Bernanke is Time's man of the year

Following hot on the heels of Barack Obama,Federal Reserve Chairman Ben Bernanke has been named Time magazine's "Person of the Year" for 2009.

For those who don't know the name,he runs the US Federal bank and according to the magazine can be counted as one of the saviours of the world

Here is what they say

Professor Bernanke of Princeton was a leading scholar of the Great Depression. He knew how the passive Fed of the 1930s helped create the calamity — through its stubborn refusal to expand the money supply and its tragic lack of imagination and experimentation. Chairman Bernanke of Washington was determined not to be the Fed chairman who presided over Depression 2.0. So when turbulence in U.S. housing markets metastasized into the worst global financial crisis in more than 75 years, he conjured up trillions of new dollars and blasted them into the economy; engineered massive public rescues of failing private companies; ratcheted down interest rates to zero; lent to mutual funds, hedge funds, foreign banks, investment banks, manufacturers, insurers and other borrowers who had never dreamed of receiving Fed cash; jump-started stalled credit markets in everything from car loans to corporate paper; revolutionized housing finance with a breathtaking shopping spree for mortgage bonds; blew up the Fed's balance sheet to three times its previous size; and generally transformed the staid arena of central banking into a stage for desperate improvisation. He didn't just reshape U.S. monetary policy; he led an effort to save the world economy.

Why did reporters miss the crunch? A US take from an ex reporter

I'll attest that business journalists as a rule are as smart, sophisticated, and plugged-in as they seem. And yet that army of professional business reporters—an estimated 9,000 or so nationwide in print alone—for all practical purposes missed the biggest story on the beat. Why?

writes former Wall Street Journal staff writer Dean Starkman.

Much has already been written on the subject and more no doubt still will be.

According to Dean in a long and detailed piece

There was a handful of heroes at the major publications who tried to get the word out. But the good, hard-hitting, arm's-length stories will have to be compared to what else was gushing out of the 30-inch business-news drainpipe—those Citigroup earnings stories, those edgy-yet-flattering profiles of Merrill Lynch's Stan O'Neal, Lehman Brothers' Dick Fuld, et al., the pieces noting how Countrywide Financial's Angelo Mozilo liked to dress well, etc., not to mention the Home Depot marketing stories, the personal finance columns, and all the cheerleading and Flip That House fluff that diverted resources from the real task at hand.

One reason that Dean identifies is the newsroom cuts which he says coincided with the first warning signs of the end of the bull market.

But that wasn't the only reason

Jesse Eisinger, a former financial columnist for the Journal and now a senior writer for Portfolio, says the paper, like business journalism generally, clung to outdated formulas. Wall Street coverage tilted toward personality-driven stories, not deconstructing balance sheets or figuring out risks. Stocks were the focus, when the problems were brewing in derivatives.

Liddle-why television news is intrinsically bias

It is worth reading Ron Liddle's piece over at the Spectator on why television news is intrinsically biased.

if you watched the inauguration of Barack, did you detect just the tiniest,
weeniest difference in tone from the broadcasters, compared to how they marked
the re-election of President Bush four years ago? Just an infinitesimally minute
difference in nuance? I might be wrong but I don’t remember them cutting to a
bunch of well-fed, middle-aged, middle-class white people in the Peter Bruinvels
Centre in Beaconsfield every so often to hear them singing ‘Go George — nuke the
Arabs!’, amidst bunting and drained bottles of champagne. ‘Awe-inspiring’ and
‘breath-taking’ and ‘momentous’ and ‘I have a dream’ were the words used by the
correspondents this time.

According to Ron,televison news does not merely report news it transforms it.

He makes the point with relation to the financial crisis

1.that the financial crisis has been deepest in those countries in which there is a strong and rapacious media — the UK, USA and Iceland, among others — and undoubtedly worsened as a direct result of relentlessly baleful headlines.

2.that the media was correct in reporting the green shoot comments of government ministers last week in order to provide some balance

There was a poll carried out back in the summer of 2008, in which almost one quarter of British people thought that the ‘credit crunch’ was entirely a media confection, a crisis whipped up to fill the blank pages. A little later the notion of the media being ‘responsible’ for the credit crunch became an urban myth. It is not quite so simple as that, nor quite so stark — but you would not bet against the media having been critically influential, given the ectoplasmic nature of city confidence.

No its true-Journalism tried to warn of the impending financial gloom

Well worth a read

Well before this year’s economic collapse, business journalists shined a spotlight on serious problems in the U.S. economy. But regulators and members of the public didn’t pay much attention.

The American Journalism review takes a look at the journalism profession's attempts to forecast the current global crisis

The business media in 2008 serve as a welcome scapegoat for those who simply want to ignore their own culpability in the financial meltdown. But it's a bad rap. Gone since the tech bubble burst in 2000 are the flattering CEO profiles and the touting of Internet companies with no revenue. The business media have done yeoman's work during the past decade-plus to expose wrongdoing in corporate America. In fact, a review of the top business publications in the country shows that they blanketed the major issues, from subprime loans to adjustable-rate mortgages to credit derivatives, that caused so much economic pain.

"If you want to get a financial story onto the front pages you must have a picture of David Beckham”

Back in Manchester after spending yesterday morning at Polis at the London School of Economics.

They were launching their report into financial reporting and the media, entitled "“What is financial journalism for? Ethics and responsibility in a time of crisis and change.

You can read the whole report here

The seminar launch though was enlivened by some lively and concise thoughts from Ed Wasserman who is the Knight Professor in journalism at Washington and Lee University
Lexington.

He argued that what distinguishes the professional journalist from other purveyors of information is the ethical foundation and in particular that based on independence.
In his view this is where the financial journalist is most at risk.
To a certain extent risk can be mitigated by disclosure of interest but he identified three endemic conflicts that often occur

endemic conflicts

1.source dependence-is both indispensable but also inhibits disclosure
2.pressure from advertisers
3.pressure to respond to public taste

For Ed,financial journalist have not come as yet come under the same scrutiny as political ones did for not questioning the Iraq war but when the Post Mortem's occur,people will ask why the profession never questions how institutions were making their money.

His also lays the blame fairly and squarely at the door of the new media whose business model means that market driven audiences and niche models no longer reward economies of scale.

Instead we have a proliferation of voices whose priority is to publish first and fact check after.

"A hunger for content means that credibility no longer brings success according to Ed
and "Speed leads to a greater reliance on a smaller number of sources."

Valid arguments an one's which could apply to any journalism and not simply financial journalism.

The problem though for financial journalists as laid out in the opening gambit by Damian Tarding is that they have a unique responsibility in that their information is directly important in the workings of the financial markets.

Wrong information can and does result in the inefficient workings of that market is the distribution of capital.In layman's terms it effects share prices,interest rates and commodity rates.

Tarding identified five challenges for financial journalism

1.increasing speed of the market and the consequent response for news
2.a comlexity which requires training and skills
3.PR conflicts which make it difficult to hold corporate life to account.
4.Sustainability-difficulties of funding a risky investigation
5.Globalisation-what makes a national interest story when corporations transcend national barriers?

Why the media didn't see the financial crisis coming-they had a vested interest

There is a very good interview with the Danny Schechter , a respected investigative journalist and the author of Plunder, over at Editors Weblog.

The question that is going to be asked of the media for a long time is why did they not cat as the 4th estate as the financial crisis was brewing.

It is very interesting to hear what Danny has to say and I recommend that you look at the full transcript.

In particular though he believes that the media failed because of vested interests.

one of the key sources of revenue for newspapers is real estate advertising in weekend supplements and classifieds, as well as advertisements for credit card and refinancing companies. As a result, he argues there is a connection between the real estate and newspaper industry, their future and success are intertwined. Schechter says, "The newspaper industry is the marketing arm of the real estate industry. In some cities you actually had newspapers getting a piece of the action of sales through the ads that they generated. So they were actually part of the corruption of this whole relationship. So of course there was little real scrutiny about what was actually happening in the neighbourhoods where houses were flipping, where people who couldn't afford to buy houses were buying them with bogus mortgages. Newspapers were making money on the sales of these homes."

So newspapers had an vested intertest in a continuing house price bubble and ignored the warning signs of the overheating economy.

FT is booming

One newspaper organisation that is doing well out of the current crisis is the Financial Times.

Amid signs that the current financial crisis is pushing the consumers of news to the qualities,the financial paper cannot print enough copies to cope with demand.

Its chief executive John Ridding is quoted as saying that

Newsstand sales rose 30 percent in the United States in September, and about 20 percent in Europe and Asia. That’s compared to August 2008, i.e., it’s a “sequential” gain rather than year-over-year growth. In the United Kingdom, Ridding said, “We basically couldn’t print enough copies and retailers were running out.”

and furthermore

The number of registered users of FT.com rose to 750,000 now, compared with 30,000 a year ago. A couple hundred thousand of those showed up in the past few months, as the mortgage and housing crisis in the United States deepened and then metastasized into full-blown world-market-crisis mode

via Paid Content

Trust us we went to business school

The stakes are enormous in a fast-moving crisis where the traditional concern about journalists causing a run on the bank is hardly a theoretical danger. But as news organizations chase exclusives about the Wall Street meltdown, they also are grappling with a troubling question: Why didn't they see this coming?

I am sure that there is going to be a lot more on this,I have reported on the rumblings of journalists before and the abdication of their fourth estate responsibilities when it came to checking on the financial institutions on both sides of the Atlantic.

It is worth reading Howard Kurtz's piece published earlier this week in the Washington Post.He quotes PBS's David Brancaccio who says

we journalists have had a long history with accepting what the smart people hand down to us, especially on complicated stuff. . . . 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.'

"