There are plenty of unsubstantiated attacks on blogs. Here’s what I consider an unfair attack on the mainstream press. It’s a Nieman Watchdog commentary by Martin Lobel, a Washington lawyer. He lambastes the press for failing to inform the public of the pending real estate crunch. He writes:
If the press were doing its job, no one would have been surprised that our economy seems to be falling apart. Anyone who took first-year economics should have known that the economy was fragile. But who wrote the stories asking the tough questions?
The article goes on, blaming the press for what he views as the public’s ignorance about risky mortgages, a tax regime that benefits the rich, and an administration that spends beyond its means.
My question: How does he know these things? Does he have good inside sources in Washington who whisper to him that the government’s running a deficit, or that the rich are faring well? He might. But I’ll bet he reads about these issues in the press. Most of us do.
The real complaint is not that the press fails to cover these issues, but that it fails to scream them in headlines big enough to reach the people who, in Mr. Lobel’s opinion, aren’t yet in the know. It’s a familiar frustration among a self-defined elite: You know, I know, why doesn’t everybody else know?
I think there are three answers to that:
1) Sometimes we in the press flat out miss stories. The looming disaster at Enron was an example. (The WSJ and Fortune eventually broke it.)
3) The press doesn’t reach as many people as we should with the serious coverage we produce. Often we fail to make it as clear or compelling as it should be, or we bury it.
3) Lots of people pick up the news, even if we don’t know that they know. In the press coverage of the mortgage disaster, it’s a lot more compelling to cover the person lamenting, “I had no idea!!!” But how many other people had an inkling? How many people know that we’re running a big deficit or that hedge fund managers pay at a low tax rate? I’d bet quite a few.
BusinessWeek readers certainly had no reason to be surprised. Here's the response from Rob Hunter, one of our top editors:
I can't speak for other publications, but BusinessWeek had been warning about problems in subprime mortgages in particular and the housing market in general long before this summer. One year ago this month we published a cover story called "Toxic Mortgages." The deck said it all: "Deceptive loans. Phantom profits. And coming soon: a wave of defaults." Yet that was hardly the extent of our warnings. Plug the names Mara Der Hovanesian and Peter Coy into a journalism database and you'll find no fewer than 32 articles highlighting problems, predicting worsening conditions, or both. Some sample headlines:
* "Mortgage Lenders: Who's Most at Risk: As delinquency rates rise, red flags are flying over some aggressive finance outfits" (April 2006)
* "Bad Blood Over Bad Loans: Mortgage defaults are rising. Wall Street thinks banks should mop up the mess" (October 2006)
* "Risky Portfolios: Mortgage Lenders Feel The Chill" (November 2006
* "A Farewell To Arms? Not Quite Yet: New classes of lenders are jumping in to offer high-risk mortgages (December 2006)
* "Is a Housing Bubble About to Burst? As rising rates send mortgage payments higher, demand may cool" (July 2004)
* "When Home Buying by the Poor Backfires: For many families, a house can be a bad investment" (Nov. 2004)
* "The Mortgage Trap: Lenders are cranking out an ever-growing array of financing schemes and lowering standards to keep the boom going" (June 2005)
* "Where a Slump Would Hurt Most: Hardest hit will be areas whose job growth is tied tightly to construction" (Oct. 2005)
* "Prefab Gains Signal Housing Pain: Manufactured home sales are reviving. That may be bad news for the larger market" (June 2006)