Financial journalism and its critics

Robert Teitelman, editor in chief of The Deal, responds Thursday to critics who blame business journalism for the current economic debacle.

Teitelman writes, “Why, among all other journalists, are financial reporters expected to accurately predict the future? Investigative reporters, after all, report the past — the crime, the scandal, the failure. AIG might have been doing dodgy things — Maurice Greenberg got booted in 2005 — but credit default swaps, one of the systemic bombs, was not one of the issues. Besides, the problem with bubbles always lies in the future.

“Again, it’s not as if many reporters did not sense we were in a bubble, and that we would pay a price at some point (as we had so many times in the past and will in the future). What no one, even those that predicted disaster, got perfectly right was the timing and the complex chain of events once subprime blew up. And if someone had laid it all out, a task analogous to calling the weather and temperature on, say, a Tuesday six months in the future, you would have had to ascribe that prescience to sheer luck. And, again, who would believe you? Who would act on that prediction?

“Journalists, regulators and bankers have very different responsibilities when confronted by what appears to be a bubble. Journalists should be wary of trying to predict the course of radically uncertain systems because they will come across as damn fools, as ‘The Daily Show’ effectively demonstrated with CNBC; even Keynes had no confidence in his own ability to see the long term. Regulators and bankers have a higher responsibility: to act before they have certainty, even if they appear to have acted too soon. It’s why they get the power and the bucks.”

Read more here.