Dublin Opinion

Okay, so this morning didn’t go so well. First of all I was a little late getting my daughter to school and although we just made it in time it meant that I had to really leg it for the Dart. When I got there I had to push slow moving commuters out of the way as they ascended the stairs having just disembarked from a still stationary train. But damn I missed it and was forced out of sheer embarrassment to go back and help up the old lady that I’d knocked so rudely to the ground. Ignoring her hissing curses, I looked at the automated timetable thingy and realized that I’d have to wait half an hour before the next one.

So I went out and bought the Irish Times, you know, to pass the time. I very rarely do this and it’s usually an indication that I’m in a bad mood. You see, after two years of working on this blog (birthday was back on the 14th of Feb, folks) I have a couple of reasons for presuming that they are not exactly kosher when it comes to certain news items. Its not that what they write is always false – of course, in some case it is - but rather its how they spin the story or, perhaps just as importantly, ignore the story completely. And I don’t single out the Irish Times in this regard. Almost all Irish newspapers and the broadcast media have a tendency to talk a whole lot about nothing, despite the blather around Bertie and the Mahon Tribunal – and leave huge questions about how things work in this country unexamined. If you start to look at the Irish media in general, and unsurprising most people have a lot to say about the media but what they have to say is often just the repetition of a cozy consensus, you would see it as a slumbering giant – on sleeping pills, with ear muffs and blinkers, sleeping in a sound proof room.

But this opinion is out of step with the majority.

In Ireland the population trusts the media, in general. Dr. Heinz Brandenburg in a 2005 article Political Bias in the Irish Media: A Quantitative Study of Campaign Coverage during the 2002 General Election suggests that the level of trust that media has in Ireland is high compared to Britain but also slightly above the EU average:

“Successive Eurobarometer studies (European Commission, 2002, 2004) as well as Inglehart’s World Values Survey have found that the Irish public shows solid, if unspectacular, levels of trust in their national press, radio and television. This is in sharp contrast with the British public, who tend to show the lowest levels of trust in their national media amongst all European nations. According to Eurobarometer studies between 1997 and 2003, only 20 per cent of British citizens voiced trust in their national press, and only 58 per cent and 54 per cent in 2002 and 2004, respectively, tended to trust radio and television. In contrast, almost half the Irish citizens consider their press and around 70 per cent their radio and television trustworthy. On these accounts, the level of trust in Irish media institutions is not exceptionally high in European comparison, but always at least just above the European average – 1 per cent higher that the 15-country average for trust in press, between 12 and 20 per cent higher with regard to trust in television (European Commission, 2002: 6; 2004: B.15).”

This view is conformed by the recent Edelman Trust Barometer findings. First of all, before I give the details, some background. Edelman is a large international PR company who conduct a survey every year of the ‘opinion elite’ to see where they place their trust with regard to sources of information on a whole range of issues. This survey is conducted all over the world and the results are broken down for each country, including Ireland. As Cian Ginty of Blurred Keys mentions in his blog post on the Irish findings:

“The survey was conducted using 30-minute telephone interviews among 150 college-educated respondents aged between 35 and 64. All were within the top 25 percent of household income nationally.”

So the survey is hardly representative of the entire population. But it is useful when talking about broadsheet newspapers, and the Irish Times in particular, because their readership is generally considered to be college-educated, aged between 35 and 64 and within the top 25 percent of household income nationally. They are the ‘opinion elite’ to use that disgusting term (disclaimer: I don’t work in PR, have never done and never will, so I can call their term ‘disgusting’ because I am happy to declare that my opinion is while balanced distinctly partisan).

So, quoting the Edelman Dublin blog, the Barometer found that:

• Trust in media in Ireland stands at 43% compared to 37% last year.
• Amongst the most valued sources of information in Ireland is radio news trusted by 59% of those surveyed and TV news at 57%. Ireland has a higher usage of newspaper articles and radio than any other country surveyed.
• Advertising is trusted by 16% of those surveyed, while social networking sites are trusted by 6% compared to a European average of 14%.
• As sources of information, television, print media and business publications are the most trusted with 70% trusting conversations with friends and peers.
• CNN, BBC and Google are referenced as being trusted in every European country.

Commenting on the Barometer’s findings Mark Cahalane, Managing Director, Edelman Ireland said:

“While government held its own overall it remains at a relatively low 35% confidence rating. In terms of the most trusted sources of information, broadcast news is one of the strongest forces at 59% while print media runs at 55% confidence.”

This it seems is good news for PR companies – certainly judging by the vibes coming from the Edelman camp, very good news indeed. Surely in Ireland trust in the media is established because they are seen as non-partisan, balanced and not in favour of one party or another. Brandenburg, in his study of media bias in the 2002 election started his analysis by addressing certain pre-conceptions about whether the Irish media is perceived to have a particular bias or not:

“Irish media, newspapers and television alike, have long since been ‘classified as belonging to the so-called sacerdotal style of election reporting, thinking of themselves as providing a service and of an election as an intrinsically important event entitled to substantial coverage as of right’ (Bowman, 1987: 167). Coverage is said to be predominantly informative, unbiased, and non-partisan.”

So, in Ireland the Irish media is perceived to be non-partisan and, more importantly seen, not as a business, but as providing a service. Is it surprising then that many of the ‘opinion elite’ consider them trustworthy.

But it is true that they are providing a service in this non-partisan way. But before I address that point I’d like to return to why PR companies believe that the results of the Barometer are good news for those in the PR industry. Commenting further on the Edelman blog the writer states:

“Newspaper articles on individual companies had a raking (sic) of 55%, while a company’s own communications was only trusted by 27% while blogs or weblogs stood at 14%.”

So we finally come to what I read in the Irish Times this morning. At the bottom of the front page is the headline “Property developers owe over €100bn to banks”, which is more than enough to make the average mortgage holder choke on the coco-pops.

That’s a lot of cash. In the piece it states:

“Private-sector credit figures released by the Irish Central Bank yesterday showed that by the end of last year, the total amount that banks had lent for real estate dealing and property development had hit €105.8 billion.
In the course of last year, bank lending to these two property-based sectors grew by €22.5 billion, or 27 per cent. This equated to 80 per cent of the money lent by the banks to business last year.

In total the loans advanced by the banks to business or the “productive sectors” increased by €28.2 billion.”

In the analysis piece in the paper’s business section Paul Tansey says:

“During 2007, the scale of lending growth to construction and real estate development continued to surpass rates of credit expansion to all other productive sectors in the economy. […]However, the annual data for private-sector credit expansion masks a steep slowdown in property-related lending in the final quarter of last year.”

In addition, there is a marked difference between the private householder and the corporate borrower:

“Compared to the corporate sector, private households adopted a much more conservative approach to borrowing last year. Households increased their borrowings at only half the rate of real estate developers.”

In the front page article the paper highlights the concerns raised about this level of exposure by the Fitch Ratings, ‘an international agency that measures organisations’ and corporations’ ability to repay their debts’. The report argued that if there’s a soft landing, everything will be okay. However,

“the agency’s report argued that if the downturn were more severe than expected, then “this overall large exposure of Irish banks to residential borrowing and to commercial real estate constitutes a weakness”.

Surely, this level of credit exposure to one sector of the economy, far above all other productive sectors, is something that we should be concerned about, especially at a time when there is a general slump in property world-wide and also at a time when the banking sector is going through a very serious credit crisis.

As Conor has already shown, and in the number of reports that finally came out following Brian Hayes question in the Dail last December, the number of unoccupied properties in this country is phenomenal. What we have is a property meltdown waiting to happen. An over saturated property market with out any one to buy them. Should we be concerned?
Well, no, the countries largest bank, at least, has it covered. In the Front page piece it says:

“AIB, the country’s largest bank, said this week said that it had scrutinised some €700 million worth of loans to property developers. The total amount of money owed by Irish people and businesses to the banks grew to €392 billion from €329 billion, an increase of 19.1 per cent.”

This reassurance from the bank is echoed in the Irish Times editorial, in what appears to my cynical eyes to be the most naked attempt by a newspaper to provide substantial support to the ‘countries largest bank’.

“Allied Irish Banks produced its final results on Wednesday, matching market expectations in reporting a €2.5 billion pre-tax profit for 2007. That was a four per cent drop on the 2006 figure but the bank’s results contained few surprises and were broadly in line with earlier guidance on earnings that AIB management had provided.

The writedowns for the bank’s investment losses in the US subprime market dented its financial performance somewhat. Those writedowns, however, amounted to relatively small losses and reflected AIB’s limited exposure to the high-risk subprime sector. In this regard AIB’s investment caution remains in sharp contrast to the reckless enthusiasm shown by some of its European and US peers for these toxic investments.”

The rest of the editorial goes on to say about other banks have been foolish and reckless while AIB has been wise. It is perhaps true that AIB is less exposed to the subprime debacle because it didn’t buy those bundled securities like many other European banks. However, considering their exposure to a very venerable property market at a time when the usual means of getting out of trouble is rapidly disappearing suggests that some serious PR is going to be needed to reassure customers and investors that everything is rosy in the garden.

However, it is not the AIB who I am interested in here. It’s that in such circumstance the Irish Times chooses to issue press releases for the bank:

“AIB, to judge by its 2007 results, hopes to reassure investors that it can manage its own loan risks successfully. In its accounts and briefings, the bank has provided a detailed disclosure of its activities and outlined how it hopes to minimise the risk of major loans losses in vulnerable sectors, such as housing, given the downturn in the property market. There, AIB has started to closely monitor some €700 million in loans to property developers, which amounts to some eight per cent of its Republic of Ireland property and construction loan book. This is a pre-emptive move by the bank to minimise potential losses to borrowers at risk of default.”

It in no way tries to question or to analyze why the rate of increase has occurred, or to spell out the dangers as suggested by in the Fitch Ratings report. It doesn’t address the point that the reason banks have been lending so much is because in 2007, as with the previous 7 years the prices of land have increased significantly due to land speculation.

Indeed, considering the possible consequences of this situation, it is ironic that on a day that Bertie Ahearn takes the stand again at the Mahon Tribunal that there has been no connection made – in the Irish Times or elsewhere - between the rampant land speculation that lead to this situation with the banks and the reason why our politicians are being scrutinized.
After all did not the Mahon Tribunal come about because of bribes given to politicians to allow planning permission to go through on land that, once provided, would hugely increase its value?

But this can’t be right, can it? Because the Irish Times is just providing a service. They are non-partisan. They are saying, Trust Us, which when see the editorial in the light of the Edelman findings, means Trust AIB.

Image from Edelman Dublin Blog about the NIB Emerald Isle report which Michael Taft devastatingly tears apart here.