As with that of bankers and politicians, the reputation of financial journalists has suffered in the wake of the 2008 crash. There is plenty to criticise – and a few initiatives to praise.
In August 2011, in the middle of the eurozone crisis, The Mail on Sunday reported that a French bank was on the verge of collapse. Or so it seemed.
In fact, the source for the story is believed by some to have been a fictional series in Le Monde. The Mail on Sunday published an unreserved apology when the mistake was exposed – but only after the bank’s shares fell by 8.4%.
The bank in question, Société Générale, claimed that the article caused “substantial damage to its reputation and prejudice to its trade”. On 26 March 2012 it was reported that the owners of The Mail on Sunday would be paying undisclosed damages to the bank.
It is not the only continental European player to attack press coverage of economic events. In 2010, Spain’s intelligence agency decided to investigate the role of the so-called “Anglo-Saxon” British and American press in heightening the country’s financial crisis. And in August 2011 Laurence Parisot, head of the largest employers’ union in France, accused American publications of running “false and dramatic headlines” about the eurozone crisis.
This belief in an Anglo-Saxon conspiracy may be far-fetched. But when they highlight the dangers of inaccurate reporting, could European critics have a point?According to Brian Maser, spokesman for the British Banking Association, the media is “front and centre” in the debate of how to raise consumer confidence. Yet the headlines often fail to capture the complexity of a financial issue, such as lending to small businesses.
“Businesses as well as homeowners are paying off debts as much as possible, getting rid of their liabilities and sitting on what cash they have,” Maser explains. “But as far as the public is concerned, what they hear is a target has been missed. That affects confidence. Confidence therefore affects demand and what we see then is a spiral.”
Bankers may have few reasons to love the press, however Anya Schiffrin, editor of the recently published Bad News: How America’s Business Press Missed the Story of the Century, says that the media can be nationalistic and short-term in its interpretation of economic events. “There is an unfair story out there that the Greeks are lazy, the Spanish are lazy – it is all their fault for not being disciplined. Everybody should follow the European Central Bank inflation hawk and anti-deficit model. But economists would very much dispute the causes and the solutions to the current crisis. The press need to be incredibly careful not to take the German point of view as gospel.”The media can also be slow to react.
In a recent talk at LSE, the Newsnight economics editor Paul Mason criticized financial journalists’ inability to think beyond neo-liberalism, comparing them to “Catholic Papal reactionaries” during the scientific revolution. As late as September 2008 British Sunday supplements were encouraging readers to protect their savings by putting them into Icelandic bank accounts. And although recently the Greek crisis has been splashed across front pages, initially the mainstream British press paid scant attention.
Steve Schifferes, head of City’s financial journalism course, says that this was partly a result of longstanding apathy. “In Britain much of the press is hostile to Europe. They are also not very interested in Europe. They hadn’t noticed how serious this crisis was for a little bit. Then, once it became a focus suddenly everybody turned their attention to it.”
He argues that there is a herd instinct in press coverage, causing it to swing from one direction to another. “Everyone goes to the same press conferences, everyone discusses it and tries to come up with an interpretation that is different, but isn’t too different from everyone else. It happens in all areas but in an area that’s more technical and more difficult to interpret like finance people may be less confident about breaking out of the pack.”
One way of combating these kinds of problems is to train better journalists.
According to Schifferes, it is easy for journalists to become overwhelmed by data. “But finding that key of information – that’s what is really important in financial journalism, and often it might be a numerical nugget rather than a quote. The challenge for us is to spot that.”
As well as the new course at City, Cardiff University has announced a financial journalism scholarship. And while the press may be guilty of both failing to foresee the end of the boom and panicking over the bust, specialist publications like the Financial Times play host to lively and important debates about the path to growth.
“Reporters have to be conscious of their audience,” says Vincent Boland of the Financial Times’s influential Lex column. “Business and finance are complicated issues. Journalists have a duty to strip them of their mystique and present the facts and the unvarnished thing itself.” Such analysis may be increasingly important to the industry in future – Reuters has been developing a rival series of columnists, Breaking Views.
As for the complaints from the eurozone about the bias of the press, Boland does not think they apply to his publication. “Politicians from Germany or France or wherever sometimes criticise the newspapers in the Anglo-Saxon world for distorting things or blowing things up out of proportion. And yet these are the very first papers these people go out and read every morning. They want to know what we think.”
Advice for covering financial issues from BBC Newsnight economics editor Paul Mason and Bloomberg economics editor Linda Yueh
“I’m glad I wasn’t a financial journalist before the crisis”: City AM’s Tim Wallace speaks to XCity