WSJ: the dog that did not bark
I posed a question at a conference on financial journalism this week which still needs answering: Why did not the Wall Street Journal know of the shenanigans in the run up to the crash which started in 2007? It was the dog which did not bark.
Possible answers are:
- Most of the bad stuff was going on in unregulated markets which were hard to report on as they were not publishing public figures;
- The voices warning of danger, and there were ones, were drowned out as the profits of Goldman Sachs and others seemed to rise and rise; and
- It was all too complex for anybody to understand.
WSJ can investigate
After all, the WSJ does investigations. It spent months digging into the Clintons when Bill was in office over the so called Whitewater affair.
And it is not too complex: read the US Financial Crisis Inquiry Report for a clear understanding of it. Yes, it’s interlinked, but key points are easily stated, as the report shows.
WSJ blinded by belief?
My answer is: The WSJ was, is and will be a firm believer in lightly regulated markets which, it thinks, are the most efficient way of allocating capital. Its editors just could not believe that the lightly and unregulated markets in their street where banks were able to do what they wanted could fail in such a manner.
There’s a lesson for us all: don’t let your view of the world get in the way of viewing the world.
Investigative journalism training
I made the same point to a group of journalists when training on investigative journalism last week. Just because you think that you know what the story is, don’t let yourself be blind to a better story coming along.
It was heartening to see this group of “trade” journalists so keen to develop their investigative skills. Many journalists have given up and succumbed to the “churnalism” so common today. Not this group: and I look forward to the results of their efforts.
I am sure they will be better than the efforts of the WSJ in 2006/7.