Buttonwood: Scrambled signals

“YOU cannot hope to bribe or twist, thank God, the British journalist. But seeing what the man will do, unbribed, there’s no occasion to.” Those lines from Humbert Wolfe come to mind when contemplating a new book of essays* that asks whether financial journalists were to blame for abetting, or not spotting, the financial crisis of 2007-08.The picture that emerges is mixed. Did journalists spot that house prices were inflated? Yes, a study found that the Spanish press used the term “real estate bubble” 2,500 times between 2003 and 2008. Did journalists report on the worrying growth of subprime instruments like collateralised debt obligations? Yes, at least in the specialist press. Did they spot that banks were expanding their lending very rapidly? Yes, an oft-cited quote from Chuck Prince of Citigroup about the bank having to keep dancing as long as the music played comes from an interview with the Financial Times. Did anybody tie the whole thing together to predict a seizure in banking and the deep recession that followed? No. But regulators and economists did not foresee that either.Nevertheless, the crisis did illustrate how the message…

Link to article: www.economist.com/news/finance-and-economics/21620232-did-financial-journalists-fail-spot-crisis-scrambled-signals?fsrc=rss|fec

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