02/22/2008 03:48 pm ET Updated May 25, 2011

Media Manuvers: Credit Crunch for Dummies

Where's a good villain when the media needs one?

Pity the ink-stained wretches and bleary-eyed bloggers tasked with covering the credit crisis, with its opaque markets and its alphabet soup of arcane products and participants. SIVs, CLOs, CDOs, CDO-squareds, Alt-A loans, FGIC, MBIA; the dreary list goes on and on. What started out as a relatively straightforward subprime mortgage problem has morphed into a hyper-complex credit bubble affecting a dizzying array of little-known but somehow completely intertwined components. No wonder the coverage has been as inconsistent and spotty as, well, the auction-rate market.

The auction-rate market? What's that?

Our point exactly.

Really, how many financial journalists knew what the auction-rate market was-or that it even existed-until a few weeks ago? Or a SIV, for that matter? Or a conduit? Or a credit-default swap? Or even bond insurance? This is normally dense, difficult, unglamourous stuff. So we're left with a, well, strange situation. Thanks to the blogosphere, never before has so much media pantingly followed finance. But never before has the media produced so little real information on such a big event. Ask yourself: has any one outlet, online or otherwise, emerged as the go-to source for original insight into our current situation?

To be sure, The Wall Street Journal, The New York Times and the Financial Times have dutifully covered many of the individual shoes that have dropped as we fall deeper into an economic quagmire. And in the blogosphere,'s Felix Salmon, for one, has done a decent job providing running commentary on developments and directing his readers to other outlets when they turn up something interesting. But no one seems to be putting it together into a coherent package or explaining how these complex markets and products fit together and why anyone should care about them. Instead, we get general rehashings like Mort Zuckerman's elementary explainer in the Feb. 27 issue of The New Republic. Its headline: "Panic!"

Thanks, that's really helpful.

Maybe a villain would help. During the last big financial crisis, the one caused by the Internet bust and a wave of corporate fraud, the media knew whom to blame. It chased an ashen Jack Grubman down Fifth Avenue and hounded Henry Blodget and Frank Quattrone. It threw spitballs at the Enron and Tyco guys and jeered at Martha Stewart. Villains don't come any better than Martha.

But this crisis is different. True, the media got excited when Wall Street CEOs like Stan O'Neal and Chuck Prince fell to atone for their firms' subprime sins. And, for a few days at least, it appeared as though Countrywide Financial Corp.'s Angelo Mozilo would become the poster child for bad subprime lending. But without incriminating e-mails or the possibility of any of these people being taken off in handcuffs, they have largely faded from view. Even the demigod of the last bubble, Eliot Spitzer, then New York attorney general, now governor, can't seem to generate much heat this time around.

His attempt to break up the so-called monolines may have generated headlines, but the hoopla will likely end there. "The Sheriff of Bond Insurance" just doesn't have much of a ring to it.

That's probably because in the general populace, nobody feels personally aggrieved by bond insurers; few even know what they do. And that makes this bust different from the last one, where "real" people-that is, individual investors-lost money in tech stocks. At the beginning of this mess, when it was just a mortgage problem, it was easy for the media to identify victims-people being kicked out of homes they can no longer afford. But now that the problem has moved beyond mortgages and into arcana like auction-rate securities, explaining what it means for Aunt Mary is a difficult proposition, unless, of course she happens to own municipal bonds. And we all know how sexy those are.

Meanwhile, attempts to cover the credit crunch continue. On Feb. 20, the WSJ's Deal Journal blog launched "How Bad Is It?" which it described as "devoted to confirming or debunking the worst fears about the severity of the credit crunch," which could cover just about any eventuality. Its inaugural offering inexplicably began by rehashing Hillary Clinton's remarks about "hedge fund dealers" before reaching its less-than-shocking conclusion: There will likely be layoffs on Wall Street this year.

Thanks, Deal Journal. That's helpful.

Yvette Kantrow is executive editor of The Deal.