Why Financial Journalism Didn't Win the Pulitzer
The Biggest Financial Crisis in 70 Years Yields No Honored Reporting
Jul 27, 2009 Lawrence De Geest
When the Boston Post won the 1921 Pulitzer Prize for exposing Charles Ponzi’s swindling of Wall St, it was heralded as the end of New York City jingoistic “yellow journalism.” But when the 2009 Pulitzer Prizes were announced in April, awards for stories about the biggest economic crisis since the Great Depression or the biggest Ponzi scheme in history were remarkably absent. The news, following comedian/journalist Jon Stewart’s now infamous March exposure of CNBC’s Jim Cramer as a potential fraud, suggests to critics of the crisis’ coverage that yellow journalism is alive and well. They are right – but for the wrong reasons.
Blame the Business, Not the Stars
If someone doesn’t like gossip magazines like Us Weekly and the stars in them, it really means that he doesn’t like the cultures of Los Angeles and Hollywood that created them. Likewise, financial journalism’s underperformance is due less to the antics of its reporters and more to the entire profession’s failure as a business - not even a Pulitzer will save the Detroit Free Press, one of this year’s winners. And few on Wall Street are investing. A 2009 report by the Pew Research Center’s Project for Excellence in Journalism reported an 83% fall in the stock of publicly traded newspapers in 2008 and expects classified revenues – the biggest contributor to profits – to disappear within five years.
Though the Internet and its independent bloggers are partly responsible, news networks that focus on entertainment as a solution are most at fault. Minute-to-minute live-action coverage (CNBC alone airs 150 hours of live television each week) is preferred to the slow and methodical investigative reporting capable of uncovering fraud. However, shows like “Mad Money” are unsurprisingly popular: the dramatization of finance has existed since the 1637 Dutch tulip bubble and Charles Dickens’ tales of “heartless economists” in his novel Hard Times.
But in addition to losing credibility, such reporting encourages the fusion of financial journalism with its subjects and the dangerous myth that Wall Street is run by market oracles who can predict the future. Banks and their regulators manipulate stock prices for fast results because modern finance, like professional journalism, prefers the short term to the long, to the ultimate cost of the latter. If information is Wall Street's most valuable commodity, then like a car, it becomes less and less valuable with each new owner.
Financial Journalism’s Next Stand
So how useful is financial journalism if it can’t make accurate predictions? U.S. reporters likewise failed to catch crashes and crises in each of the last three decades. But if they could, would their reporting interfere with their subjects? Some point to negative speculative reporting on Bear Stearns’ assets before its demise as a “yes”.
Nevertheless, it is accepted that what goes up must come down. The confusion surrounding the market crash and the Paulson and Obama bailouts just demonstrates that no one is likely to know when. Perhaps this should be expected considering the speculative nature of finance. But an extravagantly complicated and competitive stock market searching for its next genius only encourages sensationalism. And considering the S.E.C. ignored reports for nine years proving Bernard Madoff to be the 21st century Charles Ponzi, it won’t matter who reports the news unless changes are made.
Rethinking Financial Journalism, Wall St
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