By Roger Jeal

Financial market chaos has propelled business news onto the front pages and prime time TV. Our role in reporting it all responsibly under pressure, like that of the bankers, is under the microscope. Much has changed, and is changing every minute, but we still have a big job to do in questioning those involved.

Participants in our writing business news courses often say they are desperate to get their business new stories onto the front pages of their newspapers. Find a crisis! British TV channels recently aired programmes on the “human cost of the credit crunch” at the same time. The tales of how lives of ordinary people have been turned upside down, often by getting into debt that they could not repay, were scary and full of emotion. Who says business news is just technical and boring? It underlies so much else.

We face a long, hard road to scrutinise what happens next and probe what has changed. Recent events have illustrated how endlessly fascinating the story of business journalism is.  But there will be many twists and turns to follow from now on. 

And we need to consider how we do this. A recent BBC radio programme, analysing how  American journalists have covered the crisis, said some high-profile media took a populist line against bank bailouts without analysing very much how the inability of companies to get credit in this mess, however caused, would hit jobs and lives of so many people.

We need to report the risks and dangers as best we can, but it’s a difficult balancing act. Some leaks of talks between British banks and the government on potential support were blamed for allegedly “undermining” their shares. But if we journalists did not report what we discover to be happening, secrecy would just benefit those in the know. If we had spent more time covering and highlighting what was going on in the complicated “financial engineering” of recent years, we might have raised a few more questions a little sooner. Editors please note, your business writers can write important stories even when there is no crisis yet!

As a columnist for The Times newspaper put it: “We’re paid to pay attention for our readers who don’t.”

One change is an increase in doubts about the financial and economic model held up to so many countries as the one they should follow as they move away from state control.

The Wall Street Journal reported that the turmoil in the U.S. financial sector threatens to undermine the dollar and lead countries around the world to question America’s long-standing economic leadership and economic policies that follow the U.S. model. Germany’s finance minister has blamed the U.S. for causing the global financial crisis and said it would lose its financial superpower status.

How urgent and essential now is financial deregulation, liberalisation and privatisation, as promoted for so long by the International Monetary Fund, when Washington is moving in the opposite direction and many governments are nationalising banks or intervening in other ways? U.S. President George Bush broadcast that markets are not functioning well and there is a risk that good companies will not have access to the credit they need to run and grow their businesses.

As has often been seen in the past, free financial markets, essential though they are, don’t solve all problems on their own and sometimes need considerable help from the public authorities to function freely. Watch out for changes in language by your government and central bank. What previously announced plans are being put on hold, delayed or forgotten? What nuances can you detect in speeches about deregulation, banking liberalisation, privatisation etc.? If you spot changes, push for more details and ask why.

On the same front page that was largely devoted to the tense negotiations on the U.S. bank bailout plan (which was soon upstaged for news headlines!), the Financial Times reported that supermarkets and consumer goods businesses in Britain face the threat of heavy fines after the competition watchdog found evidence of companies sharing pricing plans.

There is a lot of talk of the real benefits of free and fair competition, but we may not be able to rely on businesses themselves to promote this.  So next time your politicians, bankers or businesspeople talk of  more or less regulation, more competition or whatever, remember to ask exactly how this will be monitored and regulated, as it must be, by the authorities, how much that will cost etc. Freedom doesn’t just happen because of government pronouncements and it costs money.

All we journalists need to begin with is a good set of questions to try to unlock newsworthy and/or informative answers and further leads to follow. And when the answers are not convincing, we have to probe and dig further because that would suggest that plans have not been thought through.

Business news stories pose the problem of explaining an ever growing number of technical financial terms that enter public debate – sub prime, toxic debt, moral hazard, private equity and many more – and, even more importantly, explaining what the financial gyrations mean for our readers, viewers and listeners.

Dictionary definitions of terms can go in sidebars and boxes but our main stories will help more by explaining the potential implications for our audiences. Amid talk of mind-boggling numbers and tortured language, never forget that human interest angles attract people into our stories. What happens on Wall Street has a big impact on life on Main Street in our every more interconnected local, national and global economies.

Everyone needs more clarity about the chaos, where we go next and why this happened.
Financial Times columnist John Plender commented: “Even bank boards and top executives have been woefully ignorant about the financial plumbing of their organisations.” British Prime Minister Gordon Brown added: “The issue here is about disclosure. You can’t do anything about a company which is taking things off balance sheet and not disclosing them. That’s got to change.”

Writing in The Independent newspaper, Stephen King, not the horror writer of that name but the managing director of economics at the HSBC banking group, commented: “Over the past few days …we’ve had a sobering reminder that capitalism can be incredibly unstable. The belief in free markets has taken a beating. State intervention is back, big time.”

But some U.S. politicians talked of stepping onto “the slippery slope to socialism”. So the whole question of more or less government intervention has been brought to centre stage again after facile assumptions that markets would solve all problems. Governments don’t run business well but markets and business need regulation from a referee.

Our job is to help make what is going on clearer, ask questions to make everyone think and highlight warning signs. Don’t be excessive in your language. Try to keep a steady head amid the financial euphoria and the doom and gloom.

For reference, take a look at this useful BBC site called “Credit crisis: World in turmoil” looks at stories on the crisis from around the world.

http://news.bbc.co.uk/1/hi/business/7654647.stm