The Blind Man and the Elephant is the Media on the Financial Crisis

01/15/2009 05:12 am ET | Updated May 25, 2011

In 2008, the financial media was saddled with an enormous task: explaining the unexplainable. The subprime mortgage mess, which began life as a seemingly isolated problem in a much larger market, had morphed into a crisis of epic proportions that would take down two Wall Street firms, a handful of commercial banks, an insurance giant, maybe even an auto company or two. The business media, which had become a purveyor of mostly positive news -- yay, stocks! yay, real estate! yay, investing! -- tempered with regular, unheeded bubble warnings, was on the hook to provide a plausible answer to an almost unanswerable question:

How the hell did we get here?

Unfortunately, the media, like everyone else from Henry Paulson on down, didn't really have a clue. But various explanations, usually of the one-dimensional sort, were promptly proffered by self-assured pundits and politicos, who happily fed theories to journalists desperate for insight. The result was a barrage of stories of the-we-figured-this-all-out-and-will-now-explain-it-to-you-poor-dumdums variety. Most of these pieces pinned the disaster on a single, often simplistic cause, as if one event, thing, or person could really be fingered for perpetrating the meltdown. Consuming this left average folks as knowledgeable about the crisis as blind men trying to get a sense of an elephant.

CBS' "60 Minutes", for example, told us the culprit was credit default swaps. At the New York Times, the big bugaboo was -- is -- executive comp, specifically investment banking executive comp. Other outlets (including The Wall Street Journal's editorial page) fingered the Community Reinvestment Act as the source of our subprime woes, while CNN (and countless others) fixated on greed, particularly among Wall Streeters, which the cable network illustrated by repeatedly showing aerial shots of Dick Fuld's Greenwich mansion. The fall of Glass-Steagall, deregulating Republicans, Fannie and Freddie-lovin' Democrats, conflicted credit rating agencies, short sellers, Alan Greenspan, Robert Rubin, unscrupulous lenders, clueless borrowers -- they all took their turn as the ne plus ultra explanation of how we got into this mess.

An exception to all this blame-based journalism was "The Giant Pool of Money," a joint production of National Public Radio and Chicago Public Radio's "This American Life" that first aired in May, along with its October follow-up, "Another Frightening Show About the Economy." Both were unique for their willingness to veer from traditional, simplistic media scripts identifying villains and victims and vilifying and comforting accordingly. There were no innocents in "The Giant Pool of Money;" everyone from borrowers to brokers to lenders to investors were portrayed as victims and victimizers as they merrily bought into the unrealistic promise of risk-free money.

The program is already being lionized as one of the best attempts to explain the financial disaster of 2008. But it certainly didn't predict the crisis, which, according to many media critics, is what the game is all about. The media, particularly the business media, took a largely unfair drubbing this year for not warning us that financial Armageddon was near (see Howard Kurtz), as if anyone could have predicted the unprecedented chain of events that would take down several storied giants and tens of thousands of jobs. And even if they did, would anyone have believed such a story?

Probably not. The author of such a pessimistic report would most likely have been mocked for being an alarmist or, if the soothsaying proved true, blamed for starting a bank run. (See Chuck Schumer.) Indeed, the media and its consumers clearly have a limited appetite for negativity, and in the final weeks of 2008, we're already seeing the backlash against doom-and-gloom reporting. The Times' media columnist David Carr, for one, recently bemoaned the unrelenting stream of bad economic news as accelerating the downturn. The economy "began to freeze in place far more quickly than it has in the past, in part because so much scary data is circulating so much faster than it used to," he wrote. "This recession got deeper faster because we knew more bad stuff quickly."

True. But when the good stuff happens, we'll know it more quickly, too.