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The alarms were working, but nobody was hearing

I was surprised that anyone else was surprised at the economic meltdown, because I thought I’d been hearing for many, many months that the fan was spinning hard and the shit was in the air, hurtling fanward. It seemed that that the alarms were firing full blast, but everybody was listening to very loud, very pleasant music through earbuds planted deep in their ears, and they couldn’t quite hear.

Jay Rosen on Twitter just posted a link to an article in American Journalism Review called “Unheeded Warnings,” which says “well before this year’s economic collapse, business journalists shined a spotlight on serious problems in the U.S. economy. But regulators and members of the public didn’t pay much attention.”

The business media in 2008 serve as a welcome scapegoat for those who simply want to ignore their own culpability in the financial meltdown. But it’s a bad rap. Gone since the tech bubble burst in 2000 are the flattering CEO profiles and the touting of Internet companies with no revenue. The business media have done yeoman’s work during the past decade-plus to expose wrongdoing in corporate America. In fact, a review of the top business publications in the country shows that they blanketed the major issues, from subprime loans to adjustable-rate mortgages to credit derivatives, that caused so much economic pain.

This is followed by an overview of some of the coverage. A bazillion stories referenced the “housing bubble” The Wall Street Journal warned for years about potential problems with Fannie and Freddie, such as a story in 2003 that included this bit of intelligence: “Far from the sleepy mortgage company of its carefully cultivated reputation, Freddie Mac in recent years has evolved into a giant, sophisticated investment company, running a business laden with volatility and complexity. That change has sent risks soaring, not just for investors but for U.S. taxpayers, who likely would be on the hook if the federally chartered company stumbled.” The New York Times had a 2004 piece called “A Coming Nightmare of Home Ownership?” that said “the most damaging legacy of Fannie Mae’s years of unchecked growth may not be evident until the next significant economic slump,” and another that said “If the company encounters serious setbacks, the impact on homeowners and the world’s financial markets could be unpleasant.”

Quite a bit more in the article, which gets to the key question – why after all this did the collapse of the housing market seem so shocking?

Andrew Leckey, director of the Donald W. Reynolds National Center for Business Journalism at Arizona State University, compares the situation to an unwanted Christmas present wrapped in shiny paper and a bow: Nobody wants to open it up to see what’s inside. The reading public wants to read only what it wants to believe. Brauchli agrees: “The notion that the business press wasn’t paying attention is wrong, and the assertion that we were asleep at the switch is wrong. We were attentive. We were aggressive. We were aware. We wrote abundantly. But it is very hard to get the public’s attention for stories warning of complex financial risks in the middle of a roaring, populist bull market.”

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