This excellent New Yorker article explores the failure of business journalists to serve as objective observers in recent years. It echoes some of the discussion I laid out in my recent piece “Separating Fact from Fiction: A Challenge for the Media.”
Here are a few key intro paragraphs:
In January of 2008, Jim Cramer, in a video at TheStreet.com, recommended that readers buy shares of Bear Stearns. Two months later, he bellowed on his CNBC show, “Mad Money,” that “Bear Stearns is fine!” and “Bear Stearns is not in trouble.” Within days, the bank was nearly insolvent and had been acquired by JPMorgan Chase.
Cramer is well known for his hysterical boosterism of the stocks he likes, but enthusiasm for well-performing companies isn’t unique in business journalism. In 2003, Kimberly Allers, writing in Fortune, described Washington Mutual as “a banking powerhouse” with an “unorthodox retail approach.” In 2006, Fortune headlined an article about Lehman Brothers’s C.E.O., Dick Fuld, “The Improbable Power Broker,” with the subtitle “How Dick Fuld transformed Lehman from Wall Street also-ran to Super-Hot Machine.” In 2007, Neil Weinberg, of Forbes, observed that “Goldman [Sachs] has to stay out ahead of its rivals in trying daring and innovative approaches that push the outer edge of the boundary between what is okay and what may not be.”
Business reporters are supposed to make the complex worlds of finance and commerce intelligible to non-experts. But business journalism generally failed to predict the looming credit collapse, although a few reporters warned of its arrival. Critical stories by Michael Hudson, of the Roanoke Times and the Wall Street Journal, and Gillian Tett, of theFinancial Times, drowned in a vat of glimmering C.E.O. profiles and analyst chatter. Business reporters missed opportunities to investigate abusive lending, negligent rating agencies, and dodgy derivatives trading. To critics, they were complicit in the financial crisis and the recession that followed.