'Why did nobody tell us?'

Jack and I attended a fascinating debate this week at the London School of Economics: ‘Why did nobody tell us?' reporting the global crash of 08’. The debate boasted a celebrity panel of Evan Davies (BBC), Vince Cable (LibDems), Gillian Tett (FT Assistant Editor) and Alex Brummer (Daily Mail City Editor) alongside LSE professors Willem Buiter and Howard Davies. The heated and occasionally humorous debate centred on the role of the financial press and its actions leading up to the current crisis:

The role of the press: Davies argued that the bulletin nature of news prevents balanced stories and should reflect rather than disrupt wider opinion.

The scope of the business press: Tett described the ‘iceberg memos’ which she drew up as editor of the Lex column in ‘03/4. They portrayed the vast areas of the City such as credit default swaps, derivatives, securitisation and debt that remained underwater receiving negligible coverage. These now hazardous areas were isolated from the outside world in favour of a focus on equities and foreign exchange issues.

The banking model: Cable suggested that the requirement of governments to protect banks necessitates state regulation similar to that used in utility companies. And also that losses AND profits need to be nationalised.

The ability to forecast crises: Willem Buiter (LSE) illustrated that history is hard enough to plot accurately and that global crises have never been forecast. He suggested that the requirement of the media to entertain inhibited any compelling warning.

The rank of financial press: any warnings that did appear remained in the business section ‘on p86’ as Brummer put it. Tett portrayed the City as unaware of the context of their industry which has led to the unforeseen impact of its demise. This ‘Bloomberg Screen’ mentality develops from the wider public’s distaste for the alphabet soup of finance.

The housing crash: Brummer demonstrated how the Mail had continually warned of a housing bubble. Davies suggested that since ‘05 sensible homeowners should have been wary of a bubble.

Financial PR: Tett and Howard Davies (LSE) described how the time pressures on journalists have assisted the growth of financial PR. They agreed that a PR serving the private interest of clients should not prevent a journalist publishing unbiased information.

This was a incredibly informative event hosted by the LSE, and the team are looking forward to attending many more in the future.

Nick