Abstract
Covering a crisis is exciting stuff. When the market began to crash during the 2007 financial crisis, I recall trying frantically to find sources who could explain it to Bloomberg’s television audience, as it was happening. It wasn’t easy. The unraveling was underway, and it seemed like everyone had been taken by surprise. Therein lays the crux of Sophie Knowles’s insightful and detailed book, in which she probes how and why financial journalists failed to predict the financial crises of 1990, 2000, and 2007.
Knowles, a senior lecturer in the media department at Middlesex University in London, draws on qualitative and quantitative research from three countries and three newspapers—The New York Times (the United States), The Guardian (the United Kingdom), and The Sydney Morning Herald (Australia)—to analyze in discrete chapters how each crisis was covered in the 1-year run-up and 2-year aftermath, focusing on sources, topics, and interviews with journalists.
Several common threads emerge across the decades, namely, journalists’ tacit acceptance of pro-business and free market narratives, a largely unquestioning embrace of industry deregulation, a reliance on ideologically monographic sources that favors industry insiders over experts and academics, and a herd mentality among journalists that disallows independent, critical reporting. One of the biggest conclusions that should give journalists pause is this: Financial reporters rarely write about or for the general public, shutting them out of a conversation that has an outsized impact on ordinary lives, particularly in times of crisis. Indecipherable topics and jargon, particularly in economics, are one barrier to the public, but Knowles also warns that mainstream journalists’ over-reliance on PR language and sources prevents reporting from serving the public interest.
The research discussed in this book gives journalists and newsroom leaders a solid point of departure for future coverage. Some bright moments dot the crisis landscape, including the media’s more successful watchdog role in the 1990 recession, and the stories of reporters like the Financial Times’s (FT) Gillian Tett, who did predict the 2007 credit bubble. For the most part, though, Knowles argues persuasively that financial journalists engage in groupthink and are too close to their business sources, a relationship that was solidified in the technology boom of 2000.
The book rests on the premise that media should be able to warn the public of impending crises. At one point, Knowles suggests that had a pattern of good reporting on subprime mortgages continued, we “might have mitigated the subprime mess” (p. 129). Maybe, but in practice, the bridge from reactive to predictive is far. Perhaps there’s something in between. In a chapter devoted to the challenges facing financial journalists, Knowles focuses legitimately on time and resource limitations, but maybe not enough on epistemic limitations. The routines of financial journalists are tragically beholden to the rhythms of weekly price reports, monthly economic indicators, and quarterly earnings. Information is rarely harnessed to tell big-picture stories, and the validity of that cycle of data is itself never questioned. Breaking from these routines—and by default, the predominant narratives—might be a tangible starting point for reporting that doesn’t just follow the herd. By way of illustration, the Associated Press has used automation since 2014 to report corporate earnings, doing so as a means of freeing reporters from rote tasks.
While organizations like Thomson Reuters, Bloomberg, and Dow Jones dominate the financial media space, there’s scarce mention of them in Knowles’s study because of their heavily niche audiences of investment banks and money managers. These news organizations represent the best and worst of industry practices: They are certainly guilty of formulaic reporting and targeting their coverage to businesses and investors rather than the public at large (for whom their stories are also unaffordable—another problem Knowles points out with respect to the FT).
Nonetheless, these organizations might have been worth some consideration as they also possess exactly what Knowles says we need to avoid repeating past failures: time, resources, and expertise. The late Mark Pittman, at Bloomberg, did predict the subprime crisis in the summer of 2007, and he had all those support mechanisms to help him connect the dots. In a 2009 interview with the Columbia Journalism Review, he said most journalists just weren’t qualified to cover the credit crisis because “the off-balance sheet accounting stuff is crazy.” It’s certainly not an excuse for why 9,000 business journalists failed to get it right, as Dean Starkman wrote in Mother Jones, but it underscores the importance of a retrospective study like this one. Financial journalists need to better know their subject matter and their history to be able to challenge the status quo confidently, and that education should start in journalism schools and continue in the newsroom. Knowles’s book, which asks financial journalists to raise the bar, should be a part of that education.