David Cay Johnston, who won a Pulitzer Prize for his innovative coverage of our tax system, retired this year as a investigative reporter for The New York Times. He is the author of Free Lunch: How The Wealthiest Americans Enrich Themselves at Government Expenses (and Stick You with the Bill).
Now that the House has rejected the $700 billion bailout, what we have to fear is not fear itself, but fear-mongering--particularly by our leading news organizations.
Katie Couric opened the "CBS Evening News" last night with video of the House clerk declaring the 205-228 vote, and then she said, "That sets off the biggest decline in stock prices ever."
Brian Williams opened the "NBC Nightly News" with the same error, saying it was "the worst single day drop ever."
These are not minor errors. They are profound, ridiculous, amateur-hour errors that surely frightened many people, especially in the context of the tone of the coverage. The stock market has had much bigger one-day declines. How about right after 9/11? How about 1987, when the Dow fell 22 percentage points, more than three times the slightly less than 7 percent drop Monday?
ABC was almost as bad. Charles Gibson read from his teleprompter words that were technically accurate, but so misleading that the effect was to instill fear in the hearts of millions who did not catch the technicality. He reported "the biggest one-day point drop" in the stock market.
That's scary unless you know what it means.
As my friend Fred Brock, one of the best copy editors who ever worked at The Wall Street Journal and The New York Times, said when I read him the transcripts last night: "That doesn't mean anything; it's utterly meaningless."
Stock indexes matter in terms of percentage changes, not point changes, because the base changes all the time. How many points an index like the Dow or the broader Standard and Poor's 500 went up or down compared to the day before, or over a week, or over another contracted time period is a legitimate measure when trying to figure out the short-term direction of the market. But when you are comparing it to trading from say 2001 or 1987 or 1929, counting points, instead of percentages, is absurd.
My first thought when scanning the nightly news programs was that this was just another example of how journalists, broadly speaking, are innumerate and so errors pop up when it comes to numbers. But the subsequent words in the ABC and NBC reports made it clear that someone on the writing and producing staff knew just what they were doing. This was not an error; this was fear mongering.
Williams, for example, reported in the first story segment that "stocks fell off a cliff, the largest single point drop in history." If someone knew enough to write "point drop," and later the correspondent Tom Costello used the right measure--the percentage drop--it suggests the writer of Williams' intro was more interested in hype than sober facts.
Being technically correct while creating a false impression does not cut it for integrity, though. Gibson and Williams owe viewers an explanation and an apology tonight for misleading them. Even if they did not understand what they were reading, they are where the buck should stop.
The broadcast networks were not alone. CNBC, CNN, Fox, and MSNBC all had bumpers with the "biggest one-day point drop" or some variation. This was especially surprising on Keith Olbermann's show since he is vigorous in expressing his views, but he also takes care to check the facts, especially when making fun of fact-free zones like "The O'Reilly Factor."
But the most amazing misuse of this meaningless data point was on the front page of Rupert Murdoch's Wall Street Journal, where the sober six-column format has been replaced this morning with big headlines and a story on the bailout that takes up the entire top half of the front page. The second graph of the lede story reads: "The Dow Jones Industrial Average sustained its biggest point drop in history and its biggest closing decline since the day the markets reopened after the Sept.11, 2001 terrorist attacks. ..."
The New York Times, where I spent 13 years, got it right, though the tone--a two-deck, six-column wide headline--did not signal the kind of sober restraint to be expected in such uncertain times. The Times also relied on a broader and more useful gauge than the Dow, which has just 30 companies, to assess the market. The Times off-lede stated in its second paragraph, "The broad market as measured by the Standard & Poor's 500 stock index plunged almost nine percent, its third biggest decline since World War II."
Fear can become a self-reinforcing mechanism. It can prompt people who would otherwise just sit tight to act irrationally. At responsible news organizations, zealous attention to detail is a core value. I have seen reporters and editors argue over commas, blowup over a sentence, and, once, a colleague slammed a fist into a wall.
But this doesn't seem to be a priority right now. So, read the news skeptically. Very skeptically. And watch to see if Couric, Williams, and Gibson correct their bush league mistakes tonight.