The Death of Journalism

When everyone is a journalist, no one is a journalist. It used to be that there were only a few, respected journalistic sources. If something important happened, the journalists would dissect it and tell a reasonable approximation of the truth about the events that led to the problem. The journalistic entities had the dedication and resources to spend months researching all the angles and come up with valid, verified stories about how events unraveled.

When the Internet started to become popular, many were thrilled that the barriers to becoming a journalist were removed and that anyone with a blog could compete with the big journalistic entities. No more were conservatives the victims of the largely liberal formal journalists. No more were special interest groups held hostage by the major businesses that owned the media. No more could a handful of outlets bottle up important stories because of perceived conflicts of interest. At least that was the conventional wisdom.

What has emerged is a hideous, tangled, conflicting pile of reports on virtually every event that happens in the world. As soon as something happens that a special interest group feels they can make points off of, out comes an instant analysis. What is important in this game is no longer truth, evidence or verifiability but rather speed. Get out there with the most outlandish interpretation of the facts, but be first to publish, and you seize the high ground. It's what I call a "front--running lie" and it works. The untraditional journalists have put enormous pressure on the traditional journalists. The traditional journalistic companies have lost readers and viewers in vast quantities -- so much so that they no longer have the resources to undertake the long, arduous, expensive undertaking of determining the truth in complicated events. And even if they do make the effort and publish the truth, no one pays much attention. By the time they publish there have been so many conflicting stories and theories published that the public has lost interest in the subject and the "real" story is buried under the sea of misinformation that preceded it.

Politicians have realized this and have begun to make it work for them. Support the wrong bill or kill the right one? No problem. Be the first to comment and blame someone, anyone else. Get your supporters to write vociferously and frequently on their blogs or anywhere else they can get published and confuse the issues before anyone else can speak clearly about the subject. Not only can you avoid being sent packing for your misjudgment, but you can improve your standing with your constituents. Because you were the first to speak and so much supportive stuff has been written, if the topic is even slightly complicated no member of the public will realize they have been manipulated. Don't worry about a real journalist going Watergate on you. The major journalistic sources no longer have the resources for a long investigation and their story would be lost in a sea of confusion anyway.

Case in point: the current financial mess. The Gramm--Leach--Bliley Act of 1999 deregulated the financial markets and caused the financial meltdown. This story was so widely accepted that former senator Phil Gramm had to step down as an advisor to John McCain's presidential campaign. But it is clearly a front--running lie. The bill repealed the portion of the Glass--Steagall Act of 1932 which made bank ownership of stock brokerage companies illegal. Quick quiz: Name one major bank that acquired one stock brokerage firm in the period between 1999 and 2007 -- before the meltdown started. Finding it hard? Try impossible. But if the 1999 act removed the prohibition of bank ownership of brokerage firms and led to the financial melt--down, don't you think at least one merger under the new law would be necessary to make the claim stick? Before the Internet, it would have. Now the truth is buried under an avalanche of front--running lies.

Who were the politicians who created this lie? That would be the Democratic leadership of the Senate Banking Committee in 2005.

The then--Chairman of the Federal Reserve System, Alan Greenspan, testified before the Banking Committee that, If Fannie Mae and Freddie Mac . . . `"continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever--growing potential systemic risk down the road. We are placing the total financial system of the future at a substantial risk." Greenspan was speaking in support of a bill to regulate Fannie Mae, Freddie Mac and Ginnie Mae with an agency with the same kinds of powers over them that the FDIC has over banks. This bill was bottled up in the Senate Banking Committee and never saw the light of day.

It is interesting that former president, Bill Clinton -- who was the president who signed the 1999 legislation, agrees that deregulation had nothing to do with the financial crisis. As he was quoted in the Wall Street Journal on October 1, 2008: "But I have really thought about this a lot. I don't see that signing that bill had anything to do with the current crisis. Indeed, one of the things that has helped stabilize the current situation as much as it has is the purchase of Merrill Lynch by Bank of America, which was much smoother than it would have been if I hadn't signed that bill."

The front--running lie is still being promulgated long after it should have died. The current Wikipedia entry on the Glass--Steagall Act concludes with this gem: "The repeal enabled commercial lenders such as Citigroup, which was in 1999 then the largest U.S. bank by assets, to underwrite and trade instruments such as mortgage--backed securities and collateralized debt obligations and establish so--called structured investment vehicles, or SIVs, that bought those securities. [14] It can therefore be argued that the repeal of this act is directly responsible for the Global_financial_crisis_of_2008--2009"

The link for Structured Investment Vehicles brings up this Wikipedia citation: "A structured investment vehicle (SIV) was a type of fund in the shadow banking system. Invented by Citigroup in 1988 . . ." Whoever wrote these paragraphs for Wikipedia is apparently telling us that Citigroup invented SIV's in 1988 and kept it bottled up on a shelf in the janitor closet until 1999 when Congress let them actually create them. The truth is clear, verifiable and irrefutable: None of the activities that have brought on our current financial woes are attributable to the 1999 deregulation of the banking system. Trading in mortgages, mortgage--backed securities, CMO's and SIV's were activities that not only were legal before 1999, but they were widely traded by virtually all banks in large quantities.

Get ready for round two of the front--running lie on the financial crisis. The republicans who are opposing the current Fiscal Stimulus Bill are suggesting that the banks that need the bailout money should be allowed to fail. Naturally, this is silly. When the economy started to fizzle, the Fed under a republican president, jawboned Bank of America to take on the failed Merrill Lynch and Countrywide. They also persuaded JPMorgan Chase to take on the failed Bear Stearns. One could reasonably argue that Citicorp failed on its own, but the only reason BofA and Morgan/Chase are currently under water is because they took over failed institutions under duress and with the promise from the Fed that the government would cover the losses.

This lie is particularly interesting in that the democrats started it when the Bush Administration began the bail out. Now that Obama is president, the democrats are all in favor of saving the economy, while the republicans have flip flopped. For both parties, the truth of the allegations isn't important. All that is important is that they can make political gains by speaking. No one cares if what they spout is true, nor even if what they spout is consistent with what they spouted yesterday.

There is no longer a coherent 4th Estate to watch over them. Journalism is dead.

February 14, 2009