Lookin’ For Bubble?

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Dr Julian Mercille (top), UCD lecturer and author of The Media and the Irish Economic Crisis: A Political Economy;  Dan O’Brien (2nd pic), former Irish Times economics editor, now with the Irish Independent, Andrea Martin (bottom second right), media lawyer, and Frank McDonald (bottom right), Environment Editor of the Irish Times appeared on Tonight With Vincent Browne last night.

Under discussion?

The role of the media in the property crash/financial crisis.

Gulp

Vincent Browne: “Going back to the media itself, the fact that the Irish Times, the Irish Independent, the Examiner, the Sunday Business Post and the Sunday Tribune and the other Sunday newspapers all were making substantial, were getting substantial revenues from the property sector. And all of them ran property views that were laudatory of all the properties that went on sale, which of course was a nonsense. That must have contributed substantially to the property boom.”

Dan O’Brien: “Ok, I’ll put it like this, media organisations…You ran..you set up a news magazine I think in 2004 that coincided with the boom, if someone came to you and said ‘we want to advertise a legal product, your commercial department says ‘yeah, well, fine, there’s nothing illegal there, we’ll just take in the advertising’. The commercial people in a media organisation…”

Browne: “But that’s not what happened. That is not just what happened. They didn’t just take in the advertising, they ran supposedly independent editorial features on the property sector that lauded the properties that were being advertised.”

O’Brien: “That’s all part of the kind of.., you know, when you’re advertising something. But in terms of the hard coverage of, of what went on then, I honestly don’t think that journalistic…you know, RTÉ ran its future shock show, Frank’s paper ran the UCD economist [Morgan Kelly], David McWilliams was writing in the Irish Independent. So there were people. So the idea that everybody shut down…”

Browne: “Nobody said everybody. This is…I’m just making the point that journalists abandoned their independence in writing about property at a time when large advertising…”

O’Brien: “Well most journalists weren’t writing about property.”

Andrea Martin: “There’s something we need to be aware of here and that is that we need to distinguish between print media and the TV media. The print media is beholden to the commercial interests, to keep the paper afloat. TV and broadcast media is regulated in a way that requires it to be fair and impartial and objective. If less, even this station is subject to that requirement, regardless of the fact that it’s beholden to its advertisers.”

Browne: “Completely meaningless.”

Martin: “But no, what this, what this means is..I’ll tell you why it’s meaningful. There were people, there were commentators within the sector, there was George Lee who produced an excellent series in 2006, predicting exactly what was going to happen.

Browne: “Once, right yeah, OK.”

Martin: “He did.”

Browne: “These were once-off..”

Martin: “Eddie Hobbs, Eddie Hobbs was saying there was going to be no such thing as a soft landing. What happened was is that there is a media consensus, a media and political unholy alliance that made these people out to be eccentrics, sidelined them, dismissed them and that is what caused that problem.”

Julian Mercille: “It was the same. If anything, TV was worse than the press. I did a study, the paper you [Vincent] referred to. Prime Time had 700 shows between 2000 and 2007, about 1% of those shows talked about the housing bubble and most of them were saying that there was no housing bubble. So TV was the same as the Press, if not worse. It’s not any different.”

Martin: “It can be held to account. I’m not saying that TV is better otherwise, what I am saying is that there were, there’s a different between print media and TV, and there ought to be. Also there were voices and they were completely sidelined.”

Browne: “The difference between the two sides is meaningless: that there’s a statutory requirement to be fair and balanced, that goes out the window, there’s no fair and balanced reportage of anything to do with economics, to deal with politics to do with social affairs. That doesn’t happen in television.”

Martin: “Well there’s a mechanism there to regulate that and report it which simply doesn’t apply in the print.”

Browne: “The mechanism that is there to regulate it has the same effect of the Garda complaints board.”

O’Brien: “Vincent, what about the magazine that you ran for that period. How much did you focus on the property bubble in Village magazine, a weekly magazine?”

Browne: “We didn’t. But just let me say.”

O’Brien: “Does that mean that you’re some corporate, you’re dominated by some sort of corporate interests?”

Browne: “No. But Dan, you fail to listen to the point I’m making earlier, which was that we didn’t hype the property thing. We weren’t going out saying ‘go and buy these…'”

O’Brien: “But did you think there was a major problem?”

Talk over each other.

O’Brien: “Julian just said only 1% of Prime Times shows dealt with it. Most people didn’t think it was a problem because there was an intellectual failure amongst economists not to have seen and flagged what was going on. So the media people are saying the experts aren’t saying there’s a problem so what are we going to do: keep writing stories about this crash…”

Mercille: “In a magazine you could say, at least they have a small staff and they can’t cover everything. You can’t say that of the mainstream.”

O’Brien: “Well, there was the editor during that time, ask him [points to Vincent]”

Browne: “We covered, we covered…”

Talk over each other.

O’Brien: “You just said you didn’t.”

Browne: “I said we didn’t deal with the property bubble, we did deal..”

O’Brien: “I thought that’s what we were talking about here, isn’t it.”

Browne: “But neither did we have property advertising…we didn’t have any advertising actually.”

O’Brien: “Were you offered? Did you turn it away? Hang on a second, this is important, did you turn it away?”

Browne: “It didn’t arise. We..”

O’Brien: “It didn’t arise, nobody offered it to you, OK, that’s a different thing, OK.”

Browne: “Dan.”

O’Brien: “If they’d offered it to you would you have taken it?”

Browne: “Dan.”

O’Brien: “Would you have taken it?”

Browne: “We would have taken it.”

O’Brien: “Would you have taken it? Of course you would, that’s it, OK.”

Browne: “No, it isn’t it. You once again, doggedly, seek to miss the point. The point I’m making is that of course if advertising came in to the Irish Times or Irish Independent, or whatever, of course they were going to take it, but they didn’t just do that, they wrote supporting editorial material that inflated the property bubble that’s the point I’ve been making.”

O’Brien: “Hang on sorry, you’re saying editorially in terms of the supplements..”

Browne: “Frank, deal with this.”

Frank McDonald: “I think it’s important to remember that when Morgan Kelly finally got to have his say in print, finally in December 2006, he actually had great difficulty getting a slot for that column. The column really predicted the crash of the property market and said there wasn’t going to be a soft landing.
Other countries had experienced similar property bubbles before and the bigger the bubble the worse the crash was going to be. And that appeared, I think it was in Christmas week in 2006 and it was regarded as so heretical.
I mean here was a guy who had come out of nowhere seemingly, whose speciality in fact was the the economic consequences of the black death in Europe in the 14th century and he was writing about this property bubble. But we were, sorry, I don’t mean me, but generally speaking Irish society was caught up in this bubble. People believed in it, they didn’t think there was anything abnormal about it: that fact that two-bedroom flats were selling for €450,000 in certain parts of Dublin and so on.
They didn’t think it was odd, as I did, going into the TSB, my bank, for many, many years – in fact I joined that bank because it didn’t have shareholders and then Ruairi Quinn sold it off into the private sector when he was Minister for Finance – but I remember going in there and being offended by the fact that even standing in a queue waiting for a bank teller to become available, you had all of these notices along the way saying ‘do you want a new car?’, ‘do you want a new house?’, ‘do you want a new holiday?’..or whatever, ‘we’ll give you the money’, there was just money being dished out for everything and you know everybody, to some extent, to a greater or lesser extent was caught up in that whole bubble.
Now admittedly in relation to the print media you are right in saying that a lot of their revenue was coming from advertising and a lot of it was coming from both recruitment advertising which explained why the Friday business supplement of the Irish Times was so thick, and property advertising which, at the height of the boom, the Irish Times property supplement ran to 64 pages, unbelieveable stuff.”

Later

McDonald: “Can I say something? I would much prefer if the property supplements that were produced by the Irish Times and by other organs of the media actually went out and did a review and of a house, enumerating all of its bad points as well as its bad points and saying whether it was really worth the kind of money that was being sought for it. And also pointing out how much money, for example, future owners were going to have to pay in property tax or in the case of an apartment building, how much they have to pay in service charges and all those things. In other words it should be much more consumer-orientated instead of just property-orientated.”

Watch back here

Previously: Julien Mercille on Broadsheet