Do Journalists Report the News or Create It?
Media Moguls, Editors & Reporters Influence America’s General Agenda
Jul 17, 2008
On Monday July 14, 2008 the American citizens experience the third largest bank failure in its history. Was this an inevitable event caused by an under-capitalized financial institution? Or did the American media contribute and directly create the demise of a large USA bank?
“The simplest daily reminder that the news is the result of countless judgment calls, rather than some abstract truth, is a comparison of [newspapers]…” - James Fallows editor and Rhodes Scholar! Politico’s John Harris wrote: news becomes “big news when wrested from context and set aflame by a news media more concerned with being interesting and provocative than with being relevant or serious.”
Media & Science
In David Murray, Joel Schwartz and Robert Lichter’s book It Ain't Necessarily So: How Media Make and Unmake the Scientific Picture of Reality, Rowman & Littlefield Publishers, Inc. April 2001, Murray says: “If newsworthy stories are sometimes ignored by the media; it’s also true that what’s not newsworthy sometimes makes headlines.” He goes on to say: “Tomato statistics [are] cases in which news reports call attention…by obscuring…crucial differences….”
Media and Foreign Policy
Piers Robinson writes in a research article, The CNN effect: can the news media drive foreign policy, in the Review of International Studies, Cambridge University Press 1999,: “…new technologies… [force] policy-makers to respond to whatever issue journalists focused on.”
Media and Real Estate
Bernice Ross, of Inman News on June 6, 2008 wrote an article entitled “Media created foreclosure hysteria” and takes a layman’s view of the media’s role in misusing housing foreclosure data. As explained by David Murray, this misuse of data can present results divergent from reality which Ross agrees with. Robinson explains that the simple reporting of this “misleading information” has a self-fulfilling effect on the information being reported so as to actually create the nonexistent results. The “run on the IndyMac bank” is but the lasted example of this effect.
Media and Finance
John M. Reich, director of the Office of Thrift Supervision, is quoted in the LA Times on July 2, 2008: “Dissemination of incomplete or erroneous information can erode public confidence, mislead depositors and investors, and cause unintended consequences, including depositor runs and panic stock trades."
In accordance with IndyMac’s 8-K SEC filings, in March 2008 there were no serious concerns about IndyMac bank, whose total assets were $32 billion. Media reports and articles bombarded the public beginning the end of June. Eleven banking days later $1.3 billion was hastily withdrawn by irrationally concerned customers and the story was nearly complete.
In analyzing the facts, the data indicates that several events did occur:
1. At the end of March 2008 IndyMac bank was a sound financial concern that was not on the Federal Government’s financial institution “watch list.”
2. Erroneous and incomplete information was given to the media which the media speculated upon, extrapolated from and created unfounded concerns and results.
3. Continual, repetitive reporting of these unverified facts and incomplete data was made by the media without concern for the impact of these statements.
4. Customers interpreted these facts as “truths” and rapidly responded in a negative way toward the bank.
5. The bank suffered a “liquidity” problem [not a solvency problem] based upon this negative run.
6. Ultimately the liquidity problem evolved into an operation problem which the bank could not sustain. It closed!
7. The Federal Government took over the bank and a further run ensued.
8. The media was now reporting the news that it (at best) helped to create and at worst created independently.
According to Business Day in their article on July 16, 2008 Run on US bank sends markets tumbling; “On Wall Street, the analysts were asking ‘who's next’?" Is the media preparing for the next headline - 1929ish Stock Market Crash, Imminent!
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