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Don’t trust the news

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by Peter Switzer

If you woke up this morning to no Wall Street news you might not know that it’s Martin Luther King Jr. Day in the US and markets were closed. And so it’s fitting that I take a local focus today and proclaim that I have a dream!

I have a dream that economists one day will stop acting like journalists and that journalists one day will know enough economics not to run dumb stories that could spook listeners, viewers or readers.

This hot-under-the-collar reaction from yours truly follows a day of painting — yes, I’m still on quasi-holiday mode until my TV program starts on 31 January — where I listened to ABC radio news reports for most of the day.

It was a day of painting and palpitations, which I hope not too many Aussies, especially those flood-affected, had to endure along with me.

Dollar check

My first heart flutter came when the newsreader accidentally said, or because her news buddy wrote her scripts incorrectly, that the Oz dollar was buying 93 US cents!

That saw me down brushes to head to my website to check the latest on the dollar, which promptly told me that we were in the 99 cents region. Not to be too self-assured, I checked another website and sure enough I was right and the ABC was wrong.

Test it first

The next nightmare came when the TD Securities inflation gauge was released and warned everyone that inflation was hotting up and that the Reserve Bank was expected to raise interest rates three times this year. This was classic Pathetic Journalism 101, which so many radio newspeople seem to have got honours in.

The key lesson, which might be the only lesson they are taught, is go for the scariest storyline possible to prick up the ears of the listeners. Forget about testing the claim, the statistic or the commentary, particularly if such thoroughness could lower the boom on a story.

Chasing headlines

Now because of this, I believe too many economists try too hard to excite journalists with their press releases and newsletters to gain exposure for themselves and their financial institution. Let me be fair, if the work is largely educational for journalists — and hell, don’t they need it! — then I am prepared to accept it but when economists chase headlines it worries me.

Yesterday, economist Annette Beacher from TD Securities was quoted in these scary bulletins expressing inflation concerns following the data. However, economists can be right, they can be wrong or they can be crazy and that’s why a news service could look to alternative views — especially the ABC.

This is even more important when a news story frightens those with mortgages, who might also be having to deal with material loss and a cleanup impost because of the floods.

As I was a painter yesterday, I accepted the news report that inflation had raised the prospects of an interest rate rise but by the late afternoon I was back to my economist/commentator persona and a quick check of the facts started to allay my fears.

Different view

Over at CommSec, Savanth Sebastian had a different take on the inflation figures leading with the headline: 'Tame Inflation'. He argued that the numbers told him that inflation was under control.

“The TD Securities-Melbourne Institute monthly inflation gauge rose by just 0.2 per cent in December,” he wrote. “Excluding volatile items, prices were flat – the fifth straight month of negligible growth.”

Given the floods impact on economic growth in the short-term, I think the Reserve Bank is on the sidelines until mid-year or until inflation signs are more worrying than the ones we saw yesterday.

Slow news day

I know slow news days can explain why an understaffed FM radio newsroom will beat up an “inflation will force interest rates up” story in a bulletin but we are entitled to expect more from the ABC.

Aren’t we? Or am I just a dreamer with a mortgage?

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Tuesday, January 18, 2011