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The Maginot Media

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Nearly three years after the financial world imploded, the business media is still operating under a cloud of shame for failing to sound the alarm that the end was near. The press, the story goes, should have warned us sooner that real estate was a bubble, subprime mortgages a crock, rating agencies a sham, Goldman, Sachs & Co. a sea creature, credit default swaps a tinderbox -- the list goes on -- and that all of these disparate forces would eventually converge to bring the world to the brink of financial Armageddon. That the media blew it is so ingrained in the conventional wisdom that to try to point out that in some cases skeptical stories were written or that disasters are almost impossible to predict is about as fruitful an exercise as trying to sell that spec house on the Gulf Coast.

Perhaps that sense of collective shame is why the media has been flooded with stories predicting the next bubble, whether it's in gold, silver, student loans, social media, tablets, China, stock, bonds -- you name it, the media has pondered its bubble potential. Apparently, even the U.S. government is in danger of becoming a bubble, according to a recent post on the Business Insider. There have been so many pieces warning of so many different bubbles that The Motley Fool recently declared "a bubble in bubble predictions."

In addition to trying to ferret out future bubbles, the media is also still exploring the causes of the last crisis and trying to expose those who are most responsible for it. "Why Isn't Wall Street in Jail?" asked Matt Taibbi in Rolling Stone in February, touching off a refrain that grew louder when Inside Job director Charles Ferguson made the same observation during his Academy Award acceptance speech, and louder still when The New York Times asked the question on its front page in a deeply reported April 13 story by Gretchen Morgenson and Louise Story.

Indeed, the anti-Wall Street missives seem to be coming fast and furious these days, whether in the form of William D. Cohan's new book on Goldman Sachs, in which he paints the firm as an immoral, unethical enterprise; Taibbi's latest Rolling Stone piece, in which he accuses John Mack's wife of using bailout money to help him buy a carriage house on the Upper East Side; or the cover of New York magazine declaring that "Wall Street Won."

But for all of the media's outrage -- and outraged it is -- nothing has really changed. Three years in, banks are too big to fail, regulations are lax, and Wall Street perp walks are a pipe dream. Could it be that the media is not as powerful as we think it is? Is it not an effective agent of change? Consider all the bubble calling that's going on now. Has it had any impact on sky-high valuations assigned to companies like Facebook and Twitter? Is gold losing its appeal?

Viewed in this context, all the handwringing about the failure to warn us looks a bit overdone. That's not to say the media couldn't have done a better job outing abuses in, say, the subprime lending racket. But could journalism -- even good, investigative journalism -- have not only uncovered the crisis before it happened, but convinced us that it was real, dangerous and had to be stopped? Could it have changed our behavior? Altered our regulatory structure? Kept the price of housing down?

It was hard not to think about all this last week when the Pulitzers were announced, including one for ProPublica's series "The Wall Street Money Machine," which uncovered some crisis scandals. Dean Starkman, editor of The Audit, Columbia Journalism Review's business press watchdog, interpreted that win as a sign that the media should keep pursuing the crisis, "the story, really, of our time [his italics]. ... Go after the big important thing, and the Pulitzers will take care of themselves," he concludes.

Perhaps. But Pulitzers aside, if the media continues to train its sights on this "big important thing," will it miss the next one? Starkman was one of the biggest critics of the media's failure to warn us of the crisis ahead -- to predict what the future would bring. Now he's urging the press to keep looking back. But won't that make uncovering the next crisis, scandal or bubble even harder? After all, if we had spent the last decade worrying about overly inflated tech stocks or corporate malfeasance, maybe we wouldn't have paid enough attention to mortgages. That's what did happen? Oh.

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Yvette Kantrow is executive editor of The Deal magazine.

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