.

If you're not familiar with these things, here's why.

Let's say you're Glenn Beck, and that you own $10,000 XYZ Corp, which you paid $1 each for, and which is about what those shares are worth. Let's also say that you'd really like to make some money on these shares.

So you go on TV, and talk about how great XYZ is, and how the share price is sure to go up, and how people are going to thank you one day if they follow your advice to buy. So people start buying the stock, which starts to go up in price as more people watch Glenn Beck and decide they need to buy it. Three months later, it peaks at $100 per share. After three months of watching the stock go up as Beck talks about how great it is, someone's Grandma cashes in her $100,000 retirement fund to buy 1000 shares. The next day Glenn sells his 1000 shares for a cool $90,000 profit. This sale triggers a selling frenzy, but Grandma, who does not work on Wall Street, doesn't know what to do, and can't bring herself to sell the stock until it hits $1 per share again, and winds up with a net loss of $90,000.

Perfect example of the free market at it's best. Survival of the fittest, right?

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