Wordblog

Evan Davis has raised an issue of huge importance to journalism: to what extent were we complicit in events leading up to the credit crunch. He was talking at the Radio Festival in Glasgow yesterday, but a Google News search suggests only the Guardian and the Press Gazette reported the event.

Davis, the former BBC economics editor who now presents Radio 4’s Today, said:

I do ask whether we did our best to warn people of impending problems during the upswing of the [economic] cycle… We did warn them but didn’t warn sufficiently loudly or clearly, and might have warned a little too early.

By reporting every house price survey the media may have helped inflate the market, he said

Very simply, if house prices over a period of years are rising considerably faster than incomes something nasty is going to happen. The arithmetic is easy and it shows that eventually mortgage repayments for someone buying a house would overtake their income. That, of course, is impossible and the market crashes long before that.

Clearly the media did not do enough to explain the dangers of house price inflation. But neither did the central bank, the financial regulator nor the government.

The boom brought a mass of advertising that made the property and personal finance sections of newspapers fat. For a troubled industry it was a lifeline and you are hardly going to write warning articles to keep  apart the ads for new mortgage deals including ones that offered more than the price of the house.

In commercial TV much the same applied, particularly at Channel 4 which produced so many programmes not just about buying homes but by investing to make money through buy-to-let and property development.