And now the markets: the good news or the bad news first? (Part One)

Posted: July 10, 2010 in Media & Journalism, The economy

One of the big questions that preoccupies me about this recession is the role of the news media. Do they simply report the mood of the markets  – panic, confidence or buoyancy – or does their language and presentation actually feed that mood? If we took a snap shot of news headlines from the past three years, what kind of picture would they give us of these powerful forces that apparently control our present and our future?

Well, out of pure curiosity the other day, I carried out a not very scientific analysis of news reporting of the financial crash of 2008 and the ensuing recession. What was the reported mood of the markets during the period? How much coverage questioned the role of the markets in creating the crisis in the first place? And did we hear much about the need to crack down on the market speculators, whose actions are blamed for crippling the finances of countries like Greece or Spain and who have their greedy eye on us too?

I emphasise again that what follows is not scientific. It’s merely an impression of the kind of news coverage we’ve been getting, its contradictions and its agendas. 

Mood Swings

I carried out three searches using familiar headline phrases we hear every day about the markets:

  • “Markets confident”: 6,900,000 results
  • “Markets panic”: 4,400,000 results.
  • “Markets buoyant”: 549,000 results

At first glance, it appears that in the past three years of recession, the dominant mood is confidence, even buoyancy at times, but lots of panic out there as well. The trouble is, there is no consistency over time. When you sample headlines from each search and then sort them chronologically, you get the impression that the markets suffer from severe mood swings over time.

For example, when this all started, in the summer of 2008, we had the run on the Northern Rock and the collapse of Lehmann Brothers. It was panic all the way and I was afraid, very afraid:

Gladly I didn’t panic. I followed “independent financial advice” and left my nifty off-shore account alone to see out the storm. And what do you know? Along came 2009 – new year, new hope in the first quarter:

But then!!! Just two weeks later it was, wash your hands, put on that hygiene mask and sell, sell, sell!!

Thankfully, I didn’t get the pig flu and, as we headed into the long dark nights of winter, there was some good news to warm the hearts of even the most hardened speculator:

Into 2010, and I was all over the place. I couldn’t be sure what the next headline would bring and there were some truly drastic swings in mood, sometimes in the space of a few weeks:

But no worries. Things seemed to settle down nicely for a couple of months:

But then…the British general election results! A hung parliament!! And the Greeks!!!

Well, after that shock from the Daily Telegraph, I called my independent financial adviser and he told me once again to breath deeply and stay calm because amid such crisis, there’s always an opportunity to profit. Put down your newspaper, he advised, and go online for some soothing advice from Love Money:

Are they serious? Amid all this panic and economic devastation all over Europe, it’s a great time to buy a mortgage? It seems so. So there I am, with my new mortgage for a house I can’t really afford or my remortgage for a totally unnecessary extension, when a few days later, I’m just out to that nice little cornershop to buy a pint of milk when I remember to get the paper, and there’s this:

It was time to take a pill now, or a stiff drink, and hold my nerve. It was nearly summer after all.  Yes, sun, sea and bbq! Another deep breath! The headlines would surely perk up. Everything would be fine again and indeed, verily verily, it came to pass:

 

So what conclusion can we come to from this analysis so far? After much thought and extensive reading,  my not very academic and not very objective deduction is that somebody out there is taking the piss.

In my next post, we’ll look at news that tries to explain who’s to blame for the current crisis and what should be done about it.

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