The Media and the Banking Bailout

Towards the end of Tuesday night’s edition of TV3 current affairs programme ‘Nightly News with Vincent Browne’ the host asked one of his guests, almost rhetorically, whether the media have some responsibility for the artificial inflation of property prices in their promotion of the market through property supplements and advertising. His guest agreed that to some extent the media did play a part in that hyping.

In the closing moments the same guest commented on the front page of the next day’s Irish Times, an ‘extraordinary juxtaposition’ of an image of Minister for Finance Brian Lenihan, who had just struck a deal to underwrite the bad debts of Ireland’s major financial institutions to the tune of €400 billion, looking somewhat ‘haunted’, while just beneath, an advertisement for an Irish based bank displayed it’s current lending rates. Browne responded, “Well that’s the way things go.” [Nightly News with Vincent Browne, TV3, 30/09/08] [1]

And with that the corporate media concluded the audit of its performance during the boom years. No failure on its part, whether it be the promoting of over valued property or irresponsible lending practices, could now prevent them from striking a populist tone in the face of a systematic failure. It is apparently irrelevant that these same institutions were instrumental in bringing about this crisis. Retrospect is after all only for ‘old lefty whingers’ – the conventional wisdom tells us there are no solutions to be found in looking backwards.

The media and big business

Ireland’s national banks are creaking under the global credit crunch, as lenders make clear their suspicions of the banking sector’s as yet unknown level of exposure to the deflating property bubble. According to Morgan Kelly, Professor of Economics, University College Dublin, “Irish banks are currently owed €110 billion by builders and developers. Of every €100 that Irish residents have deposited in banks, €60 has been lent for property speculation.” Media analysis shares the blame for this predicament between the central boom profiteers, banks and developers. [2]

What is not referred to is the symbiotic relationship between the corporate media and big business, a relationship that put newspapers and media outlets at the virtual helm of the property boom titanic. In July 2006 for instance the Irish Times bought the property website MyHome.ie for €50 million. Three months earlier Tony O’Reilly’s Independent News & Media acquired PropertyNews.com, the “largest internet property site on the island of Ireland.” Along with their competitors, the Irish Times and Irish Independent promoted the sale and purchase of vastly over valued properties to consumers – invariably under the disingenuous presumption that property value is a function of time. [3][4]

The fraudulent mythology of never-ending property value increase has been perpetuated by the media for over a decade, with few notable exceptions. In 2005 the Irish Independent’s Con Power reporting from a seminar attended by over 200 leading property professionals predicted:

“The average Dublin house price will hit the €750,000 mark or higher in 2015” [Average Dublin house in 2015 to hit €750,000, Irish Independent, June 2, 2005][5]

Around the same time the Irish Times’ Edel Morgan speculated:

“One can only surmise what the average millionaire will be able to buy in Dublin in another nine years. A pokey one-bed apartment in the outer suburbs? Or maybe a townhouse on a new development bought under the local authority’s affordable housing scheme? Will the semi-d become the preserve of the multimillionaire while only the super rich will afford the luxury of living detached?”[6]

In the face of advancing realities this fanciful indulgence was to be short-lived and as the bubble wheezed, the rhetoric began to lose its bluster, though still clinging to its underlying theme.

In  2006 RTE broadcast ‘Future Shock – Property Crash’, a documentary discussing the possibility and likely consequences of a property crash, undermining completely the rhetoric of ‘hard’ and ‘soft’ landings – a contrived framing that simply suggested a return to ground level, obscuring the probability of negative equity. The media reaction was vehement.

Journalist Alan Ruddock likened the documentary makers to super-villain and sociopath Lex Luthor. Writing in the Irish Independent, which it should be noted, co-sponsors the ‘glittering’ Irish Property Awards, he claimed that RTE had “broadcast fear in the market”: [7]

“RTE did its bit on Monday night to kill the property market. And, if its own logic is correct, kill the economy too. Set to a soundtrack of gloom, Futureshock told us we were doomed. There were some caveats, but the message was relentless: the Irish property market, which has enjoyed a spectacular boom, is now stagnant.

Instead of being a sane and salutary warning that prices fall as well as rise, that property booms end and that a crash is a possibility, it became an exercise in fear endorsed and promoted by the national broadcaster.”[8]

Clíodhna O’Donoghue assured readers that “if (and that is a big ‘if’) the market is going to crash it will do so in a patchy, selective way which will not impact to any great degree on many of the existing homes in Ireland.” [Clíodhna O’Donoghue, Irish Independent, April 20 2007][9]

The Irish Times’ simply referred to RTE’s ‘lurid’ predictions. [10]

Three months later the Independent was forced to concede that the “RTE programme on property crash likelihood ‘was not biased’.” The Irish Auctioneers and Valuers Institute’s complaint to the Broadcasting Complaints Commission “claiming that the programme had not been impartial and had a detrimental affect on the property market” had been rejected. [Gareth Morgan, Irish Independent, August 11 2007][11]

In fact the predictions made by the makers of ‘Futureshock Propertycrash’ were far less severe than what we are presently witnessing. [12]

The Irish Times’ Assistant Editor Fintan O’Toole commented in interview with MediaBite on this issue:

“RTE are one of the few media outlets that don’t take property advertising. It’s not a simple one plus one equation, though it is undoubtedly true that if not the choice of subject, but the prominence that is given a certain subject has to be related to the direct interests of the media outlets themselves. There is no question that almost all of the Irish media for the last 10-15 years has had a crucial economic stake in a rising property market. Because property advertising is very lucrative and is a very important part of what makes the Irish media tick. It’s not that a newspaper like the Irish Times will not publish things that say ‘this is a bubble’. It has published a number of pieces and very authoritative pieces, but in a sense it’s where are those pieces going to appear. How are they related to the broader agenda, in terms of how we understand our society at the moment? So I’m not saying there is an absolute mechanical relationship between certain interests and what appears, but I am saying that the relationship exists. People need to understand this, it is not a council of despair – well you know there is nothing you can do about this. A critical understanding of how the media works is one in which people understand the kind of relationships that are involved and how to read and see that it is not necessarily an objective and accurate reflection of everything that is important to Irish society.” [13]

Unfortunately even tempered admissions such as this on the direct interests of the media in the buoyancy of the property market are rarely hinted at in print.

Discussing the Market – A ‘procession of the powerful’

A recent analysis by Greg Philo of the Glasgow University Media Group titled ‘More News, Less Views’ rejected by the Guardian on the grounds that “it would be read as a piece of old lefty whingeing about bias” commented: [14]

“News is a procession of the powerful. Watch it on TV, listen to the Today programme and marvel at the orthodoxy of views and the lack of critical voices. When the credit crunch hit, we were given a succession of bankers, stockbrokers and even hedge-fund managers to explain and say what should be done. But these were the people who had caused the problem, thinking nothing of taking £20 billion a year in city bonuses. The solution these free market wizards agreed to, was that tax payers should stump up £50 billion (and rising) to fill up the black holes in the banking system. Where were the critical voices to say it would be a better idea to take the bonuses back?” [15]

As with the property crash, the property boom was also a procession of the powerful. Mainstream media debates were invariably dominated by those with financial vested interests. For example, when the government was considering changes to stamp duty in order to artificially bolster property prices in late 2007 the Irish Business Post “asked six experts for their views on whether now is the time for the government to reform the tax”. [Stamp duty: the debate rages on][16] The response was overwhelmingly in favour of what should now be considered a failed policy. Those experts were:

Chief Economist with Friends First

President of the Irish Auctioneers and Valuers Institute

Economic research officer at the Economic and Social Research Institute

Economist with Douglas Newman Good

Chief Economist at the Sherry FitzGerald Group

Lecturer in economics at the Cairnes School of Business and Public Policy at NUI Galway

In November last year, when the Irish Times canvassed the views of property experts, or as they are more casually known property dealers, developers and investors, “to find out what they expect will happen over the next 12 months.” They consulted:

Managing director, CBRE

Investments director, Lisney

Managing director, Savills HOK

Managing director, Sherry FitzGerald

Managing director, Ballymore

Chief executive, IPUT

Director, Finnegan Menton

Predictably, these ‘experts’ were unanimously upbeat about the future of the property market. [Focus on prime locations and bargains, The Irish Times, 28/11/2007][17]

The mainstream corporate media’s reliance on “people that have an agenda”, specifically people that have the ‘capacity’ to influence reporting for their own financial gain, consequently then, people and institutions that are unlikely to have readers interests at heart, means that the infrequent protestations to the contrary are essentially drowned out: [18]

“The disproportionate influence and power which the property sector wields explains the prominence of, and support for, the calls for reductions in stamp duty received in the media during the election campaign.” [Noel Whelan, Wealthy sectors will gain most from stamp duty changes, 8/12/07][19]

Denial at the precipice

The Irish Independent’s Brendan O’Connor wrote a landmark piece in July 2007 ‘The smart, ballsy guys are buying up property right now’ still revered for its unintentional satire:

“Tell you what, I think I know what I’d be doing if I had money, and if I wasn’t already massively over-exposed to the property market by virtue of owning a reasonable home. I’d be buying property. In fact, I might do it anyway.” [Brendan O’Connor, July 29 2007][20]

As the cracks appeared in the property market, and analysts predicted further drops, journalists became even more irate, nudging potential buyers towards the credit abyss:

“The faint-hearted agonise over buying, hoping that prices will fall further. But don’t wait. Buy now, don’t listen to the doomsayers. [Kevin O’Connor, The Irish Times, 24/01/08][21]

“We all got such a fright last year, that we huddled up in the far corner of the field waiting for the sheepdog to herd us towards the gate. Well the property gate is open again. Not quite as wide open as it had been before, but open nevertheless. So let’s get moving. You can never buy at the wrong time.” [Isabel Morton, The Irish Times, 24/04/2008][22]

In March 2008 Brian McDonald wrote in the Independent “If I was to give advice to people, I would say, go out and buy some property now. It’s great value.” [Brian McDonald, March 15 2008][23]

In April the Sunday Independent relayed word from leading estate agent Peter Wyse that “the time to buy is now. There is certainly great value in the market at the minute but it doesn’t mean people can dilly dally.” [Sunday Independent, 06/04/08][24]

In May the Irish Independent’s business section offered advice from Ken MacDonald of Hooke MacDonald estate agents:

“Ken cuts to the chase by saying “in fact I would have no hesitation recommending any friends of mine to buy at the present time because with the sharp reduction in new starts, it is inevitable that there will be a shortage of supply in Dublin in the very near future”.” The journalist responded: “OK Ken, I’m convinced. I’ll take two. Now, if I could just get a mortgage…” [May 22 2008][25]

Journalists were forced to compete against the rising tide with ever more contradictory cognitive dissonance, as the market and the intangible ‘confidence’ dissolved:

“We know the market has taken a hit. No one knows how far that hit is going to go but it won’t last forever. This time next year will be a really good time to buy, just before the market starts getting stronger again.” [Niamh Horan, Irish Independent, 25/05/08][26]

As prices tumbled the mantra adapted, and the focus was now on ‘rising rents’ to provide the impetus to buy:

“The cost of renting has risen by 6.6 per cent in the last 12 months, according to a survey published today. The Daft.ie report says that as property prices fall and rents rise, it is now more attractive to buy a house than to rent in certain areas. [Patrick Logue, Survey shows 6.6% rise in rents 27/11/2007][27]

“The decision of first-time buyers to defer purchases has seen a boom in the rental market, with rents rising to an all-time average high of €1,400 a month nationwide.” [Charlie Weston, Irish Independent, 28 November 2007][28]

Niall O’Grady, head of marketing at Permanent TSB, said: “there’s little surprise in the figures for October which confirm that there was little spark in the market during the traditionally strong autumn selling season. Clearly potential purchasers remain cautious and demand is sluggish.”

He said people’s reluctance to buy in the current market was beginning to impact on the rental sector “where rents are rising steadily in response to strong demand.” [29]

In fact, rents were actually falling, as Conor McCabe of Dublin Opinion evidenced at the time:

“Three weeks after the Irish Times and Irish Independent announced Dublin rental demand at an all-time high, 68% of properties surveyed remain unoccupied. The sample of 200 properties from Daft.ie was taken on 29 November 2007. Of those 200 ads, 26 have since dropped their asking price. Only three have increased their asking price.” [Conor McCabe, Dublin rents and the myth of demand: three weeks on, 22/12/2007][30]

Morgan Kelly noted in 2006 that compared with income, rents have fallen since 2000, while house prices have risen by more than 30%. It was clear even in 2006, to economic experts at least, if not journalists, that “the fact rents have fallen shows conclusively that our housing boom is a bubble.” [31]

A flawed system

Despite assurances from the liberal media that ‘the overriding duty of [the media and] journalists is to readers’ Vincent Browne’s audible reflection is the limit of any internal audit we can expect from the media. Just as with the banks and the developers and the other ‘risk takers’ out there – the ‘institutional memory’ has not been altered by this obvious display of the bankruptcy of the system. The system, studiously defended by the likes of David McWilliams (one of the few consistent critics of groundless faith in the property market), does not learn from its mistakes in the conventional sense, it simply learns to profit from them. [32]

Across the Atlantic, as Wall Street awaited a taxpayer solution to its self inflicted economic crisis, the New York Times reported:

“Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it. Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages. Nobody wants to be left out of Treasury’s proposal to buy up bad assets of financial institutions.

“The definition of Financial Institution should be as broad as possible,” the Financial Services Roundtable, which represents big financial services companies, wrote in an e-mail message to members on Sunday. The group said a wide variety of institutions as varied as mortgage lenders and insurance companies should be able to take advantage of the bailout, and that these companies should be able to sell off any investments linked to mortgages.” [33]

Thus those institutions which grossly profited from the sub-prime economic crime, ultimately weakening the global ability to actively challenge the impending crisis of Global Warming, are forcing the tax payer in one way or another to buy up their bad debt – and as with Bradford and Bingley in the UK the remaining profitable sectors will remain in private hands.

Along with the majority of the US Congress many in the Irish media have now taken to striking a more populist tone. Fintan O’Toole’s piece in the 30th September edition of the Irish Times ‘There is no such thing as private enterprise’ is almost right on the money, putting to one side the unconvincing linkage to the recent Lisbon Treaty referendum.

However the argument is essentially an uncontextualised exercise in pointing out the obvious; which embodies the corporate media’s reckless disregard for self examination and reform. It is, along with the banking bailout, a propaganda bailout. The media, a major driver of perpetuating the ‘flawed’ system, absolves itself of responsibility.

“”Private enterprise” is tapping us on the shoulder and saying, “by the way, there was a hidden clause in the social contract that says you’re responsible for my screw-ups”.” [Fintan O’Toole, The Irish Times, 30/09/08][34]

The media meanwhile is tapping us on the shoulder saying “If you remember all that stuff we used to say about house prices climbing forever, just forget about it! It never happened.”

An unfulfilled social contract

The social contract promised by the media, to provide “reports that are honest, accurate and comprehensive; and analysis that is informed, fair and based on the facts” is declared null and void in retrospect. The truth is only current; yesterday’s news becomes tainted by tomorrow’s realities.

George Monbiot wrote recently in the Guardian, “corporate welfare is a consistent feature of advanced capitalism,” the only thing that has changed is that the state “has been forced to confront its contradictions.” The contradiction of ‘free market’ ideology being that bad debt, the other less publicised consequence of risk, is underwritten by the state, while profit is retained by the private sector.

He cites Stephen Slivinski’s estimate “that in 2006 the [US] federal government spent $92bn subsidising business. Much of it went to major corporations like Boeing, IBM and General Electric.” [35][36]

An excellent insight, from one of the few mainstream journalists to have slipped through the ‘natural selection’ of the corporate news structure, but with one glaring omission – news media are also beneficiaries of corporate welfare, even the most avowedly liberal ones. Perhaps to a much lesser degree and perhaps more often than not indirectly, but they are beneficiaries nonetheless:

“What are the elite media, the agenda-setting ones? The New York Times and CBS, for example. Well, first of all, they are major, very profitable, corporations. Furthermore, most of them are either linked to, or outright owned by, much bigger corporations, like General Electric, Westinghouse, and so on.” [Noam Chomsky, What Makes Mainstream Media Mainstream, October 1997][37]

Following the announcement of the €400 billion taxpayer sponsored banking bailout the lead editorial in the Irish Times, Ireland’s most respected broadsheet, read:

“It would be foolish of the banks to act in bad faith on this matter given the scale of the risks that the Government has exposed tax payers to in order to safeguard them. And in time they must be held to account for their own role in creating this crisis.” [38]

Who will hold the media to account for their part in creating this crisis?

Suggested Action

Please open the debate with journalists and editors on these issues:

Irish Independent Editor, Gerald O’Regan independent.letters@unison.independent.ie

Irish Times Editor, Geraldine Kennedy gkennedy@irish-times.ie edsoffice@irish-times.ie

MediaBite supports an open and constructive debate with the media and individual journalists, please ensure all correspondence is polite. Please copy all emails to editors@mediabite.org.

Permanent Link:

http://www.mediabite.org/article_The-Media-and-the-Banking-Bailout_679566551.html

1. http://www.tv3.ie/programmes.php?action=ep_view&id=23588

2. http://www.irishtimes.com/newspaper/opinion/2008/1002/1222815457103.html

3. http://www.rte.ie/business/2006/0728/myhome.html

4. http://www.inmplc.com/reports/uploads/INMAcquiresPropertyNews.pdf

5. http://www.thepropertypin.com/viewtopic.php?f=4&t=2631&st=0&sk=t&sd=a&start=15

6. http://www.irishtimes.com/newspaper/property/2005/0526/1116889038303.html

7. http://www.independent.ie/unsorted/property/irish-property-awards-63271.html

8. http://www.independent.ie/unsorted/features/rte-broadcasts-fear-in-the-market-124730.html

9. http://www.independent.ie/unsorted/property/future-shock–property-crash-

-the-reaction-44341.html

10. http://www.irishtimes.com/newspaper/property/2007/0419/1176454879751.html

11. http://www.independent.ie/national-news/rte-programme-on-property-

crash-likelihood-was-not-biased-1056685.html

12. http://dynamic.rte.ie/av/228-2239098.smil

13. http://www.mediabite.org/article_The-Corporate-Media—Part-1_474268952.html

14. http://members5.boardhost.com/medialens/msg/1222802848.html

15. http://www.gla.ac.uk/centres/mediagroup/

16. http://archives.tcm.ie/businesspost/2007/10/14/story27313.asp

17. http://www.irishtimes.com/newspaper/commercialproperty/2007/1128/

1128/1195682454447.html

18. http://www.mediabite.org/article_The-Corporate-Media—Part-2_219127101.html

19. http://www.irishtimes.com/newspaper/opinion/2007/1208/1196839145041.html

20. http://www.independent.ie/opinion/analysis/the-smart-ballsy-guys-are-

buying-up-property-right-now-1047118.html

21. http://www.irishtimes.com/newspaper/property/2008/0124/1201073465696.html

22. http://www.irishtimes.com/newspaper/property/2008/0424/1208904400661.html

23. http://www.independent.ie/national-news/over-40-homes-but-fahey

 -says-hes-not-rich-1318400.html

24. http://www.independent.ie/national-news/flight-to-quality-in-housing-

market-as-demand-rises-1339714.html

25. http://www.independent.ie/business/irish/ken-tells-us-to-buy-as-he-takes

 -us-to-a-better-place-1382686.html

26. http://www.independent.ie/national-news/property-tycoons-tv-show-says-

now-is-the-time-to-buy-1386443.html

27. http://www.ireland.com/newspaper/breaking/2007/1127/breaking51.html

28. http://www.independent.ie/national-news/firsttime-buyers-hold-their

 -fire-on-home-loans-1231852.html

29. http://www.ireland.com/newspaper/finance/2007/1124/1195682249196.html

30. http://dublinopinion.com/2007/12/22/dublin-rents-and-the-myth-of-

demand-three-weeks-on/

31. http://www.ucd.ie/economics/staff/mkelly/papers/housing1.pdf

32. http://www.irishtimes.com/about/p_intro.htm

33. http://www.nytimes.com/2008/09/22/business/22lobby.html?_r=2&oref=

slogin&oref=slogin

34. http://www.irishtimes.com/newspaper/opinion/2008/0930/1222719690967.html

35. http://www.monbiot.com/archives/2008/09/30/

congress-confronts-its-contradictions/

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