Red ink rising

Dean Starkman has a great piece in this month's CJR on the coverage of the credit card industry in our nation's financial publications. Academics, documentarians and others, he argues, have written extensively on the shifting relationship between consumers and their plastic and how it has affected people's lives negatively. These non-business-press sources place their credit-card story within a broader context, that of a besieged American middle class caught in an iron vice of stagnating incomes; shrinking disposable income; rising costs for health care, housing, and education; the aforementioned usurious and rapacious practices of the credit-card industry; a growing, consolidating, and increasingly sophisticated debt-collection industry; and, to add insult to injury, a new bankruptcy law that closes the courthouse door to formerly eligible debtors. This narrative, as we will see, is fully supported by credible anecdotal and aggregate data and happens also to be true. The business press, on the other hand, has written the Wall Street narrative but largely ignored the repercussions on Main Street. The financial press, I would suggest, did not rise to the journalistic challenge presented by this radical shift. Focused on traditional earnings and marketing stories, it didn’t really ask how it was that retail banking, of all things, the maturest of mature industries, had become a phenomenal driver of earnings growth and share price performance. Instead, it stuck to the script: This speaks to a broader critique of media coverage on the economy, one that many have made recently regarding the housing bubble. For one, financial innovation has outstripped regulation and this new, complex web of financial arrangements that has emerged is flat our confusing. Reporters of all stripes are having a difficult time teasing out the important threads and relaying that to information to readers. Instead, in a short news cycle, they focus on facts they can report, like the stock ticker, even if those numbers are meaningless to many Americans. Here's Ezra Klein. The media, however, don't have a whole lot of time to treat them with care. In an age of 24-hour financial channels and daily business broadsheets, the allure of an easily comprehensible number that comes out every few seconds and can serve as the subject for further commentary is hugely seductive. Increasingly, the stock tickers serve the same purpose in economic reporting that poll numbers serve for political scribes: They provide constant, reportable data that can be used to draw broad conclusions about the subject as a whole -- but at a cost of accuracy, random fluctuations and significant separation from the issue at hand. It's a tricky problem to correct. So until the media can, we best read Dean Baker.