Irish Economy
Irish mainstream media in times of boom and bust
By Michael Hennigan, Finfacts founder and editor
Sep 15, 2014 - 7:37 AM

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Dr Julien Mercille, a French-Canadian who lectures at University College Dublin (UCD) has written a book, 'The Political Economy and Media Coverage of the European Economic Crisis: The Case of Ireland' on the performance of the Irish mainstream media in times of boom and bust.

The Irish national mainstream media market is small: 3 locally-controlled broadsheet dailies; 2 Sunday newspapers; RTÉ, the State-owned broadcaster dominates television and radio broadcasting and is funded via a mandatory licence and commercial advertising; a small commercial TV station and 2 national commercial radio stations.

About 30 middle-aged people have editorial control on business/ economics content and the stable of pundits tends to be stable whether they are right wrong and or sometimes disastrously wrong.

It's interesting that it's a foreign academic who is prepared to put the gatekeepers to newspaper columns and media appearances, in the dock.

The number of Irish journalists with an knowledge of economics to forensically question ministers is small and the taoiseach of the day can get away with refusing all requests for broadcast interviews where he would be questioned in detail on policy.

At a ministerial press conference this year I had the experience of being told not to interrupt the minister when Richard Bruton was defending 2013 jobs data that he claimed to be reliable but was later shown to have been wrong.

It should also be noted that in the small society, Dr Mercille's colleagues at UCD and counterparts elsewhere are not noted for treading on each other's toes.

Mercille says Ireland’s economic crisis has its roots in a housing bubble that collapsed in 2007. Commentators have pointed to a number of bankers, politicians, developers and builders who share part of the responsibility for the orgy of lending and borrowing that preceded the crash, but the key role of the media as a cheerleader  has not yet been systematically examined.

The book was preceded last year by 2 papers: The Role Of The Media In Propping Up Ireland’s Housing Bubble; The Role of The Media in the European Economic Crisis: The Case of Ireland [pdf - free download].

Mercille summarised the pre-boom cheerleading:

It is not too difficult to identify a housing bubble in the making, based on simple indicators such as the P/E (price/earnings) ratio and the price-to-income ratio. This is what a few analysts did, such as The Economist magazine, which stated in 2002 that Ireland’s real estate market had been ‘displaying bubble-like symptoms in recent years’ and estimated that it was then overvalued by 42%. However, the Irish media were almost without exception cheerleaders for the booming property market, only dampening their enthusiasm months after prices had started to decline in late 2007 and 2008.

One way to illustrate this claim is simply to count the number of references in the press to the notion of a ‘bubble’ in the housing market before and after the crash. The figure above shows this for the Irish Times, Ireland’s newspaper of record. It can be seen that before 2008-2009, there were comparatively few articles that even mentioned that the market might be in bubble territory. On average, the newspaper had 5.5 times more articles on the bubble per year in 2008–2011 than in 1996–2007. For the newspapers Irish Independent and Sunday Independent, which boast a high readership, it was even worse: they had on average 12.5 times more articles mentioning the bubble in 2008–2011 than in 1999–2007. And that doesn’t mean that such articles published before the crash warned of a bubble - - very, very few did, and many only talked about it to attempt to reassure readers that in fact, it didn’t exist.

Another way to look at the performance of the Irish media before the crisis is to consider that between 2000 and 2007, the Irish Times published over 40,000 articles on economic topics - - but only 78 were about the real estate bubble, or 0.2% of the total. In other words, any article that might have been critical about the housing market was effectively lost in a sea of uncritical reporting. That’s a very poor record for one of the most important economic events in Ireland over the last decades.

Television displayed the same behaviour as the print press. During the boom, the state broadcaster, RTÉ, fed the national obsession with property by airing shows like House Hunters in the Sun, Showhouse, About the House and I’m an Adult, Get Me Out of Here. In particular, Prime Time, a leading current affairs programme, remained essentially silent on the dangers inherent in the rapid growth of the property market. Between 2000 and 2007, it presented over 700 shows, but only 10, or about 1% of the total, talked about the housing boom. Worse, the majority of these had guests arguing that there wasn’t any bubble. This is not surprising, as most of them were either affiliated with the property and financial industries or politicians from Ireland’s establishment parties (Fianna Fail, Fine Gael and Labour), which all had direct or indirect political or economic interests in sustaining the fiction that the Irish economy was booming, and would not stop booming. They were quickly brought back to their senses, but alas, too late."

Finfacts said last year that RTÉ, the public broadcaster, reported in 2011 that Geraldine Kennedy, former Irish Times editor, had denied that her paper compromised its standards with its property coverage during the boom.

She said at a public forum that The Irish Times had been the first and only newspaper to publish in 2007 the views of Morgan Kelly, a professor of economics at University College Dublin.

Kelly began a series of searing indictments of monumental misgovernance, policy and regulatory failures during the years when many thought the free lunch had been invented.

Kennedy said his articles had "astounded" the political and business establishment by saying the property boom was over and how far the market was to fall. "And we were eaten alive for it," she said.

However, the penny had dropped only when the firestorm was out of control.

We also reported in 2006 that it was believed that 60% of Irish Times revenues came from property advertising.

In 2006 the Thursday Irish Times Property Supplement averaged about 60 pages - - excluding editorial, that was about 50 pages of advertising at €12,000-€15,000 a page.

In the Sunday Business Post, Laura Noonan wrote in 2006:

Between 2002 and 2005, the amount spent on advertising Irish residential property soared by 157%. The spending frenzy reflected a property market that was on a steep upward trajectory, with house prices rising to record highs.

Now, though, experts say that the property market is heading for a slowdown. This year's price growth forecast stands at 13%, but experts expect 2007's rate to drop to between zero and 5%."

In 2002, property advertising rose by 31%, followed by 34% in 2003, 46% in 2004 and 29% in 2005. "The first eight months of this year, however, have recorded rises of just over 7%."

In respect of the aftermath of the bust Mercille argues "that elites in both creditor and debtor countries share a similar interest in full debt repayment through the imposition of fiscal consolidation and austerity programs on taxpayers in debtor countries, a process which can be seen clearly in Europe today. The media, being part and parcel of the corporate establishment, share elite interests and views and have thus played an important role in making such policies acceptable to the public by dismissing the option of defaulting on sovereign debt, even if empirical and historical evidence shows that it could potentially be beneficial for countries like Ireland. This will be shown through a systematic examination of articles published in three leading Irish newspapers over the period 2008-2012."

On debt default, "only a total of 28 articles appeared in the three newspapers which addressed the subject directly over five years.

Of those, 17 were favourable to the default option, 7 were against it, and 4 adopted a neutral stance. The fact that such a small number of articles addressed the topic, out of thousands of 16 articles about the economy since 2008, constitutes a strong piece of evidence to support the claim that the media present views that tend to be in line with those of elites."

Peter Murtagh who had experience with The Sunday Times in London and later at The Guardian where he was deputy foreign editor and finally news editor, was opinion editor at The Irish Times when the Celtic Tiger crashed. My own experience was that he was prepared to give a platform to dissenters from the status quo.

After being switched to foreign affairs in 2011, the section returned to the editorship of cautious conservatives.

A flaw in Mercille's post-crash argument is that a hugely consequential State bank guarantee that was initially termed "the cheapest bailout in the world" turned out to be a decision that was made with no serious considerations of downsides.

The proponents of default and exiting the euro were also unwilling to sketch scenarios in detail that would follow such unilateral decisions.

The typical response was that Frankfurt would cave but even if that was likely, a Plan B could have given such proposals more credibility.

Shane Ross, a former business editor of the Sunday Independent who had been admirer of two of boom's leading bankers, in June 2011, proposed a default and cited the post default successes of Russia and Argentina, which had both gained from commodity booms - - but still foreign examples were no substitute for a local blueprint.

When tax revenues collapsed, how realistic was it to expect external grants or loans to support bubbletime spending?

Commercial considerations are hard to avoid and the book costs £90 ($123) and downloading last years papers from the official site would cost $39 a pop.

Finally, despite the bust, few Irish data indicators can be taken at face value:

The idiot/ eejit's guide to distorted Irish national economic data

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