When Journalism Misses the Big Picture

Robert Teitelman thinks that since he’s in charge of a publication aimed at financial-market professionals, there’s no need to spend much effort on making it easy to read:

There’s an entire world of B2Bs like The Deal and Dealscape that, in fact, are targeted at practitioners. The difficulty of the B2B game is not necessarily to write more accessibly as it is to report and write with greater sophistication and depth.

There are two problems here, as I see it. Firstly, there’s no reason that accessible journalism can’t be sophisticated and deep. It’s not necessarily easy to write accessibly about complex and sophisticated ideas, but yes, it can be done. The main problem is that it takes much more time and effort: the amount of work I put into my Wired story on the Gaussian copula function, for instance, was a good order of magnitude greater than the work that I would put into writing at that length on the blog. Maybe straitened journalistic enterprises don’t have the resources to make their stuff accessible.

But secondly I think that financial journalists are deluded if they think financial-market professionals are willing and able to wade through pages and pages of dry, jargon-heavy prose. The financial professionals I know tend to have short attention spans and have no particular eagerness to read the trades — especially any story in which they’re not quoted. Just because you’re writing for a business audience doesn’t mean your writing shouldn’t be lively and accessible. And, ideally, short.

Teitelman adds, apropos my call for more accessible financial blogging,

Salmon and his commenter skip past the hard question here, however: Can the complexity of finance (and economics) be effectively captured by the kind of simple explanations required by an audience that barely knows the basics? Let’s put it another way: In telling that “simple” story, is the journalist distorting the situation, highlighting certain aspects, accentuating certain tendencies and ignoring others?

It’s true that the mass audience does tend to be attracted by simple explanations; I got a worryingly large number of emails after my Wired piece came out essentially saying “thanks, you’ve now explained everything”. Which of course one article about one formula could never do. But I never asked for journalists to oversimplify, and there’s no reason that accessible journalism can’t show many sides to any given story. What’s more, trade journalism is also guilty of many of the sins which Teitelman enumerates.

It’s not just journalists, of course, who will highlight certain things and ignore others. Often, the journalists do that just because they rely, of necessity, on their industry sources — and their sources are doing it too. One of the problems with trade journalism is that a lot of day-to-day reporting is done via the banks’ PR departments, and the PR departments tend only to serve up managing directors and above for interviews. And when you talk to high-level people, you’re often talking to people who are genuinely ignorant. Think of AIG Financial Products, as described by Michael Lewis:

It’s hard to know what Joe Cassano thought and when he thought it, but the traders inside A.I.G. F.P. are certain that neither Cassano nor the four or five people overseen directly by him, who worked in the unit that made the trades, realized how completely these piles of consumer loans had become, almost exclusively, composed of subprime mortgages.

Or think about Bob Rubin, who famously told Carol Loomis that he’d never heard of the notorious liquidity puts which ended up all but destroying Citigroup (C) until after it was far too late — despite the fact that Rubin, more than any other individual, was meant to be the person taking the big-picture view of the bank’s overall risk profile.

Looking back at the history of journalism over the course of the financial crisis, the problem was never too much oversimplification as it was too many journalists taking a narrow view of the market: they didn’t think nearly enough about — or push bankers to answer tough questions about — big-picture systemic risks. It’s a hugely important role of journalism to put events in large-scale perspective. Those stories should be written more often, and they should be written as accessibly as possible, by journalists and bloggers both.

Comments

[nobby73:]

I agree with you, it is crucial to think about the simplistic facts. Take SIVs for example, these are vehicles which allow you to put certain assets off balance sheet. A common feature is the funding is provided by commercial paper, with the bank providing a CP backstop. Is the risk off the books?

Yes, until the quality of the assets deteriorates, or the bank, which is the provider of the CP backstop hits a rating trigger. If the bank is downgraded, there is a sudden jump in funding requirements which is more expensive and further deteriorates the bank. If the assets in the SIV deteriorates, it come on balance sheet and damages capital ratios, therefore likely triggers a downgrade. The banks did not know the difference between capital arbitrage and real balance sheet management. For all intents and purposes, the risk was still on balance sheet when it mattered.

I am sure if you explained it in simple terms to an educated novice, they would have seen it quickly, but if you framed it in fancy financial language, they would have said it sounds very clever and assumed you knew what you were doing.

Jul 07 06:16 PM

[Jasper M:]

So often, the deciding factor for whether (or, for pessimists, when) bad processes get entrenched is if the people charged with noticing such things are paying attention.

Jul 07 10:54 PM

[the hand:]

very few of us are interested in reading the truth, most are interested in confirming what we think is true.

the reality is that the situation complex. few have time to read to get a feel. this is the first time in my lifetime that i think the economic bears may be correct. these bears as a group have been disproven many times through history.

back to journalism. it is about money. money comes from advertising. advertising is about a positive message.

Jul 08 01:24 AM

[derryl:]

Before you can give an accurate simple explanation of anything you have to understand the big picture. Nothing exists in a vacuum. Everything exists in a context, a bigger picture. If trade journalists can't give a relatively simple explanation of some aspect of their subject it's probably because they really don't understand the field very well.

Jul 08 02:11 AM

[Leftfield:]

Good point; if a journalist or bigshot can't explain simply, there is probably no understanding.
Too bad with the economy, mainstream journalists mostly don't even try to get beyond soundbites. This debacle is huge yet there seems to be none of the whistleblowing and investigative journalism once common, at all. I've heard mainstream journalists actually joke about their math and economics ignorance all too often. The ramrodding of TARP came with the media having no clue of it's importance. I saw a silly program about, "take your own stress test" while that was in the news, with a reporter added that she knew someone who had a heart attack soon after a stress test.
Mainstream media wasn't always so clueless or worse. Lack of investigative reporting is "the dog that didn't bark."

Jul 08 09:20 AM

[Perry B:]

Good article. One point comes to mind having owned a news publication and the struggle between good accurate journalism and the almighty advertising dollar. One has to make a decision as the publisher. Which is more important. Political correct content or truth. I found in my experience. Truth wins and advertisers will follow. On that road to discovery of the truth one angers many political forces. However the publication gain's the respect of the masses. Who eventually buy products. In today's mainstream media. Publishers are to concerned with keeping the advertising base they have. Consequently they are stagnating and losing readership. The next step is they will go out of buisness. Giving way to fresh truthful journalism. The new emerging journalists and publishers will capture the market share of readers seeking the truth, and we may get away from this yellow pravda journalism we now endure. But this is not why I am writing. I am writing because AIG just did one of the dirtiest tricks on the stock market which the media has not said much about. My concern is that thier silence is a way of making us as consumers feel we are helpless to these Wall Street tricks. Which in turn will make it easier for Citi, BAC and all failing financial institutes to follow suit. Bilking the public for one more time of unpunished arrogance and greed. Greenburg was aquited by a New York jury For his part in a retirement "scheme" As the press called it. The word scheme used to mean an evil underhanded wrong doing. Which would send off bells of foulplay to any strreet smart individual or journalist. But today it is a buisness plan. This scheme left many retiree's facing an uncertain weaker financial future. Where is the press on this issue? While Greengurg walks freely and very much in the clear for his part in the scheme.

Jul 08 11:46 AM

[John Lounsbury:]

If journalists (and bloggers) would force themselves to write two versions of every article, one for the professional reader and one for the general public, they would determine how much they really understand about the topic. If you can't do both, you probably have some blind spots. Leftfield, derryl and nobby73 are, essentially, expressing this opinion.

Secondly, some are writing editorials rather than news analysis for reasons mentioned by the hand.

Jul 08 12:46 PM

[John Lounsbury:]

Felix - - -

Sorry. I neglected to thank you for writing about this topic. Good article on a subject that all who are trying to contribute to news, analysis and opinion should be thinking about.

Jul 08 12:48 PM

[Cesar Valencia:]

Only people who truly understand an issue are able to talk and write clearly about these issues.

Jul 08 02:47 PM

[Swashbuckler:]

A large newspaper publisher said a lot in a few words several years ago----"Editorial content. That's what separates the ads."

Jul 08 05:09 PM