Ann Pettifor

Predicting the crash: Did the media fail in its scrutiny?

7th November 2008

Paul Mason economics editor of the BBC’s Newsnight hosted an interesting event at the Frontline Club on Thursday 7th November. In attendance: Gillian Tett of the Financial Times, Michael Blastland, a freelance writer, Paul Lashmar, and yours truly. The theme was, and I paraphrase: “Why did the media fail to predict the crash? And what can editors do to prevent such myopia in the future?” Self-flagellation was in evidence all evening to the credit of the journalists present.

Paul Lashmar is undertaking research into the stories that were or were not written, and comparing these to What Was Not Written about Weapons of Mass Destruction. Gillian Tett gave a fascinating insight into her struggle to get the FT to investigate that large chunk of  the financial iceberg obscured from everyone’s view – the credit and debt markets. The paper she argued, focussed on just the tip of the iceberg – the equity and M&A markets.  I urged editors not to patronise their readers. People are hungry for a conceptual understanding of economics. Economists I argued were like those tourists on Phuket Beach. Only they were using complex mathematical modelling to measure perturbations on the surface of the water, instead of trying to understand the movement of tectonic plates beneath the waves…No wonder they could not predict the financial tsunami. . . Watch the debate here.


4 thoughts on “Predicting the crash: Did the media fail in its scrutiny?”

  1. Thought this might interest you, Ann:

    Franklin Delano Obama?

    By Paul Krugman

    Suddenly, everything old is New Deal

    again. Reagan is out; F.D.R. is in. Still, how much guidance does the Roosevelt era really offer for today’s world?

    The answer is, a lot.

    But Barack Obama should learn from F.D.R.’s failures as well as from his achievements: the truth is that the New Deal wasn’t as successful in the

    short run as it was in the long run. And the reason for F.D.R.’s limited short-run success, which almost undid his whole program, was the fact that

    his economic policies were too cautious.

    About the New Deal’s long-run achievements: the institutions F.D.R. built have proved both durable

    and essential. Indeed, those institutions remain the bedrock of our nation’s economic stability. Imagine how much worse the financial crisis would

    be if the New Deal hadn’t insured most bank deposits. Imagine how insecure older Americans would feel right now if Republicans had managed to

    dismantle Social Security.

    Can Mr. Obama achieve something comparable? Rahm Emanuel, Mr. Obama’s new chief of staff, has declared that “you

    don’t ever want a crisis to go to waste.” Progressives hope that the Obama administration, like the New Deal, will respond to the current economic

    and financial crisis by creating institutions, especially a universal health care system, that will change the shape of American society for

    generations to come.

  2. Ann, yes, universal health system for the U.S. not so much just for the health benefits but for the acceptance of the concept or a

    socialist universal good not the product of the free market. The problem for the USA is that their rhetoric has shifted so far to the right that

    they will not recognise nor embrace a solution from the left. Many of the 35 % without health care are forced to join local support groups which

    come unfortunately with a heavy dose of religion. So Universal Health Care will give a more secular balance. A decade ago Bill Clinton was raving

    that ‘this is as good as it gets’ when the economy was chugging along yet 40% or so were without health care. The crux now is not to restore the

    old system but to fundamentally alter it. Pre-crisis capitalism was not delivering equity within nations nor between nations and was destroying the

    I have one question. With all the government dollars going in to prop up banks etc. How is this being managed so that the

    taxpayer/provider has equity in the resucitated institutions. i.e what will be my dividend when they recover. Its almost as if some are still

    declaring profits and dividends to nominal shareholders but receiving the benefit of the general taxpayers money
    My prediction is that recovery

    programs will not have time to bight before further climate change and peak oil detonations occur.

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.