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A media failure compounds the financial failure

COMMENTARY | October 23, 2009

The press is still missing the story of fraud that has taken place, avoids reporting the ‘hollowing out’ of the middle class, and pretty much has its eyes closed to the economic decline that almost certainly lies ahead, writes Danny Schechter.

(Part of our series on "Reporting the Economic Collapse.")

By Danny Schechter
We know that Wall Street has not learned much from the crash it helped instigate. We know that our government, whatever its stated desire to clean up the markets and reform the financial behemoths, lacks the willingness and perhaps the clout to rein in the real power centers. We are not sure if they have been “captured” by them, or just lack the guts to take on institutions and individuals that helped fund their rise to power.
But do we know that, even now, much of our media, despite the sheer volume of coverage, may be missing the real story? Do we know that if we want to find missing facts and the real context we have to turn away from the failed media system that never really investigated the failed financial system.
The Project on Excellence on Journalism that examines media trends released a study charging “that the gravest economic crisis since the Great Depression has been covered in the media largely from the top down, told primarily from the perspective of the Obama administration and big business, with coverage reflecting the concerns of institutions more than the lives of everyday Americans.”
Why is this? I asked several journalists in making a film and writing a book about the financial crisis as a crime story. A number agreed that the media themselves are “embedded” in the culture and narratives of Wall Street, like reporters embedded in Iraq. Many lack the willingness to be critical of the sources they rely on. Most bring too little perspective and context to their work.
Max Wolff who works in the financial industry, and also teaches about it, shared his view as we stood outside the New York Stock Exchange:
“I think the media mostly did unpaid press releases for various businesses looking to sell financial products and…becoming cheerleaders instead of critics and that took off the table, and out of the discussion, a critical voice that would have helped people realize what was going on, stop it before it got too big and deal with the crisis in a way that was relatively transparent, democratic and broadly beneficial – as opposed to being partial, muddy and unclear.”
I pressed him to reflect on why. He said, “It seems like there is still a tendency to amplify rumors on one hand, and then try to reassure that everything is ok …
“We get a wild volatility, with a blind set of stories saying everything is fine, nothing to see here, remain calm and then, ‘If you don’t do x,y and z or tomorrow, life as we know will come to a total hold, water won’t come out of your faucets, electricity won’t come on, and you will live the rest of your life regretting that you just didn’t listen to me when I told you what I was going on.’
“And this lurching back and forth is a bad way conduct a social discussion. It makes the public more scared and quite reasonably less confident in leadership whether that is corporative leadership, politicians or the media itself.”
The tendency on the left is to bash the frenzy of free market hype on Fox but not look to carefully at other channels and mainstream media outlets.
Often, even when major outlets run good stories, they don’t probe deeply enough. The Naked Capitalism offered up one recent example in the New York Times:
“The New York Times features a generally very good piece, ‘Buyout Firms Profited as a Company’s Debt Soared,’ by Julie Creswell that falls short in one important respect: it fails to call a prevalent and destructive practice of private equity firms by its proper name….
“George Akerlof and Paul Romer called that activity looting in a famous 1993 paper and depicted it as criminal.” They wrote, “Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations.”
Conservatives like Peter Schiff, who was literally laughed off Fox News when he warned of the coming meltdown in 2006—the year I did the film In Debt We Trust—say media institutions have centrist biases that genuflect to the status quo. “A lot of the media I appeared on were kind of captured by the industries,” he told me. “You know everybody that comes on television is working for government or working for Wall Street. They all have a vested interest. They are all trapped inside the bubble and so from their vantage point they don’t know they are in a bubble…”
Right now, many media outlets are reinforcing the idea that a recovery is under way, pointing to a rise in the stock market and some signs of an upturn, even as joblessness continues to climb along with bankruptcies and foreclosures.
A few banks doing well get enormous visibility while hundreds that are in trouble do not.
The dissents of informed analysts like Paul Krugman, Nouriel Roubini and George Soros are heard but marginalized. The signs of another collapse tied to an insolvent banking sector are discussed in the financial blogs but not yet on TV.
And the crime angle that I investigate is still seen as minor, except in all the stories about high-profile personalities like Bernie Madoff or the corporate lawyer Marc S. Dreier, just profiled by 60 Minutes, which kept trying to get him to be more “emotional” (that is, to cry for the camera).
Where is the focus on the plight of the middle class which has seen its wealth transferred to the wealthy? Editors should take a cue on this more significant story from an “insider” perspective by a finance industry expert, John Bougearel, Director of Futures and Equity Research at Structural Logic:
“The core of America is the middle class. And Harvard Law Professor and chair of the Congressional Oversight Panel COP ( the COP is to oversee TARP, the Troubled Assets Relief Program) Elizabeth Warren tells us that the core of America is being carved up, hollowed out. In her words, “I Believe Middle Class is Under Terrific Assault…Middle class became the turkey at the Thanksgiving dinner” of the financial elite. Elizabeth Warren is more than just right.
Call it for what it is. It has more names than Satan. Call it plundering. Call it pillaging. Call it extortion, Call it fraud. Call it racketeering. Call it the financial raping of the middle class. Call it criminal. Consider the following. The middle class never consented to this financial rape. They vehemently protested it when the government first proposed a $700 billion bailout of the financial system called TARP in Septermber 2008. Yet what did Congress and our government do? They went ahead and did it anyway. This boils down to one thing, taxation without representation. Our votes do not matter anymore.”
This larger crisis in the crisis is not getting the attention it deserves even as “poster boys” for corporate crime do get some attention. But what about reports on what the FBI calls an “epidemic of mortgage fraud,” or the pervasive “epic” fraud in our financial institutions buried in trade outlets like Information Week, which notes in a headline, "Seventy percent of financial institutions in the past 12 months have had cases of insider fraud, new survey says."

Epic problems are often buried problems. No wonder most of us don’t know about them and are not as outraged as we deserve to be.
I was called an alarmist when suggesting that a credit breakdown was possible in the pages of Nieman Reports in 2006, but today it is hard to keep up with the increasing number of real prophets of doom, even in centrist financial websites like Marketwatch that carried a hair-raising report by Paul Farrell, who wrote:
“Hong Kong's contrarian economist Marc Faber warns in his Doom, Boom & Gloom Report: "The future will be a total disaster, with a collapse of our capitalistic system as we know it today."
“No, not just another meltdown, another bear market recession like the one recently triggered by Wall Street's "too-greedy-to-fail" banks. Faber is warning that the entire system of capitalism will collapse. Get it? The engine driving the great "American Economic Empire" for 233 years will collapse, a total disaster, a destiny we created.”
Let’s hope it’s not true, but what is clear is that too many of our media outlets seem to be looking the other way at trends that are downright frightening, perhaps because of a misplaced sense  of a mission to reassure public opinion and keep confidence high.
Occasionally, however, even our leaders are becoming less shy about expressing their real worries. The George Washington blog, for example, recently carried this observation by a prominent politician famous for going off message from time to time.
He said:“My grandpop used to say … “When the guy in Minooka’s out of work, it’s an economic slowdown. When your brother- in-law’s out of work, it’s a recession. When you’re out of work, it’s a Depression.”
[Asked how he views it, he responded:] Well, it’s a Depression…It’s a Depression for millions of Americans, through no fault of their own.”
That quote, still buried in the blogs, not highlighted on the front pages, is from Vice-President Joe Biden.
As people from my own tradition would say, “Oy vey.”

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