So big cheese media critic Howard Kurtz has spoken: The business media is partly to blame for our economic crisis.
"As in the savings-and-loan scandal of the late 1980s, the press was a day late and several dollars short," Kurtz declared in his Washington Post column last week. While he allows that some of the financial system's woes "were conveyed in incremental stories--and a few whistle-¬blowing columns--the business press never conveyed a real sense of alarm until institutions began to collapse."
Kurtz, who hosts a weekly CNN gabfest, is not the only media critic chastising the press for failing to warn people that financial Armageddon was near. (See the Columbia Journalism Review's The Audit.) But he is the most mainstream of the bunch, and his piece, accordingly, was filled with various éminences grises of financial journalism admitting that, yes, we all failed to see disaster coming.
"What we didn't understand was that this was building up," CNBC's Charles Gasparino tells Kurtz. "We all bear responsibility to a certain extent."
That's true. Only a fool would argue that the media could not have done a better job at sounding the alarm in the years leading up to the credit crisis--though what other part of the media is expected to make long-term predictions? We all know that the media, like the market itself, is a bullish creature. But columns like Kurtz's are also wrongheaded on two fronts: First, they make you want to ask, "Well, Howie, what were you doing while the rest of us were busy missing the big story?" (Well, gabbing on CNN.) And second, they fail to tell us exactly what kind of stories would have prevented us from ending up in the predicament we're in now.
Kurtz admits some stories were indeed done--there were dozens of housing bubble pieces, and there were prescient warnings from The New York Times' Gretchen Morgenson about credit default swaps--though you do wonder how deep Kurtz's reading goes. But, he argues, the media didn't put all the pieces together and warn us that the banking system was about to fall off a cliff.
In short, the media failed to fully predict the future, an easy observation to make with the benefit of hindsight.
Kurtz offers several stereotypical reasons for this failure: the difficulty in taking on "masters of the financial universe," especially when times are good; a tendency to lionize CEOs; the ghettoization of business news; pushback from corrupt companies. And while all those things may play a role, they don't address a more disturbing problem: Could anybody--on Wall Street, in Washington, in the newsroom--really foresee the path of this disaster? Or have our markets and our financial institutions gotten so large and complex that no amount of journalistic derring-do could have resulted in stories foreseeing the fall, in quick succession, of three Wall Street titans, a couple of big banks and an insurance giant?
And just imagine if a doomsday piece predicting such widespread destruction had appeared. Who would have believed it? Who would have run it? As the managing editor of Fortune, Andy Serwer, told Kurtz, "If we had written stories in late 2000 saying this whole thing's going to collapse, people would have said, 'Ha ha, maybe,' and gone about their business."
Serwer is right. Media Maneuvers summarily dismissed a Portfolio cover story by Jesse Eisinger last year that predicted Bear Stearns Cos. and Lehman Brothers Holdings Inc. would lose their independence and "takeover speculation" surrounding Morgan Stanley and Merrill Lynch & Co. would reheat. Oops. Our bad. But ignoring such prophecies of doom and gloom isn't unusual. For one thing, such pieces are highly speculative by nature--where's the smoking gun--and if they come out too early in the cycle, they disappear into the bubble-filled ether. As a journalist, if you make a dire prediction, you'd better be correct soon. Otherwise, everyone just moves on.
But getting into the game too late doesn't work, either. Witness the blame heaped on the media (not to mention the shorts) for "bringing down" Bear and Lehman by speculating on their survival. When it comes to the prediction game, the window of opportunity is very small.