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Merrill Tries To Muzzle a Blog

Forty-five billion dollars in TARP money could help Bank of America fund an awful lot of mortgages, payroll loans, and credit facilities. But for BofA's Merrill Lynch division, it seems what was at the top of the shopping list was erasing the views of the comany's bearish former chief economist, David Rosenberg, from Zero Hedge, an insider financial blog whose writers believe the worst of the meltdown is yet to come.

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Yesterday Zero Hedge's anonymous lead blogger, who goes by the name Tyler Durden, received a Digital Millennium Copyright Act Takedown Notice for sixpostsinwhichhecitesMerrill Lynch reports authored by Rosenberg or his staff. The reports are indeed proprietary—but for journalists and bloggers, their widespread distribution has long been a helpful way to decode movements in the markets. "It's their prerogative to impugn that there has been infringment," Durden told me. "But there are intangibles. Rosenberg is leaving the company and is soon to be replaced by someone who has a slightly more upbeat feel."

As a journalist, I've never had any trouble getting the contents of a report for a story I was working on. Indeed, press officials at banks have often seemed pleased or at least placated by the attribution that comes with citing their reports in a story. That said, James Ledbetter, The Big Money's editor, was turned down last October when he asked for this Web site to be added to a weekly distribution list of the Rosenberg report. "Our goal is to keep it proprietary for our clients," he was told by Merrill Lynch media relations. The reports can sometimes be tough for media to subscribe to (as opposed to making requests on a one-off basis).

Rosenberg's reports are different than those of the typical investment bank economist. The bearish, even cynical reports issued from his desk have been serving as a rallying cry for financial bloggers who don't believe that the economy is recovering as fast as financial cable networks, the mainstream media, the Obama administration, and, indeed, the investment banks themselves seem to suggest. "I would imagine that they would not be too happy with this kind of stuff floating around, especially the fact that he got more bearish towards the end of his tenure," said Durden.

Rosenberg's reports are known for gems like this one: "We don't really share the view that the recovery, if and when it comes, will be sustained. We understand the historical record that even in the face of monumental fiscal and monetary easing, it takes a good four years for the economy to work through the aftershocks of a collapse in credit and asset values. While most economists are now waving the pom-poms, we find very few marketmakers who share their enthusiasm."

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And this one: "There is no doubt that the economy is no longer in free-fall, but it is hardly stabilizing, even if the data have improved from deeply negative trends at the turn of the year. There are pundits claiming that because initial jobless claims have managed to come off their recent highs, the end of the recession is in sight. That is a fairy tale, in our opinion."

An early doomsayer...who's still gloomy

Rosenberg was Merrill's chief economist, which is not a position easily attained or from which such proclamations are taken lightly. Indeed, Rosenberg appears to have been the first of the major investment bank economists to call the coming recession, as this Bloomberg story recounts. Durden says that Rosenberg was a hit with his readers because his reports have, "phenomenal fundamental analysis verified by facts, leading to conclusions that are objective."

Rosenberg announced he was leaving Merrill after the merger with Bank of America to return to his native Toronto. Perhaps he left because he believes we're in the ninth year of a 18-year down-cycle. Or perhaps he didn't feel his point of view fit into the bank's.

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DMCA takedown requests are commonplace for Web sites like YouTube that feature videos or MP3s, but relatively rare for documents or, in this case, excerpts of documents. Considering that the U.S. government is a huge stakeholder in Bank of America's business, including its research products, it's a little galling to see the DMCA law used to remove analysis of the country's economic condition from the public eye.

Durden believes that as Zero Hedge's readership has grown to 100,000 hits per day, Merrill Lynch felt it could not longer ignore his impact on that readership. He is taking the offending posts down this evening—but hasn't yet ruled out consulting a lawyer on his options.