I read a lot. Newspapers, books, magazines, the Internet, I read it all. In my reading, I am continuously amazed at how often contradictory reports and blatantly erroneous information finds its way into mainstream reporting. Sometimes the errors and/or contradictory reports are funny. Sometimes, however, it's obvious that mainstream media doesn't have a clue.

Obvious fact checking doesn't seem to be high on the list of a lot of media outlets, either. The Los Angeles Times recently completed a story on Julius Nasso, who is the former partner and confidante of the actor Steven Seagal. I say former because Nasso appears to have serious mafia connections, and he has been charged with attempting to extort money from Seagal. But during better days for Nasso, the press gave him the positive coverage he craved. And as The Los Angeles Times reported, one newspaper (The Times didn't mention it by name) profiled Nasso, chronicling his rise from humble roots to the acquisition of two doctorates. Two doctorates? Now that is a fact you might want to check out when doing a profile. But as The Times delicately put it, apparently the newspaper doing the profile "did not realize . . . that Nasso proudly counts a 1979 testimonial dinner at Fordham University as the equivalent of an honorary degree and bases his other on a membership certificate from the Connecticut Pharmaceutical Association."

This kind of reporting might be funny and passed off as sloppy work from "those guys on the entertainment desk." But when the errors are major errors making it onto the headlines of the front page, above the fold, of The New York Times or the lead paragraph of the lead story of The Wall Street Journal, on perhaps the biggest financial story of the year, you really have to wonder if these guys have any clue at all.

Now I am going to point out a major error that occurred at both The New York Times and The Wall Street Journal in their coverage of the WorldCom accounting scandal, but first I have to explain a little elementary accounting, so please follow me on this.

In accounting, the way a business spends money can be accounted for in one of two ways: It can be an expense or a capital expenditure. The purchase of gasoline to fill a truck on its way to deliver an order for a customer is an expense because the gasoline is being used up in less than a year for the completion of a customer order. The purchase of a truck itself is a capital expenditure because the usefulness of this purchase will go far beyond a year. Expense versus capital expenditure is a basic accounting concept.

If either of the purchases made in the example above were made by cash, it would have resulted in a decrease in cash flow. Again, very simple.

Now let's assume that some genius in accounting decided to call the gasoline purchase a capital expenditure. This would reduce current expenses and therefore increase the profit picture, but it wouldn't affect cash flow. Cash going out for either a business expense or a capital expenditure is still cash going out. No impact on cash flow. It's simple. Except, of course, for The New York Times and The Wall Street Journal.

On Wednesday, June 26, as the WorldCom accounting scandal broke, I managed to open my bloodshot eyes and read the headline of The New York Times and the story at The Wall Street Journal about WorldCom. The Times' front page, above-the-fold headline blared, "WorldCom Says It Hid Expenses, Inflating Cash Flow $3.8 Billion." Wrong! WorldCom did call $3.8 billion in expenses a capital expenditure, which did impact reported profits, but it had zero, I repeat zero, impact on cash flow, not a $3.8 billion impact on cash flow as the headline in The Times reported. The Journal's lead paragraph chimed in, "WorldCom's audit committee uncovered what could be one of the largest accounting frauds in history, with the discovery of $3.8 billion in expenses improperly booked as capital expenditures, a gimmick that boosted cash flow and profit over the past five years." Wrong! Again, it did boost profit but not cash flow.

To compound the error, deep into the story, The Journal went at it again, reporting that, "While it's not clear exactly what costs WorldCom capitalized, the process helped boost cash flow because it treated the costs as an asset that can be written down over time . . . ." If there was ever evidence that The Journal reporters didn't understand what they were writing about, it is this paragraph. Again, calling an expense a capital expenditure does not impact cash flow.

I wondered if perhaps the WorldCom press release improperly said there was an impact on cash flow. So on the Internet, I went to the release put out by WorldCom. It said, "As a result of an internal audit of the company's capital expenditure accounting, it was determined that certain transfers from line cost expenses to capital accounts during this period were not made in accordance with generally accepted accounting principles (GAAP)." Nothing about cash flow. The release then even stated that "The expected restatement of operating results for 2001 and 2002 is not expected to have an impact on the Company's cash position . . . ." It wouldn't have an impact on its cash position because the restatement was not a restatement of cash flow.

The New York Times and The Wall Street Journal both had front page stories with a major error. The New York Times, which prides itself on its business reporting, and The Wall Street Journal, which is supposedly America's business paper, were clearly out of their element on a simple accounting concept.

By Thursday's Journal, WorldCom was of course on the front page again, and there was even a box explaining what occurred in the WorldCom accounting scandal, but there was no mention of cash flow at all. Somebody finally explained to The Wall Street Journal what cash flow was all about. And it had nothing to do with this scandal.

I should add that the financial news network CNBC was not much better in their reporting. I can only take this network for about ten minutes a day before going dizzy. But when I did turn on CNBC that morning, David Faber was definitely floundering around in the world of cash flow, earnings, EBITDA and the like. It then went back to the anchor Mark "I own Enron in my retirement account" Haines. He mumbled something about cash flow and I turned the television off.

This should be the classic example in Business Journalism 101 as to how you should know what you are reporting about before you start reporting.

But it is not only the reporters at The Journal who have mud all over their face in their reporting or writing. Susan Lee is a member of The Journal's editorial board, and also writes a Journal column titled "The Dismal Science."

Now I suppose she thinks her column title is a cute and flip reference to economics being a dismal, boring science. What the title really indicates, however, is that Lee doesn't do her homework and that she hasn't even researched the origins of the title she has chosen for her own column!

The phrase "the dismal science" was coined by the racist historian Thomas Carlyle in a speech titled "The Nigger Question."  In the speech, Carlyle attacks economics as a dismal science because of an economic argument being made at the time that stated that blacks should be free because they would be more productive as free men. Carlyle said any science that could justify the freeing of "niggers" was a dismal science. That's the origin of the phrase Lee chose for her column. Great choice, Susan.

Now Susan, you and the rest of the editors at The Wall Street Journal are quite the warmongering group. You cheer US troops in Afghanistan and you are big supporters of an attack on Iraq. But before you start spewing out anymore geopolitical opinions, I really think you should go back to school and sign up for some basic accounting courses and some basic economic history courses. Maybe then you won't make embarrassing front page errors on basic accounting concepts, and you won't name your columns after phrases inspired by racists who attack economics because it offers a justification for freeing "niggers."

Once you get your basic accounting down for your business paper, and once you get a bit of economics history down, then maybe we can start talking a bit about geopolitics. But right now, you are in way over your heads on basic business and economic topics. And I haven't even touched on the topic of how you decided to send a Jewish reporter, Daniel Pearl, to interview Muslims about Al Queda connections, when the United States is bombing the hell out of neighboring Afghanistan. Are you really surprised that he was killed?

It really looks like you don't have any clue at all.

Post Script: I emailed this column to Rob M. Saturday afternoon. It is now Sunday morning, and I just finished watching "This Week with Sam Donaldson and Cokie Roberts."

They had on as a guest Congressman Billy Tauzin, the Chairman of the House Committee on Energy and Commerce. His committee is holding hearings on the WorldCom accounting scandal.

Donaldson questioned him about the investigation into the scandal, and Tauzin kept referring to WorldCom's transfer of expenses to "capital losses." He referred to capital losses a number of times, which means Tauzin doesn't have a clue either.

The WorldCom transfer was from expenses to "capital expenditures."  There is a big difference. The purchase of a truck is a capital expenditure.  A capital loss would occur if, for example, the truck somehow became useless for some reason. Trust me on this, WorldCom wasn't cooking its books to create "capital losses."

Now this is the chairman of the committee investigating the scandal, going on national television and basically dropping his pants, showing that he doesn't have a clue as to what he was talking about. Just what kind of law is this guy going to write that some Harry Houdini of finance isn't going to be able to get around in five minutes or less?

This all brings to mind the old Vietnam War protest song "Sunshine," written by Jonathan Edwards. Part of the lyrics go:

"Some man's gone he's tried to run my life

He don't know what he's asking

He tells me I better get in line

Can't hear what he's saying

But when I grow up I'm gonna make him mine

If these are dues, I ain't paying...

He can't even run his life

Be damned if he'll run mine"

Billy Tauzin, The Wall Street Journal and all of government and its apologists are pretty good at telling us what to do and what wars to fight. Well it's time they get their own houses in order on subjects they pretend to be experts in, before they start calling for wars in far off lands.

You guys don't have a clue about your supposed areas of expertise. I'll be damned if you are going to try and run my area of expertise, which happens to be my life.