One of the most notable features of the recent and continuing global banking crisis has been the failure of financial journalism, together with the global news agencies, to alert us to the signs of imminent catastrophe, thus confounding over-simplistic models of journalism as an efficient system of antennae monitoring the external environment. With a handful of honorable exceptions, most financial journalists and most international news agencies simply failed to report much of the emerging evidence of the growing possibility of collapse. Various explanations have been proposed for this failure including the complexities of the evidence, the manipulative power of financial public relations, and the difficulties of undertaking investigative journalism when newsrooms cut staff.
In the wake of the financial crisis, journalists were criticized for failing in their coverage of the economy: The claim was that they had failed in their duty as watchdogs. The only exceptions concerned few young heterodox journalists and, more, some novel and movie. First, Union Atlantic, the first novel by Adam Haslett, who made his name with the Pulitzer- and National Book Award-nominated story collection You Are Not A Stranger Here. The eerie overlap of Haslett’s narrative with current events in the American economy gives “Union Atlantic” unusual impact. This timely novel demonstrates not only how the financial crisis happened but why, by documenting the intersection of big, blunt historical forces with tiny, intricate, cumulatively powerful personal impulses. Businesses become too big to fail, Haslett suggests, because individuals fail one another, in a snowball effect.
But, beyond this significant case, the question could be expressed as: Is financial crisis: a media failure? Or: are the news media making the economic crisis worse? And: are journalists to blame for current financial crisis?
Recent coverage has raised a set of profound questions about financial journalism and issues of trust, influence and accountability. Damian Tambini, senior lecturer in LSE’s Department of Media and Communications. expressed the hope that financial journalism can re-found on new ethical bases, financial media reassess its roles and responsibilities and develop a common strategy to respond to the multiple challenges if faces today. Tambini is the author of “What is Financial Journalism For? Ethics and Responsibility in a Time of Crisis and Change, produced by LSE media think-tank POLIS. The report examines the pressures of reporting both in a time of crisis and change and within the wider context of financial journalism. According to the report journalists might have become too close to their sources. In some cases, the interests of their newspaper might have manipulated reporters. However, many journalists are currently working under the pressure of a 24-hour news cycle.
The low tricks of high finance: how greedy bankers, weak politicians and timid journalists could cause a new crash. Michael Lewis, the author behind the new movie The Big Short, is furious that reforms have been blocked. He writes that the Wall Street Journal is a much worse newspaper than it was 20 years ago,’ he asserts, taking aim at the bible of US high finance. ‘The news side of the paper has the fingerprints of the finance industry all over it’.Lewis extends his critique to the media as a whole. ‘We are underserved by critical, knowledge-able financial journalists who don’t have any fear whatsoever of what their subjects think of them.’Michael Lewis is, by a long way, the most important financial writer alive today — not just in his native America, but worldwide. At a time when public confidence in Wall Street and the City is at rock-bottom, his views pack a mighty punch. Lewis wrote The Big Short, a penetrating account of the build-up of the western world’s housing and credit bubble during the 2000s.
Described as ‘probably the best single piece of financial journalism ever written’, The Big Short analyzed how the international banking system came off the rails, with devastating consequences for the global economy, due to the crass, immoral behavior of those running some of the world’s biggest banks.
At the heart of the story are four sets of Wall Street ‘outsiders’ — from an eccentric doctor turned hedge-fund manager with a glass eye, to a couple of college-aged kids operating out of a parental garage who spotted the early warning signs of the US housing crash signs everyone else wanted to ignore. A story, the Lewis’ one, much more full of social teachings than orthodox media: economic journalism is, ultimately, to a crossroads. Namely it either succeed in learning to understand events, the responsibilities of actors and the causes that determine them, or it will become more and more a puppy, or, worse, a watchdog of editor interests.