Whom do you trust?: The

Whom do you trust?
: The stock market will collapse if we cannot trust the valuations of companies because (a) auditors and accountants are so beholden to their clients across multiple lines of business that they cannot see straight and (b) analysts are also so weighed down with conflict — their companies trying to sell, sell, sell that which often should not be bought, bought bought — that they are suspect.

It’s just like the Olympics: the French judge can’t judge because of conflict of interest. It’s just like politics, where pols who get too much special-interest money are also smudged by conflict.

The solution is obvious: Independence. We must make those who judge and value companies independent of those companies. Auditors must not be allowed to sell other services to their clients; they should be replaced reguarly so that other auditors will check their work; they should be liable for their lies.

But what about the analysts who sold not only lying scumbag companies such as Enron but also pigs in pokes on the Internet? I’ve long said that analysts have far too much influence and power for the idiots they are; they buddy up to the companies they cover and readily swallow the financial spin that’s fed to them (I’ve worked around the PR people who do the feeding) and they are influenced by their own brokerage house’s need to sell, sell, sell. They are not to be trusted.

My humble solution: A news organization — Dow Jones, Thomson, the FT, Reuters — should buy the analyst operation of a leading brokerage house and operate it independently, without influence, trading purely on the value of its research and opinions. The brokerage house can buy the services of these independent analysts for their top clients; it will be more valuable to them (and brokers can save by not providing valuable analysis to cheap, discount customers like me). The news organization can sell these services to other brokerage houses and directly to consumers. The problem with news organizations’ financial reporting today is that it is too damned shallow; they, too, swallow the PR fed them by investor relations flacks and conmen and can’t afford to dig deeper. With the depth of a full team of analysts, they can deliver real value.

To see how it can work, look no farther than Chris Byron, now a columnist on the New York Post. He calls a spade full of bull a spade full of bull. In his latest column, he found that even Krispy Kreme dabbled in Enron-like off-the-books accounting and KK immediately reformed. He exposed Boston Market for the lumpy gravy it was long before the market realized it. He exposed lots of dot.con idiocy.

Imagine if you had a staff of similarly grumpy — and independent — analysts going after every industry and every major company, a hundred Chris Byrons calling the shots. I would pay for that. I’m not talking about mere blathering, like that on Motley Fool. I’m talking about real reporting.

We would finally have something to believe: We’d know that these reporter/analysts were digging on our behalf, to ferret out the lies and let us know what was true. That is how we would know the true value of the companies in which we are investing.

This, after all, is what journalism is all about, or what it is supposed to be about: Independent reporters finding the facts and asking the tough questions on our behalf, beholden to no one but us, trading only on their own credibility.

We need these standards now more than ever. We have to find this indepdent, smart, tough voice in financial reporting and analysis. The economy is now built on the stock market. Our 401Ks and pensions and insurance and much of the worth of every company and charity and even government is built on stock. If we cannot trust the value of that stock simply because auditors are crooked and analysts are biased, then we will watch the collapse of our very economy.

Soft money, soft spine
: For all the reasons above, Bush should not — cannot — veto campaign reform. Soft money breeds a conflict of interest. We, the people, are going to be far more demanding of all institutions — financial, governmental, media — to eliminate conflict of interest for while that conflict exists, trust, credibility, and value do not. The times demand higher standards.

There goes the neighborhood
: Ken Layne finds no connection between (a) the riot/assassination that killed a government minister at the airport in Kabul and (b) the soccer riot that broke out shortly thereafter. He’s right about this: It appears one is a political event, the other not. Nonetheless, I do see a tie: Afghanistaned is one f’d up country and it is going to be harder than we admit to drag them back to civilization. I won’t be vacationing there for a very long time.

Merchant of death
: The Times of London says bin Laden’s arms merchant has been revealed: a former Soviet air force office. A Times profile of him.

Next stop: Baghdad
: The Times says Bush is finalizing plans to topple Saddam Hussein:

If all goes well with President George W Bushís rapidly developing plan to overthrow Saddam Hussein, General Najib al-Salhi, a former chief of staff of the Iraqi 5th mechanised corps, might be back in Baghdad by the end of the year.

As one of the highest-ranking defectors from Saddamís elite Republican Guard and one of the founders of the Movement of Free Officers, a clandestine Iraqi opposition group, Najib believes the moment of reckoning has finally arrived for the tyrant he used to serve. ìThe Iraqi people are ready for action,î he said last week.