According to Vincent Browne the establishment of the National Asset Management Agency (NAMA) represents “potentially the single largest transfer of wealth ever to take place at once.”
The agency, established to “oversee the transfer of the dodgy loans held by the banks, loans amounting to €90 billion,” will take on billions of Euro in debt owed by developers, essentially making the public liable for the private sector’s ‘commercial risk’. A risk which has been realised in the ghost estates mercilessly documented by Eamonn Crudden in his short film ‘Wallets Full of Blood: Houses On The Moon‘.
Properties sold as investment opportunities and, often secondarily, as ‘a place to call home’ will now not only become the crash landing of negative equity, but also the burden of additional tax. Taxes that will not be spent on public services, but set aside for the state financed bailout of a rich minority.
As quoted in ‘Houses on the Moon’, “What was built to keep people safe, is gonna trap them inside.”
Scapegoat the poor
By establishing NAMA, the government identified the primary cause of our economic difficulties. Not public sector inefficiencies; not uncompetitive wages; not excessive social welfare payments; not even reliance on low corporate tax rates. But reckless lending, by reckless financial institutions, to reckless developers, spurred on by a reckless government and all under the watch of a reckless establishment press.
So how does this inconvenient fact fit into the recessionary narrative? Not very comfortably it would seem.
In the weeks and months since the banking crisis was exposed “the economic debate [has morphed] from an obsession with debts and deficits into a full-blown assault on the public realm that has more in common with Thatcherism than it does with mere fiscal prudence.”
For instance, The Irish Times’ Stephen Collins recently warned that “[t]ackling the public service pay bill and the social welfare bill can hardly be avoided.” Dan O’Brien of the Economist Intelligence Unit also told of the need to address “the elephant in the room” in the Irish public finances,” declaring that a “reduction in the minimum wage from €8.65 was “an open and shut case.”” While Sarah Carey fretted about the potential impact of bank nationalisation, whereby the inefficiencies of the public sector might exacerbate the incompetence of the banking sector! “I accept that there are talented people in the public sector, but the inertia of government is more than they can usually bear. Worse, it’s contagious. Turn bank employees into public servants and I guarantee the malaise will seep in.”
A sentiment summed up in ‘Shock Doctrine-esque’ clarity by an Irish Times’ Editorial writer: “Serious reform of the public sector – too long shirked by all political parties – was never more necessary. An economy in crisis presents a political opportunity to achieve that reform.”
Michael Taft explains this narrative as “merely a logical working out of basic right-wing premises. It started with calls for public expenditure controls, then moved on to the ‘bloated’ public sector and ‘overpaid’ public sector workers, proceeding to private sector wage cuts – and so on until it cascaded into a full blown attack on the public realm, making those on the lowest incomes scapegoats for the failed policies of past right-wing governments.”
Good and Bad criticism
As we discussed in ‘The Media and the Banking Bailout‘, the major problem facing the media is that it has been one of the leading proponents of the system which led us here. Newspapers disguised the true nature of the bubble economy, devoting ever more pages to property – the indestructible pillar of capitalism, now crumbling around us.
This interdependence between property and media industries has recently resulted in severe pay cuts for journalists and editors alike. Independent News and Media’s Irish operations’ revenues “fell 6 per cent to €377.3 million due to a “significant fall-off in advertising”.” The Irish Times’ Managing Director, and presumably the brainchild behind the purchase of MyHome.ie, Maeve Donovan explains that “the decline in property and recruitment advertising has been particularly marked.”
A clear recognition of the media’s financial reliance on the property industry, yet it has not prompted a corresponding look at the potential journalistic compromises caused by this dependence.
This reluctance to address a clear conflict of interest is at least partly due to the media’s resistance to certain types of criticism.
Take for instance, David Bloch’s recent piece in the Irish Times. Mr. Bloch, chief executive of Brightwater, a firm of recruitment specialists, accuses the Irish media of acting as a “bad news brigade,” stoking pessimistic sentiment and thus worsening the economic situation. He writes:
“The world is in a dreadful state, no doubt. Ireland’s pillars of prosperity have been eroded by many factors. The construction boom is over and will take two to five years to recover fully. The banking sector is in trouble globally, but there are certainly green shoots of recovery all around the world.”
Bloch’s criticism is certainly outwardly negative, but it also suggests some underlying broadly positive attributes. It suggests the media is uncovering and highlighting ‘bad news’ stories, such as banking irregularities, political mismangement and job losses, at the expense of ‘good news’ stories, such as feint signs that unemployment growth is slowing – the former reflecting negatively on business and politics, the later reflecting positively. This type of criticism therefore, reinforces the idea that the media acts as it claims – as a check and balance. This could then be dubbed ‘good’ criticism.
Quite oppositely, when criticism appears to expose subservience to right wing establishment ideology journalists are far less willing to entertain it. For example, the Irish Times’ Sarah Carey was recently challenged by Michael Taft and Donagh Brennan of the Irish Left Review to substantiate her claim that the Irish welfare system offered “the most generous social welfare payments in the EU” (the inference being that welfare payments needed to be cut), a claim also made by a number of others.
Carey was unable to establish a verifiable source for her “most generous” claim, simply deferring to information she had been passed by her ‘contact’ in the Department of Finance. The OECD data Taft and Brennan cited on the other hand contradicted Carey’s claim. In fact “a single person claiming social welfare in Ireland received payments that were 29 percent below the average of other EU-15 countries…Even poorer countries such as Portugal and Spain make higher payments.” Yet Carey refused to accept the error and more importantly failed to make a correction of equal prominence.
This conservative meme also prompted an Irish Times poll with the none-to-subtle question “Do you think Ireland’s social welfare system is too generous?” and following a report by David Grubb of the OECD (Organisation for Economic Co-operation and Development), in which he laid out recommendations for an employment “activation programme” and suggested that the government should “tighten and modernise benefits administration,“ readers were treated to some sensationalist headlines.
The Irish Independent announced “Dole is too generous, says top jobs expert.“ While the Irish Examiner told of the need to “get tough on welfare recipients.”
In fact, Grubb refers to social welfare policy strictly within the confines of its implications for employment activation: “The commitment to maintain social welfare rates at a higher level (in comparison to 2000 levels) is another reason that Ireland now needs to develop stronger activation measures…because international comparisons suggest that countries where net benefit replacement rates are high spend far more on both active and passive labour market programmes.”
The sacred journalistic notion of ‘balance’ came in the form of a 200 odd word press release from Cori (Conference of Religious in Ireland) – “Generous Irish welfare a ‘myth'” – unfortunately resulting in yet another headline tying the word ‘generous’ to ‘welfare’.
The property problem
“Money has lost its value, property has lost its value, Woolsworths gift vouchers have lost their value…Before all this happened all that was on television all day was programmes about how to buy a house, do up a house or sell a house for more than you payed for it, or do all three simultaneously…and in between these programmes about how to buy a house, or do up a house, or sell a house for more than you paid for it, were adverts telling you how to get money to do this, money that wasn’t really yours, by taking out a loan or by suing someone for something that was obviously your fault.” [Stewart Lee, Stewart Lee’s Comedy Vehicle, BBC2]
The issue of property is a thorn in the media’s side. A dirty secret omitted from debate. Stewart Lee, quoted above, is one of the few that have attempted to address the issue. But as a stand-up comedian, his analysis is unlikely to be subjected to further scrutiny in mainstream discourse. Satire is a forum for debate that the establishment is understandably unwilling to enter into.
Having said that, rare instances of unintentional satire do appear, such as the Irish Independent’s ‘5 Mins With‘ interview with disgraced Chairman of Anglo Irish Bank, Sean Fitzpatrick in 2006. In 2008 it was revealed that Fitzpatrick had hidden €87m in secret loans over a period of eight years, yet the most probing question he was asked by the Irish Independent was: “If you had a spare million?” To which Fitzpatrick replied: “I’d do something for the homeless; provide day-time facilities.”
The failure to report accurately and investigate thoroughly during the bubble years raises very serious questions about the media’s ability to act as a ‘check and balance’. The continuing failure to acknowledge this issue undermines its authority to comment on the solution to the current crisis.
Even on the rare occasions that commentators raise the subject, it is invariably met with a deafening silence.
For instance, UCD’s Colm McCarthy broached the subject on RTE’s Prime Time late last year in interview with Donagh Diamond, acknowledging several times that the media were key stakeholders in the property bubble. Back in the studio however, Richard Curran, Shane Ross and Mark Little all suffered the exact same selective memory loss, unanimously failing to address this core part of Diamond’s investigation.
More recently Prime Time dipped its toes into this relationship with a report by Derek Brawn, a former property insider, having worked as head of research for Savills (Hamilton Osborne King). Unfortunately, the report was introduced by Miriam O’Callaghan as follows: “Derek Brawn gives a very personal perspective on the boom, the bust and what it all means for you.” RTE clearly distancing itself from the “very personal perspective” at the outset.
Brawn attempted to answer the question “Who really inflated the property bubble?” Citing some of the boom’s unreal price increases, he made clear how fraudulent the price explosion was. He reminded viewers of the €14m offer made on a Landsdowne Road house in 2005, for a house bought for €0.5m in 1994. A 35% increase in value each year. If that growth were to have continued, he explained, the house could have been worth €5.8bn in 2025.
Brawn identified the major culprits of the bubble industry as follows:
“The three main culprits [of the property bubble] were builders, banks and politicians…But there were another group of people who added fuel to the fire in the run up on property prices, namely the estate agents and newspaper property pundits. They collaborated with the big developers, especially where it came to advertising. Property advertising in Ireland accounts for up to half of newspaper ad revenue.”
He went on to charge that even after the bubble began to collapse, the culprits continued their campaign:
“Home values in Ireland have fallen by a fifth since the market peaked in 2007, but the estate agents and the newsprint media focus incessantly on aspirational or asking prices. Lately they have been guilty of exaggerating the price drops in order to fool the public that we are now close to the bottom.
Even today two years into the recession we are still being subjected to black propaganda or misleading counter intelligence. The property pages are full advertisements claiming it is now cheaper to buy than rent, as monthly mortgages have fallen. Wrong, as long as house prices have further to fall, it pays to wait.”
We don’t need an insider to spot this “black propaganda,” the evidence litters our newspapers. Yet Brawn is almost alone in commenting on it. Several weeks later, following a dearth of follow up commentary, Brawn was invited on to the Late Late Show to battle it out with property expert David Cantwell of Hooke and MacDonald. And again, despite appearing on the country’s most watched programme, he was almost universally ignored by his peers in the media (Kathleen Barrington did make passing reference in the Sunday Business Post).
A notable exception to this silence is Paul Gillespie, writing in the Irish Times about a speech by Lionel Barber, editor of the Financial Times, who “asked what responsibility journalists in the financial media have for not foreseeing [the crisis],” Gillespie notes:
“If media are to live up to the self-proclaimed role as critics and accountants of power rather than its mere corporate stenographers they must accept some blame for such a lack of foresight. Barber says the financial crisis started as a highly technical and opaque story about credit markets that took months to go mainstream. Reporters working there found it hard to interest their superiors, who controlled space devoted to stories of rising property prices and economic growth and some of whom did not want to antagonise advertisers.”
But this is not a view shared publicly by journalists. Brawn and Gillespie are most definitely exceptions to the rule.
To read Part 2 of ‘Don’t Shoot the Messenger’ click here.
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