The Media's Role In The Financial Crisis
Our government's current operating principle seems to be bailing out people who were culpable in the financial meltdown. If so, journalists are surely entitled to billions of dollars.
Why? Journalists were grossly deficient when it came to covering the reckless behavior, sleaze and willful ignorance of fundamental economics, much of which was reasonably obvious to anyone who was paying attention, that inflated the housing and credit bubbles of the past decade. Their frequent cheerleading for bad practices -- and near-total failure to warn us, repeatedly and relentlessly, of what was building -- made a bad situation worse.
Journalists are notoriously thin-skinned, defensive about even legitimate criticism. But this lapse has been too blatant even for reporters to miss. Two-thirds of financial journalists in a recent survey said the news media "dropped the ball" in the period before the crisis became apparent. (Still, almost none of them assigned the press any responsibility for what has occurred.)
It's not as if this is the first time a big issue has had too little discussion while there was still time to fix the problem. Journalism has repeatedly failed to warn the public about huge, visible risks. The media's complicity in the Iraq War-mongering and 1990s stock bubble were the most infamous recent examples until the financial bust came along, but the willful blindness to reality was uncannily similar.
To be fair, in these cases and in every other such foreseeable calamity, at least several journalists or news organizations stood out in retrospect for having seen what was coming. Almost alone among the Washington press corps, the Knight Ridder (now McClatchy) newspaper group's Washington Bureau asked the right questions as the Bush Administration herded the nation toward war. A few scattered stories in the media, including Fortune magazine and The New York Times business section, wondered about the stock and housing price bubbles, not to mention the implications of new financial policies and instruments that made the credit expansion so dangerous. And some commentators (including bloggers who did serious, if widely ignored, reporting) were firmly on the case.
But to say that the press was all over the housing/credit mess before it blew up, as the American Journalism Review argued recently, defies reality. The good journalism was overwhelmed by the happy-face, herd coverage, usually laced with quotes from people who stood to benefit from the bubble's continued inflation. We saw story after story about new cadres of home-loan borrowers, about people who "flipped" homes for big short-term profits, and about the way home values kept rising in unprecedented ways. We saw few cautionary tales about what happens when bubbles burst, how families can and economies can face ruin. It's probably no coincidence that most newspapers have weekly real estate pages or sections, the main purpose of which is to collect advertising for property sales.
And even when the reporting was solid, which was rare enough, news organizations didn't follow up in appropriate ways. If we can foresee a catastrophe, it's not enough to mention it once or twice and then move on.
That common practice suggests an opportunity. When we can predict an inevitable calamity if we continue along the current path, we owe it to the public to do everything we can to encourage a change in that destructive behavior.
In practice, this means activism. It means relentless campaigning to point out what's going wrong, and demanding corrective action from those who can do something about it.
So in Florida, Arizona and California, among other epicenters of the housing bubble, newspapers might have told their readers -- including governmental officials -- the difficult truth. They could have explained, again and again, that the housing bubble would inevitably lead, at least locally, to personal financial disaster for many in their regions, not to mention fiscal woes for local and state governments. How many should have done this, given the media's at least partial reliance on advertising from those who profited from the bubbles? Any that cared to do their jobs.
Some plain-as-day woes don't present any financial conflicts. For example, the threat to New Orleans from hurricane-created flooding was clear long before Katrina, and the New Orleans Times-Picayune did run a series of articles warning of what might happen years before the hurricane struck. What it didn't do was follow up in the relentless kind of way that might have spurred local, state and federal action to prevent or mitigate the inevitable disaster.
Californians are absurdly unprepared for the epic earthquake that everyone knows is coming. News organizations have warned about it, but haven't drilled home the message in sufficiently graphic ways of the havoc it will cause, and haven't campaigned enough for pre-quake mitigation that would save lives and treasure.
Californians are especially practiced at pretending not to see what's visible in front of them. The state's fiscal crisis is far worse than most, in large part because the governor and state legislature -- with media winks and nods -- generated a torrent of new red ink, via borrowing, to cover new spending and earlier debts. The piper is now demanding his payment, and his price threatens to be ruinous. (Will this be our national fate in a few years?)
Journalists have an opportunity, right now, to ask questions we need answered -- and they should be asking again and again, and again. Taxpayers (or rather our children and grandchildren, who'll pay for this) are forking over $700 billion to bail out financial institutions, the first installment of trillions we're collectively spending to try to save American capitalism itself. Yet we aren't allowed to know how the money is being spent. This isn't merely opaque; it's the blackest of boxes, and occasional queries from journalists aren't helping to make it transparent. Congress is the most culpable party in this case; as usual, lawmakers have dodged their responsibility, but an insistent journalistic campaign wouldn't hurt and might actually help dislodge some facts.
Once upon a time, news people went on campaigns when they saw the need. Sometimes this led to yellow journalism, as when newspaper owners used their publications to stir up the populace in dangerous ways. At other times, however, old-fashioned press campaigns led to change for the better; back when editorial pages had more influence in communities, a few courageous newspaper editors in the South campaigned for school integration, and made an enormous difference.
Journalistic activism -- precisely what we need despite most journalists' disdain for the idea -- won't save newspapers that are suffering from a perfect storm of dwindling leadership and advertising losses. But as Online Journalism Review's Robert Niles recently wrote, journalists should "accept the responsibility to demand action" based on what they learn when they do their jobs right.
The media's collective irresponsibility has ill-served its audience. If journalists want to keep the audience they have, never mind build credibility for the future, they need to become the right kind of activists. More than ever, we need what they do, when they do it well.
... but don't forget that Paul Krugman has been warning us (is still warning us) for a long time.
January 23, 2009 10:15 AM | Reply | Permalink
. . . if, in particular, the housing bubble bursts before the trade deficit shrinks - we're going to have an economic slowdown, and possibly a recession. Paul Krugman August 29, 2005
Not exactly a jeremiad, eh wot?
January 23, 2009 11:07 AM | Reply | Permalink
Try moving ahead a bit - the warnings get more severe. As I've asked you before what is your prescriptions - aside from witty remarks?
January 23, 2009 11:24 AM | Reply | Permalink
prescription
January 23, 2009 11:25 AM | Reply | Permalink
Now, if Krugman had warned of the unsustainable level of private debt to GDP ratio -- the real cause of the current crisis -- and offered his "prescription" for curing the debt disease, then, kudos might be deservedly his.
Did he?
January 23, 2009 11:51 AM | Reply | Permalink
Yes. He's been warning about debt based on home equity and credit cards as an obvious ticking time bomb for quite a while. Check out his back stuff. Meanwhile, Ellen, I ask again what is your remedy - aside from ridiculing a Nobel Prize winner.
January 23, 2009 8:43 PM | Reply | Permalink
Ellen -- 2 links
tlees2 -- 0 links
Winner? Ellen by 2-0!
January 23, 2009 9:53 PM | Reply | Permalink
http://www.nytimes.com/2008/07/28/opinion/28krugman.html?_r=1&scp=30&sq=Paul%20Krugman&st=cse
There's one. I suppose I need to do your research for you since your now keeping score - very mature way to approach the nation's financial crisis I might add. I await your next witty retort. I've given up hope that you'll advance your remedy since you obviously have none. Methinks your credibility is shot. See EH's comment above. Meanwhile the adults need to get busy fixing the problem.
January 23, 2009 10:38 PM | Reply | Permalink
you're
January 23, 2009 10:39 PM | Reply | Permalink
The link you've made proves my point.
There, Krugman is complaining about a lack of regulation of financial institutions that had no skin in the game.
No recognition of or description of the impending crisis; nothing whatever about its cause -- that is, massive debt, speculative CDS writing, and contra Krugman, banks having had massive amounts of "skin in the game." Why do you think Citigroup is on its back, today?
Less than 8 weeks before Lehman failed and AIG had to be saved with huge amounts of bailout funds, Krugman wastes our time chatting about regulation reform which won't take place for another year.
But then, what else should he have done -- since he knew little about what would bring down (or threaten to bring down) the financial system.
N.B. Krugman wasn't alone; the crisis appears to have surprised all the greater lights.
January 24, 2009 6:02 AM | Reply | Permalink
There was not just one way the thing could collapse. Nor was there just one time period when it was destined to happen. Anyone who predicted that it would collapse just when it did just the way it did (Rubini came close) was to some large degree "lucky." People who predicted it would never happen were both stupid and - if players in the game in any capacity - culpable. In a sane society, there would be criminal penalties for that sort of thing. But it wasn't something that was destined to happen in any particular month or even year. And it was something some very brilliant and motivated people were doing their best to obscure the possibility of - people far more brilliant and motivated than your typical former communications major now writing for a daily paper.
The press is, frankly, not smart enough to be counted on for any of this stuff. Have you met your local reporters? I have. To evaluate complex threats takes specialist education and IQs in the 150+ range. To write for a local paper takes a communications degree, and the typical communications major is lower in IQ than any other department aside from education. It will take a generational change in who does journalism to fix this. We can't do it with the dummies currently on the job.
However, Krugman, as a high-IQ specialist, warned us pretty well. That the beat writers didn't follow up is a sign of the Times being owned by its real estate advertisers, mostly. Even now they run articles advising that rich kids borrow from their families to keep Manhattan apartment prices from deflating further.
January 24, 2009 11:07 AM | Reply | Permalink
I respect Krugman as one of the only public intellectuals who took on the Bush-lovers and the WSJ editor-types in the winter of our discontent. His was the sane voice that spoke for the rest of us.
But when it came to warning about what threatened the financial system, he was as clueless as the rest of his macroeconomic colleagues.
January 24, 2009 11:42 AM | Reply | Permalink
I have to agree with Ellen.
I respect PK for taking on the Bush Admin on many fronts. And I seem to recall him warning of an impending problem even as "Bubbles" Greenspan frothily dismissed any concerns about the real estate sector.
However, Mr. Krugman has been slow to recognize the financialization of the US economy and the substitution of imports for domestic production as the real root of our current crisis.
January 24, 2009 12:13 PM | Reply | Permalink
You take that person seriously? "Her" comments are straight from Wikipedia, 20/20 hindsight, and who knows what else. Obviously there's no conversation to be had, just potshots from the peanut gallery.
January 23, 2009 10:04 PM | Reply | Permalink
Ellen,
you sound like the Bush/Cheney gang when they said they couldn't do anything about preventing 9/11 as the warnings they had didn't say who the perps were, what the date of the attack was, what the target was, and what weapons they were going to use.
January 24, 2009 1:14 PM | Reply | Permalink
Screw Krugman, listen to Peter Schiff and Marc Faber. They were predicting this in 2000. Marc is starting to get scary with his predictions (read unrealistically fatalistic) but he was dead on with gold, silver, the housing mess, and the coming dollar devaluation - just as Peter was.
January 27, 2009 2:15 AM | Reply | Permalink
Whether it be financial news or the disastrous Bush administration's chronic malfeasance, McClatchey does a near-sterling job of asking the right questions and publishing the hard facts. And this in an era when much of the media has abrogated its responsibility simply to keep the public informed. All we need, to make wise decisions in a democracy, is information; we're smart enough to weigh it and act accordingly. What we get from today's news industry is soft-pedaled ventriloquism of the connected and powerful.
January 23, 2009 11:00 AM | Reply | Permalink
The MSM drove me away with its pat-on-the-head-it'll-be-okay propaganda. I didn't want to be dumbed down. I wanted to be informed even if that information was less than pleasant. The few pieces of solid in-depth journalism that I did find were always buried amidst fluff, dismissed with no follow-up, then gone like they had never existed.
There was no guts.
There was no glory.
This article tells me that maybe the train is getting back on the rails.
Recognizing the problem is the first step to rectification.
January 23, 2009 11:10 AM | Reply | Permalink
'McClatchey does a near-sterling job of asking the right questions and publishing the hard facts.'
I agree. They are my main source of news these days.
January 23, 2009 11:16 AM | Reply | Permalink
Perhaps out of abundance of fairness, I might note that even financial reporters (or those paid handsomely to put out various newsletters) are not truly experts and need to rely on the same people who had a tremendous profit motive for giving the truth a rosy gloss.
The thing that really gets me is that even now, after years of snowjob reporting, these same people do not seem upset enough at their horrendous performances to go back and juxtapose their former sources' predictions and analyses with current reality.
January 23, 2009 12:08 PM | Reply | Permalink
Interesting, that.
=D
I work with a few folks like that. But unlike the media, everyone knows they're full of, er, manure.
January 23, 2009 10:05 PM | Reply | Permalink
I don't think most people in the financial press "herd," as you call them, really have the background or education to see the havoc that something like this housing bubble could wreak on the larger economy. The people I saw warning of that larger impact were independent money managers, writing on the web, who seem to have made a commitment to attaining clarity and communicating what they think the real story is, despite the smoke and mirrors that other players in the financial industry who positioned themselves to benefit from the bubble were happy to promulgate.
Mad Money's Jim Cramer once remarked that "you have to use these guys, the Joe Pisanis of the world" ie., the financial journalists, when you are a money manager, in order to maximize your position. I honestly think the general "herd" of Joe Pisanis didn't really understand it to report on it, even had they had the go ahead to do so. They repeat what industry insiders tell them.
Take GE which runs NBC/CNBC/MSNBC etc, and was also positioning itself in its GE Capital unit to take advantage of the bubble. If there's no incentive for people making money within the GE Capital division to feel the burden of preserving the larger institution of GE itself, there's no reason for those people to do anything other than promulgate the information that helps them line their own pockets-- never mind allow the news unit in to try to figure out what they're doing.
In that case, I'm sure the news unit hoped GE Capital knew what it was doing, but questioning that is not what they're paid to do, and I doubt that they can. They're getting their education now, along with the rest of us.
I'd even guess that people I am *certain* must have known that this bubble was not going to end happily, people who have worked in government and other financial clean up operations (yes, I mean Obama advisor former Treasury Secretary Robert Rubin), probably under-estimated the mess they knew was coming. My guess is Rubin figured on a nice little 1980s S&L crisis for his $100 million from Citibank.
Nice inside job if you can get it.
January 23, 2009 12:15 PM | Reply | Permalink
All of which is to say that we have to prosecute this to the fullest extent possible, directly, and not be allayed into "oh, oh, the press didn't tell us!"
I saw Charlie Rose interviewing Larry Summers and Robert Rubin this fall as the crap was really hitting and back before the election. When Rose asked him how could he work at Citibank and not see this coming, Rubin turned it right around on him, saying "with all due respect, Charlie, you in the press didn't see it coming."
Well okay, but Charlie Rose was not responsible for running Citibank and keeping it off the public dole.
January 23, 2009 1:01 PM | Reply | Permalink
with all due respect, Charlie,
Now that (as we say in tha' hood) is a chutzpah-flashin' motherfucker!
January 24, 2009 12:30 PM | Reply | Permalink
$11 billion from Obama’s stimulus package has been proposed for the state of California; California is $42 billion in the red and growing. If the Federal package passes without too much change, California would be able to cut its fiscal crisis by about 1/4th; although, still needing to make proposed cuts in services and raising state revenue through increased in taxes. The tax increase is “promised” to be temporary….a “promise” state lawmakers said when they raised state sales taxes to 8.25% so many years ago.
January 23, 2009 12:48 PM | Reply | Permalink
What the media have failed to explain about California is that we have, at the instance of right winger anti-tax campaigners, managed to break the mechanisms of government. The state is large, complex and needs government -- but we have made it structurally impossible for even well-intentioned legislators and governors to practice fiscal responsibility because we have, undemocratically, given a minority a veto over budgets.
How often does the media explain those facts of life, instead of railing at the incompetents in Sacramento?
January 23, 2009 1:16 PM | Reply | Permalink
To this day the news media refuse to acknowledge that it is the minority, the people most people didn't vote in favor of, who are holding up any solution to California's problem, unless it is a drastic cut in services to the most needy in the state. All news stories blame the legislature for not passing a balanced budget, never once mentioning that the majority of the legislature have proposed such budgets over and over again, but with the 2/3 vote required for all budgets, the minority party always stops approval of those budgets.
Then we have a governor who hasn't a clue about what needs to be done, preferring to play to the masses as if he really is the Terminator. This state is now permanently ungovernable.
January 23, 2009 9:44 PM | Reply | Permalink
This is an incredibly important point. Much of the media - even what considers itself the liberal or progressive media - has accepted reactionary anti-tax positions. Here in the most liberal-Democratic corner of Vermont, the local paper - the "Reformer" - runs a staunchly-leftist editorial page. Yet its beat reporters end every single story about local politics by giving the last word to those who are against public expenditure - whether on education, fire protection, or any other public function other than busting tourists for speeding on their way to our ski resorts.
Most of the anti-spending, anti-tax people the Reformer gives the last word to even consider themselves Democrats - as no doubt the reporters do. Can we send these people to re-education camps soon? Please? Our survival as a civilization may depend on it.
January 24, 2009 11:23 AM | Reply | Permalink
The media has not been very good at describing the true nature of the so-called innovative financial products that are at the heart of the financial meltdown. Usually the media glosses over the point with an acronymn such as "CDO", a generic term such as "derivative" or a meaningless phrase such as "innovative financial product".
Here is the one exception I have found. It is an NYT piece Deutsche Bank's Gemstone VII, "After Sure-Bet Investment Fails, a Bank Contends It Was Duped". http://www.nytimes.com/2009/01/20/business/20gem.html?adxnnl=1&dlbk=&adxnnlx=1232712013-wvU0WyQdKPSsTKOT3dAj1w.
January 23, 2009 1:25 PM | Reply | Permalink
The media would do well to hire on people who can read the economy and explain it well. Ian Welsh is a blogger at Firedoglake, and he is excellent at this task. But instead, we will have Rupert Murdoch hiring Fleet Street reporters to flood the Wall Street Journal.
Mmmmm, maybe that isn't so bad. I never liked the WSJ much anyway.
January 23, 2009 8:33 PM | Reply | Permalink
nuriel rabbini has also been warning us
January 23, 2009 9:03 PM | Reply | Permalink
Mr. Larry Kudlow, of CNBC, repeatedly warned the American people that if the federal government did not establish a flat tax and eliminate the death tax, we would find ourselves in the situation we find ourselves today.
January 23, 2009 9:16 PM | Reply | Permalink
Yes, and I have repeatedly warned people that staring at the moon would result in failure of most of the big Wall Street banks. Both Larry and I have not received the plaudits we earned.
January 23, 2009 9:46 PM | Reply | Permalink
"Our government's current operating principle"
What does that mean?
January 23, 2009 9:57 PM | Reply | Permalink
Here in Boston, they're on it now. Hardly a news report goes by without a mortgage story, and the stations have all developed their own distinctive financial crisis graphics and theme music so we can know when to pay close attention.
January 24, 2009 12:08 AM | Reply | Permalink
Let me play the devil's advocate once again.
Much of economics depends on people's perception of what is going on and what is going to happen in the near future. Such perceptions affect economic behavior.
A more pro active financial press therefore would be a press that might have undue influence on the course the economy takes; especially when their predictions turn negative.
So I would cut the financial press some slack, given the above sketched situation they find themselves in.
January 24, 2009 1:38 AM | Reply | Permalink
Follow the media's coverage yourself:
http://www.amazon.com/Panic-Story-Modern-Financial-Insanity/dp/0393065146
January 24, 2009 2:55 AM | Reply | Permalink
Peter Schiff tried to warn the media, but they laughed at him.
http://www.youtube.com/watch?v=2I0QN-FYkpw
January 24, 2009 6:48 AM | Reply | Permalink
The media's failure to report on the financial crisis includes its no-think acceptance of the travesty known as the post-industrial service economy.
Conventional wisdom says the argument over the need for a healthy domestic manufacturing sector was settled with the NAFTA debate between Ross Perot and who was it, oh that's right, Al Gore.
Ever since then, all (supposedly) sentient journos and policy makers have "known" that the US economy is properly based on services - meaning financial services, marketing, design, etc.
As evidence they pointed to the booming economy of the 90s, much of which we now know as the tech bubble, and the housing bubble of the 00s, all based on borrowed money.
Anyone who deviated from this party line was denounced as a Luddite protectionist Buchananite or worse.
Now we are finally beginning to have a discussion of the pernicious influence of financialization (thank you Kevin Phillips and Eamonn Fingleton) and the need to have a real economy that makes things other than CDOs and ever more exotic debt instruments.
I'm waiting for a probing journalist to ask Mr Gore (whom I do actually credit with having more intellectual honesty than most in his former line of work), having the benefit of hindsight, how he feels about the substitution of domestic production with imports - which is what Nafta and similar policies are all about.
January 24, 2009 11:55 AM | Reply | Permalink
thank you Kevin Phillips
The Friend To The Poor is correct.
Phillips might as well make his hotel reservations for Stockholm now, and beat the end of year rush.
How much better can you do than call the hollowed out core economy and be on your book tour when the shit actually hits the fan?!
January 24, 2009 12:39 PM | Reply | Permalink
Self-interest compels journos (and academics) to accept whatever the conventional wisdom du jour is. The question for us who are not so constrained is, always, whether that conventional wisdom is correct. So --
Given the fact of international wage arbitrage, can America be anything other than a "service economy" -- which includes investing her savings in emerging and developing economies?
What, if any, are the long-term benefits of establishing an American (quasi)autarchy? What its long-term costs?
January 24, 2009 1:15 PM | Reply | Permalink
What a naive concept of what the press is for. Sure, it would be nice if the press were our mommy, looking out for our best interests and reminding us to wear our galoshes because it might rain today. But please name a time when the press has ever served this purpose?
Everything we needed to know was there, whether it was the housing bubble (only fools think that sort of thing can go on forever), Katrina (EVERYONE knew) or Bernie Madoff (yeah, right, twenty-percent returns forever!). It's always there, but we don't see it until it's too late, often. Because we don't want to. And we don't want to read about it in the paper, either. The paperh, as the article states, "...the main purpose of which is to collect advertising..."
Grow up, Mr. Gillmore, and stop complaining that the reality doesn't match your Frank Capra illusions.
January 24, 2009 12:59 PM | Reply | Permalink
But Dan, what about "objectivity"? What about the advertisers? What about the party invitations the editors and publishers won't get any more? And that's even before "what about the shareholders?"
You've been doing this for a long time; any chance that the current economic turmoil might lead to enough realignment of ownership to be worthwhile? Right now, it looks as if the only people investing in journalistic outlets are the ones interested in squeezing the last few pips out of the lemon.
January 24, 2009 8:24 PM | Reply | Permalink
Um, can you say,
Business as usual?
January 25, 2009 12:21 PM | Reply | Permalink
Well there is an interesting tale here. In the same way as it did years before the dotcom boom, The Economist droned on about house prices for years, and how unsustainable it all was. The trouble is that nobody, however smart, can predict exactly when the bubble is going to burst. So you have to keep trying to keep a story, which isn't a story, alive by hitting your head against a brick wall until the bubble does burst.
Take this from The Economist three and a half years ago in mid 2005:
"This boom is unprecedented in terms of both the number of countries involved and the record size of house-price gains. Measured by the increase in asset values over the past five years, the global housing boom is the biggest financial bubble in history (see article). The bigger the boom, the bigger the eventual bust.
Throughout history, financial bubbles—whether in houses, equities or tulip bulbs—have continued to inflate for longer than rational folk believed possible. In many countries around the globe, house prices are already at record levels in relation to rents and incomes. But, as demonstrated by dotcom shares at the end of the 1990s, some prices could yet rise even higher. It is impossible to predict when prices will turn. Yet turn they will."
Really, it couldn't be clearer. Some of the world's top brains were reading all this stuff. And anyone who bothered to think for a microsecond knew it was an asset price bubble. The trouble is that even though many people knew this, they actually just wanted a piece of the action like some crazy global ponzi scheme where the whole world is hoping that they'll be a few rungs up the ladder before the whole thing crashes to halt.
The trouble for the public is that it is easy to ignore even very clear warnings of danger. Journalists can't keep writing the same thing every week saying the world is going to end when it isn't and when other stuff is actually happening there are real wars, famine, elections to cover. "Hey boss, house prices are up by a record 12% this year, how about another story on how the housing market is doomed?"
Yes, much of the media did fail with its uncritical lapping up of this stuff, from the house developing programmes to the idiots who write the financial pages of many of the newspapers. I remember at the time being hugely frustrated at this gullible whipping up of the bubble.
But they did the same thing during the dotcom boom, and every other damned asset price bubble in history. When the shoeshine boy is giving stock price tips, everybody knows it is time to get out.
Rationally, actually many of us actually knew this. Even experiencd investors knew the dotcom bubble was a bubble, but they still invested right up to the end. Why? Because everyone else did, and they couldn't risk doing worse. Likewise in housing when all your friends and neighbours are making megabucks on their houses, appearing to get richer, and trading up, whatever, the urge to think critically and not want some of the same evaporates.
Call it greed if you like. I'd call it our inner ape doing what it always has.. and trying to do what everyone else is doing to stay safe. Other people call it the madness of crowds. Whatever, the basic point is that this is a fault of the way humans are. Go back 20,000 years and there will be axe-head asset bubbles or bone jewellery.
Yes, the media, along with the government and banks, and financial institutions all played their part. But ultimately: 1. we ALL ought to know better and 2. the need to recognise the inherent bias in the media in that it will always devote more column inches to what is happening rather than what might happen.
Don't agree? At any given moment there are endless stories we could choose to write about about threats that are low risk but high impact, or high risk and a long way away but all things we could do more now to prevent, these include the global outbreak of h1n1, resistance to some key antibiotics, demographic healthcare crisis,
dirty bomb in major city, loss of coral reefs, major earth asteroid strike, and the NEXT asset price bubble.
Hindsight is a marvellous thing.
If we don't accept that the media is inherently biased this way because of hte way humans are, and just sling out the blame--then we will miss our chance to have a long hard think about what actions we as citizens and society to deflate the next asset price bubble.
Maybe someone like Google finance might usefully have a page devoted to bubble economics that gives a running breakdown using indicators of how inflated various sectors are over time. This, at least, will give the public some measure of the riskiness of their actions.
January 25, 2009 1:20 PM | Reply | Permalink
Hindsight is 20-20. Few understood Warren Buffet in 2003. But here he is:
via blog Jon Frederick smiile at psynet.net
Mon, 3 Mar 2003 23:49:59 -0600 (CST)
http://archives.lists.indymedia.org/imc-houston/2003-March/005802.html
And at the BBC Tuesday, 4 March, 2003, 13:32 GMT:
http://news.bbc.co.uk/2/hi/business/2817995.stm
And at the Buffet site 2002 annual report copywrited 2003 (derivatives start on page 13):
http://www.berkshirehathaway.com/2002ar/2002ar.pdf
January 25, 2009 7:45 PM | Reply | Permalink
It seems capitalism as we know it is dead.
The U.S. monetary system has failed and there is not enough money in the world to bail it out.
I haven't heard this in the mainstream media.
I read Charles Morris', “The Trillion Dollar Meltdown” and Ellen Brown's “The Web of Debt” which go a long way to explain why we're in this mess right now. The only way out for the U.S. is to nationalize the banks and print our own currency. The Federal Reserve has got to go. Funny thing is, Paul Krugman mentioned this in a column last week and so did The Nation in a column titled, “The Crisis is Global,” 2/2/09.
Ah...the winds of change.
January 26, 2009 1:55 AM | Reply | Permalink
We do not have a media in the United States and haven't had one in a very long while.
All one needs to do is a little research into day, the Middle East, which is not the least bit complicated or difficult to understand, and it becomes pretty clear we have propaganda, and that's all we've had for about 20 years.
Has the media brought up Operation Ajax and how that relates to Al Qaeda? It was Ajax that created the Iranian revolution, that became the Islamic revolution. Did the media explain why the US partnered with Saddam Hussein in the 1980s, to try to redo Operation Ajax? How often does the media show you, say, where Jewish settlements are in the West Bank? Has the media EVER mentioned the Irgun, and how it became the Likud Party, and what the Irgun did? How often does the media show you just plain old statistics in childhood fatality in the Israeli conflict?
We have a government that either controls our media entirely, or a media that controls our government entirely. In either case, they are one in the same and that's the way it's been for a long, long time. All of my adult life, and I'm pushing 40.
The media isn't negligent, it's responsible.
Has the media EVER mentioned how your congressman has voted on ANYTHING? How many times has your media given you a link to a bill that just got signed into law so you can read it? Can you even name 1 bill that either Obama or McCain voted on even? Don't you think you ought to be able to do that, before you VOTE?
Gee whiz, how did this happen in a free country?
Lets just call it what it is, and it's not entertainment, because it's not entertaining.
It's propaganda.
Drag your lazy butt down to a GOOD library, and pick up a newspaper from the turn of the LAST century. That's what a newspaper looks like in a free country despite the fact that we had racial segregation, lots of corruption, and we were still exterminating native Americans or Indians or whatever you wish to call them. We had a working press back then that was pretty independent of the government.
We don't now.
You read German by any chance? Go read a newspaper from 1935 from there.
None of you will recognize just how bad it is, until it falls apart. You got 5 years left before you recognize it one way or another.
January 27, 2009 2:08 AM | Reply | Permalink
Dan Gilmor claims the media was complicate in creating the financial meltdown by refusing to question reckless bubble spending and ignoring the obvious -- that the bill would one day come due.
This is clearly a self-serving argument. All I have been hearing for the last few years is the growing popularity and authority of bloggers, of the new media, this is where the resources and the readers are. Then, why aren’t these new media journalists held responsible? Oh, yeah, that is right, because they don’t actually do the work just the critiqe. They are good at dissecting a news story, they just would never bother with the actual investigating, the crunching of the numbers and the reporting that goes into uncovering a story.
We, as a nation, were blind-sighted by this financial meltdown because of the shrinking number of “journalists” biz and otherwise. Just about every news organization in this country has cut its newsrooms, in some cases by 50 percent.
Another point is that many newspapers did sound the alarm. I know I was doing it two years ago in Florida, about the real estate market, about subprime loans and about how the housing bubble was going to percolate out into the national economy. And nearly every Realtor in the state I ever talked to blamed us back then for making things worse, for scaring homeowners out of buying homes. For profiting off gloom and doom. And eventually, the repeated complaints from advertisers, and more importantly the pulling of ads likely got into the minds of editors. There was more that could have been done, but no one wanted to hear it.
When it comes to filling in the gaps in political coverage, new media reporters have quickly stepped up. It is the more theatrical beat. You don’t really ever have to figure anything out, you just work ubber egotistical folks into putting their feet in their mouths. You turn a good phrase, develop sources and you are done. But when it comes to Biz and Finance, the online folks still remain incapable of breaking news.
“When we can predict an inevitable calamity if we continue along the current path, we owe it to the public to do everything we can to encourage a change in that destructive behavior."
"In practice, this means activism. It means relentless campaigning to point out what's going wrong, and demanding corrective action from those who can do something about it."
Alright, then where you Gilmor. Where was your activism? I don't remember reading any stories from you. In fact, the only forward-looking reporting that was done on the Financial Crisis came from Wired Magazine and newspapers -- check the archives of the Washington Post and New York Times, and you will find the stories.
A lot of people, when reading about the woes of the LA Times, the New York Times or the scores of other newspapers, have responded with no sympathy. Newspapers got themselves into this mess. They are irrelevant. We don’t need them.
Well, the truth is you are living in the post-newspaper era already. And still you folks are too busy dissing newspapers to even realize it. What happens when you are forced to lay off half your people? What happens when you have less than half the number of journalists out in the fields actually trying to uncover stories? What happens? The tougher stories, the ones that take a little longer than a 350 word blog entry to read, don't get told. After all, people are use to getting their news online now, they don't have time to read all that.
Soon, there won’t be anybody else out there looking at all. It will be interesting to see what the critics and bloggers do then, start dissecting and critiquing each other I suppose. Doubt they will ever get off their asses, out of their offices and do the actual work.
January 29, 2009 3:08 PM | Reply | Permalink
Every country was on the look out on the appropriate solution to fight the global recession.It is suitable time to repair our credit. Credit worthiness is important when you are going to secure a loan. Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits. Therefore you should find out your credit score to find out if you need to repair your credit. The credit bureaus are required by law to give you one free report per year, so start there to find out if you need to repair your credit. Financial responsibility is essential, and you should avoid late payments, even if it means credit cards, or using a payday cash advance loan to bridge a temporary gap. It's better to get on the ball sooner rather than later, because credit follows you everywhere, as much as it pains to side with an utterly insipid band on TV. Some would give installment loans to silence them, but it is good to repair your credit.
May 6, 2009 12:20 AM | Reply | Permalink