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.
