Ask an average American how they feel about executives at AIG getting bonuses and I bet their answer will be short, clear and definite. After a few days of wall to wall cable news coverage of the $165 million dollar outrage, it's something that nearly everyone knows about. But if you asked the same average American to explain AIG's role in the financial crisis, I'm wagering you'll get nothing but a blank stare and a mumble or two.
That's because the major media, especially cable news, has failed dismally in explaining what actually happened to trigger the biggest economic crisis since the Great Depression. The media is letting down the American public in the same way they let us down in the months leading up to the Iraq war and the consequences could be even worse.
Jon Stewart was right to lambaste the financial news channels for blowing the story but he didn't go far enough. Cable news has been a bright shiny bauble of sound and fury explaining nothing but feeding us Dow numbers and battling viewpoints. Where are the explanations of the the complexities of mortgage backed securities, the commercial paper market, or credit default swaps?
The AIG bonus story has created another chance for cable news to get it right but they have remained admirably true to form. The bonuses are awful and there's a story there as Congress and the Obama administration struggles to deal with it but the deeper story remains unexamined. Why is AIG too big to fail? What were they insuring? What are those derivative things that have been mentioned? Oops, no time -- let's cut to the B Roll of the people protesting!
As much as both the right and left love to claim an ideological bias to the media, the real culprit is journalistic laziness and a bias towards simple, dumbed down discourse and argument. The actual causes of crisis seem fairly nonpartisan and there's plently of blame to go around.
There is one area, however, where the Republicans need to be called out and that's in the narrative they have been running since the election that the heart of the crisis is subprime loans made to poor, minority borrowers by Fannie Mae and Freddie Mac. It's an easy, one sentence soundbite that plays to a good sized chunk of the country's prejudice and it's beyond shameful in both its manipulation and inaccuracy. Worse, it's gotten traction because cable news has let it be repeated countless times in the last few months and they have utterly failed to prmeovide the real explanation for the meltdown.
But there's nothing dumb that can't be made dumber. The even shorter version of the GOP narrative was Rick Santelli's rant against 'losers'. This is ideological justification for the frenzied cries of wealth redistribution. To a citizenry treated like idiots by many journalists and told repeated lies by the political leaders of a major political party, the whole thing sounds plausible.
This is too important to let the media blame the public and their short attention spans. NPR's show This American Life did an episode back in May, 2008 called The Giant Pool Of Money that showed that the subject can be handled in a way that's clear, compelling and entertaining. NPR's Planet Money podcasts have continued to be an invaluable tool for understanding what's really happening with lucid, east to follow explanations of things like the TED spread and why the interest rate on the 3 Month Treasury Bill matters. 60 Minutes has also done excellent work.
These are exceptions, though, and so the person on the street isn't learning what they need to know in order to understand what is happening. The useful information is drowned out in a waterfall of simplistic and often partisan explanations of things that are tangential to the crisis at hand.
Ultimately, blaming the media is futile. Can we really expect Contessa Brewer, Wolf Blitzer or Steve Doocy to explain semi-complex financial terms when it's so much easier to do a segment where two people bicker? And is it a good use of time for economists like Paul Krugman or Dean Baker to explain the same thing over and over again in layman's terms?
At this point, the explanations needs to come from the Obama administration itself. Yes, it has plenty to do already but if wants continued public support for their efforts to solve the crisis they need to realize that people don't even really understand the crisis. The President can mention the derivative market in speeches but he's got to realize that he might as well be speaking Latin to the people on Main Street.
It's time for back to basics. Capitalism In Crisis 101. It's crazy that we're this far into the crisis and it needs to be explained, but that's the situation we find ourselves in.
Paging Professor Obama.