On his blog “The Feed” media critic for St. Petersburg Times Eric Deggans wondered how CNBC’s tourette's afflicted financial “guru” Jim Cramer (host of his show Mad Money) kept his job after telling investors to get out of the market on NBC’s Today show.
On October 7th, Jim Cramer defended his statement on NBC's Today show, saying he still stands behind what he said. According to anchor Meredith Vieira, his comments caused a “firestorm." One email likened his comments to “yelling fire in a crowded building.” Another email pointed out that the financial system is based on “trust” and that Cramer was sabotaging it. What makes this all very ironic is that Cramer has been giving bad advice for a while (he told people to buy Wachovia and Bear Stearns stock), but he’s taking criticism for giving good advice this time: SELL!
Jim Cramer and business journalists (not that he is one) are stuck in a very odd position. Because the market is based so much on confidence, their collective coverage can affect the confidence of the market. It’s sort of like the “observer effect” in science that says in some experiments in quantum physics, the very observation of the experiment could change its outcome. Business journalists are in the same boat.
Howard Kurtz's column “Press May Own a Share in Financial Mess” is about how business journalists failed to foresee this economic crisis. He acknowledges their difficult balancing act: “If these journalists shout too loudly, they can be accused of scaremongering and blamed for torpedoing the stock of outwardly healthy companies.”
Using The Wall Street Journal as an example, he says some stories and opinion pieces did warn about possible collapse, but they failed to paint a full picture of the economic crisis. Basically, they played it down. Some of the journalists he quotes in his piece offer hints as to why:
"…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." - Fortune Magazine Managing Editor Andy Serwer.
"When I would cover these very issues about problems with regulation, problems with 'is this a disaster waiting to happen?' people would say: 'Well, young man, you don't have an MBA like I do. Trust us. We went to business school.'" - David Brancaccio, PBS.
"The business press tends to get in with the people that they cover. They get in the bubble that is Wall Street, just like political reporters get in the bubble that is the White House and the traveling press of the campaign . . . and they don't see the obvious things." - Steven Pearlstein, Washington Post business columnist, Pulitzer Prize winner.This does not sound like an environment where honest journalism can go down. Can you smell filters?! How much does sourcing and corporate ownership contribute to the sunny optimism of business pages, even on the verge of a financial crisis? There is real pressure on business journalists to paint a rosy picture and when they don't, they're punished, even when they're giving good advice at the time (a la Jim Cramer). There needs to be enough distance between the business journalist and the market, so that honest, objective reporting can go down.
2 comments:
A model post: pithy, to-the-point, well-researched, sharply argued, and truly thoughtful. A Great Leap Forward from previous posts. Some free-associated responses:
1. "What makes this all very ironic is that Cramer has been giving bad advice for a while (he told people to buy Wachovia and Bear Stearns stock), but he’s taking criticism for giving good advice this time: SELL!" Great, stingingly funny insight! Oh, the irony...
2. "...not that he is one..." Well, what is he, then? You elide the difference between pundits and reporters, throughout this post. As does Kurtz, seemingly. Does this matter? Or are you implying that there's little distinction, these days?
3. "Because the market is based so much on confidence, their collective coverage can affect the confidence of the market." First, your invocation of the Heisenberg principle is smart and apt. Second, this law may apply to pundits, but aren't reporters supposed to set their bullshit meters on the most sensitive setting and report the truth, market collapses be damned? Interesting to note that Kurtz's article presumes that markets are governed by fear and greed---not the classical paradigm of markets bequeathed to us by Adam Smith, in which rational actors make choices based on logic, a paradigm still enshrined as canon law in some economic theories.
4. As for WHY biz journalists (and pundits?) are more cheerleaders than truth-squadders, smart use of the Kurtz quotes and your own insights. Would have liked to have seen links to other critiques of the biz press, not just Kurtz's. Also, would been curious to hear you expand on the perception that biz reporters get too cozy with their sources. Question: aren't many of them free-market evangelists by nature, constitutionally inclined toward market triumphalism? Or are they? Again, my biases are showing, but this point is worth a thought, I think, especially in light of Chomsky/Herman's comments in MANUFACTURING CONSENT about the elevation of capitalism, in the U.S.A., to a state religion.
Postscript to the above:
MacArthur fellow and way left cultural critic Mike Davis, on TomDispatch.com:
"Let me confess that, as an aging socialist, I suddenly find myself like the Jehovah's Witness who opens his window to see the stars actually falling out of the sky. Although I've been studying Marxist crisis theory for decades, I never believed I'd actually live to see financial capitalism commit suicide. Or hear the International Monetary Fund warn of imminent "systemic meltdown."
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