One of the greatest challenges affecting Greek understanding of the current debt crisis is the apparent difficulty of the mainstream television channels to understand the key issues and ask the right questions.
This reticence may be a structural issue: most probably journalists do not have an in-depth understanding of economics or finance, and may be appointed to their posts for other reasons (including physical attractiveness, personal connections, and personal ratings). It may also have to do with the fact that the government exercises certain forms of control over the media, such as allocation of public advertising budgets or issues such as debt forgiveness (which is a major issue with Alter at the present time).
Yet the fact remains that in the public broadcasting channels (ERT,
NET, ERT3), the quality of coverage is extremely poor. A typical example is seen in the coverage of comments today, Monday, 14 March, in which the results of the EUR 110 bln debt rescheduling led each broadcast, together with the earthquake. Japan
Some typical points mentioned in the afternoon () and evening () broadcasts were:
· Coverage of George Papandreou’s press conference outside the Presidential mansion, that
had “won a battle, but that the war was still being fought.” Greece
· Coverage of Press Spokesperson Petalotis’ bombastic and contradictory press conference, in which he stated among others that “we did not ask for anything, no one gave us anything, whatever we have earned we have fought for”, etc.
· That European leaders apparently commented about the unfair decision made by Moody’s.
· That the revised agreement would, according to a statement by George Papandreou, “save” Greece EUR 6 billion per year.
· That spreads had “fallen” while the stock exchange had rebounded.
The tone particularly on
NET was triumphalistic: that has one again prevailed in a war against external enemies, that Greece has been “saved.” Additional comments were made or implied that Greece was no longer part of the problem, but part of the solution; that Greece and Moody’s were the new problems, etc. Ireland
As a parenthesis, I must say I was equally amazed at George Papandreou. Upon his return from
, he summoned his Cabinet for an emergency meeting, and read them this speech. Honestly speaking, I can’t think of a graver waste of time than to summon 30 people into a room on a Sunday afternoon to read out a 5-page speech full of empty platitudes and inaccuracies. I am certain that North Korean reports on agricultural output are more interesting than this. Brussels
Yet throughout this television coverage or the Prime Minister’s speech to his Cabinet, I didn’t hear any of the really important questions being raised:
a. I didn’t see a single chart or table showing what the annual instalments and total interest paid were before the loan rescheduling and after.
b. Because such data were not presented, no reporter asked how
would pay back the EUR 110 bln, which by simple calculation will cost at least EUR 18 billion per year from 2014 onwards, and which implies an 8% Greece GDP surplus being allocated to debt repayment. (Such a surplus has never before been achieved in Greek history in hard currency terms.)
c. Nor did I hear any reporter question
’s future payment capacity given that the budget deficit in the first two months of 2011 is EUR 1.028. Equally, no reference was made to the remaining EUR 230 billion (in present value) which have to be repaid, or what happens when interest rates on this re-set from 2013 onwards. Greece
d. Although reference was made to a lowering of bond yields, the fact that they remain over 12%, and that the average discount on the open market for a 10-year Greek bond is 35%, was not mentioned. This raises significant doubt as to how successful the European “solution” for
actually is. Greece
e. Although Moody’s was once again cast as the villain, no one bothered to present what was actually written in the downgrade notice, or explain the reasons Moody’s may have indicated for downgrading Greece. This caused the media to miss the basic fact that in a debt restructuring after 2013, the European Stability Mechanism (ESM) will likely lead to a haircut on securities held by private bondholders.
f. In turn, no mention was made about the possible risk exposure of Greek and Cypriot banks to (a) Greek government bonds, and (b) the dramatic decline in domestic banking indicators and the rise in non-performing loans.
g. No indication was given of the direction of the EUR 50 billion privatisation package, or whether the Prime Minister’s earlier promise to pass a law making it impossible to sell public land without a Parliamentary vote might act as a deterrent to potential investors.
Although I heard George Papandreou and George Petalotis speaking, I didn’t hear a single question being asked to them. All that was broadcast was their set remarks. It looks as if the reporters have accepted their “achievement” at face value, and are simply, and mindlessly re-transmitting these to the public.
This is literally astounding. Given everything we have learned about corrupt and incompetent politicians in
, the fact that today the media give them the benefit of the doubt is unbelievable. I have rarely seen such a misrepresentation of reality, because this is what we are dealing with. If the average Greek citizen gets his news from the mainstream television broadcasts, then he can be forgiven for thinking that everything is all right. Greece
We should not be surprised if, 12 or 24 months from now,
’s fiscal situation has worsened, but we hear the same shameless cheerleading emerging from the media and the government. Greece
(c) Philip Ammerman, 2011
Navigator Consulting Group
(c) Philip Ammerman, 2011
Navigator Consulting Group