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Is the Press Too Big to Fail?

Because it has been failing us again and again since Watergate.

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Nonetheless, the sense that the war was an unjustifiable grind grew, especially after the Vietnamese launched the Tet Offensive of January-February 1968, startling the U.S. military, Washington officials, and journalists alike. When, in 1969, Seymour Hersh  reported for the tiny Dispatch News Service that a unit from the Americal Division had slaughtered hundreds of Vietnamese civilians in a village named My Lai, his story went mainstream.

Still, the long bombing campaign that President Nixon ordered in Cambodia and Laos did not feature on television, and barely made the newspapers.  And even when, in a remarkable feat of reporting, it finally did in a major way, there was no journalistic sequel.  The “secret” bombing of Cambodia -- secret from Americans, that is -- was reported on page one of the New York Times on May 9, 1969, and 37 years later, the reporter,  William Beecher, said this about his story: “We're not talking of some small covert operation here, but a massive saturation bombing campaign, with a false set of coordinates to mislead the Congress and the public… You would have thought that such a story would have caused a firestorm. It did not.”

After Watergate, whatever hard-won, truth-bound independence the mainstream press had wrested from its own history failed to hold.  In the run-up to George W. Bush’s invasion of Iraq, for example, most Washington journalism once again  collapsed into deference, and so, too, did the financial press on its own front.  Washington’s war-making might and Wall Street’s financial maneuvers were both deemed too mighty, too smart, too hypermodern to fail.

Although the  New York Times and the  Washington Post later acknowledged flaws in their Iraq reporting, neither paper nor other major outlets have owned up to the negligence that led up to the great global economic meltdown of 2007-2008. We are far from grasping how fully business journalism played cheerleader and pedestal-builder for the titans of finance as they erected a fantastical Tower of Derivatives, which grew way too tall to fail without wrecking the global economy.

Start to finish, financial journalism was breathless about the market thrills that led to the 2007-2008 crash: the financialization of the global economy, the metastasis of derivatives, and especially the deregulation underway since the late 1970s that culminated in the 1999 congressional repeal of the 1933 Glass-Steagall Act (with President Bill Clinton blithely signing off on it).  That repeal paved the way for commercial and investment banks, as well as insurance companies, to merge into “too-big-to-fail” corporations, unleashed with low capital requirements and soon enough piled high with the potential for collapse.

A Proquest database search of all American newspapers during the calendar year 1999 reveals a grand total of two pieces warning that the repeal of Glass-Steagall was a mistake.  The first appeared in the Bangor Daily News of Maine, the second in the St. Petersburg Times of Florida. Count ‘em: two.

On February 24, 2002, as the scandal of the derivative-soaked Enron Corporation unfolded, the New York Times’s  Daniel Altman did distinguish himself with a page-one business section report headlined “Contracts So Complex They Imperil The System.”  He wrote: “The veil of complexity, whose weave is tightening as sophisticated derivatives evolve and proliferate, poses subtle risks to the financial system -- risks that are impossible to quantify, sometimes even to identify.” He stood almost alone in those years in such coverage.  Most financial journalists preferred then to cite the grand Yoda of American quotables, Federal Reserve Chairman Alan Greenspan.  And he was just the first and foremost among a range of giddy authorities on whom those reporters repeatedly relied for reassurance that derivatives were the great stabilizers of the economy.

 
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