John Hanrahan of Nieman Watchdog writes about the lessons for reporters and editors in their failure to identify the housing bubble before it burst and created chaos and collapse in the economy.
Hanrahan writes, “With rare exceptions, the press, too, ignored the issue, taking their cue from Greenspanâ€™s statements that rational, explainable market forces were at work driving up housing prices. Occasionally, Baker said, Yale University economist Robert J. Shiller would get quoted in the press about the housing bubble in years leading up to the housing market crash, but usually his comments were deep down in stories extolling the housing boom.
“Shiller, Baker said, had gone back even further — all the way to the 1890s — to examine data and found that for the next 100 years the price of housing had kept on the same pace as the overall rate of inflation, until it began to run wild in the 1990s.
“Baker said the failure of most economists and the press to spot the housing bubble before it burst is a prime example of how reporters ‘need to evaluate the arguments for themselves’ and not just uncritically accept the opinion of a few authority figures — such as Greenspan — as being the only word on the subject.
“Baker said reporters should probe more deeply for information to back up assertions by officials and economists, as well as talk to other economists who have strong arguments supported by data that run contrary to the common-wisdom position. That way, perhaps, the news media will warn of the next economic bubble before it bursts.”
Read more here.