Critical analysis of Financial Times article Essay
Title: Produce and subject a critical analysis of an article on a current economic issue from the Financial Times. The Housing Market. 1750 words.
Article: Cohen, N. , ‘House monetary values suffer biggest bead in 25 years’ ,Financial Times,6ThursdayNovember 2008, INTERNET, available at hypertext transfer protocol: //www.ft.com/cms/s/0/ad9f650e-abeb-11dd-aa46-000077b07658.html [ viewed 19.11.08 ]
( See Appendix ) .
This paper presents a critical analysis of the above article, viewed online in the Financial Times web archive. It sets out to analyze the piece both textually and contextually, and, wheresoever necessary, does so from a comparative position, pulling in other beginnings, both from theFinancial Timesand elsewhere. Overall, it is argued here that the nonsubjective public-service corporation of this piece – and others like it – relies on a combination of textual and contextual analysis. This is non so much a review of Cohenper Se,as the genre in which this piece is composed and presented.
The article is ab initio viewed in its literary and journalistic context. TheFinancial Timesarguably occupies a alone niche in the British newspaper market, every bit good as the field of news media itself. It is regarded as an nonsubjective supreme authority of information about the concern and fiscal universe, and relied upon by a broad scope of sentiment as a usher to investing. This is particularly important in footings of the FT’s niche market. Whereas all UK circular newspapers arguably retain their nucleus readership partially through the care of a peculiar column position, the FT does so through heed to the demands of the UK and international concern community, stockholders and investors. In the procedure, it – of necessity – marginalizes a scope of overlapping societal, political and cultural considerations, which otherwise might obtain primacy. This trait becomes more important when sing articles devoted to affairs with of import social deductions, such as the UK lodging market. However, it is non this facet of Cohen’s article, but its reductive nature, which offers up its most combative points.
The article is titled with the apparently positive statement that UK house monetary values have suffered their greatest decrease in 20 five old ages: it opens with the auxiliary information that values have fallen in likewise unprecedented proportions between September and October 2008, and in the old 12 months. ( Cohen 2008 ) These losingss are quantified as 2.2 per cent and 15.5 per cent severally. A figure of back uping statistics are provided before the beginning of these seemingly inexorable omens is finally revealed.
The first point which must be made is that all the figures quoted are ( presumptively ) aggregated from average norms of nationally collated information. This point is non specifically acknowledged, except through the employment of the taxonomy ‘national’ , itself subsumed beneath the header ‘UK’ . What it implies – and at the same time conceals – is a important decrease of truth with respect to regional and local fluctuations in such losingss. This is compounded by a neglect for disparities mediated through classs such as type of belongings, niche markets and specialist gaps such as bargain to allow. This instantly downgrades the existent public-service corporation of the piece for its ( presumed ) intended audience – the prospective investor, buyer, or stockholder. The extent of this journalistic licence becomes more evident when the birthplace of the statistic is provided: the beginning of the relevant information series in 1983. In other words, the 25 twelvemonth chronological comparing set, a important facet of the article’s impact, is derived from the handiness of a one-off sample, and is itself the merchandise of a historical accident: the origin of this information series in 1983. ( Cohen 2008 ) .
Does this, of itself, strip the article of its journalistic unity, or nonsubjective usage to the reader? The reply is non straightforward, and may be explored more to the full in the subsequent inside informations of the study. An of import reconciliation point in the whole alarmist discourse is provided in the grant that ‘strong house monetary value rising prices in recent years’ means that, despite the suggestion of unprecedented losingss, many householders have retained important additions through rises in the value of their belongings: ‘…the mean UK house monetary value is still 22 per cent above where it stood five old ages ago..’ . More significantly, it is besides reported that, notwithstanding any external factors, the UK lodging market had been seesawing on the cusp of a retrenchment wholly of its ain devising. ‘…even without a recognition crunch, house monetary values needed an component of deflation merely because they have become unaffordable. The long-run ratio of house monetary values to mean net incomes is about 3.6 to 4.0.’ ( Cohen 2008 ) . If this point is given more prominence, it becomes clear that the whole construct of ‘value’ and ‘price’ is employed rather subjectively throughout the full piece. It could every bit be argued that belongings monetary values are returning to their realistic value in proportion to the remainder of the economic system.
About as if to marginalise these silver liners nevertheless, some parallel storm-clouds are quickly re-deployed to immerse the reader into somberness one time more. New auto enrollments are reportedly down twenty three per cent in a year-on-year comparing with October 2007, whilst unemployment statistics – possibly intelligibly – non quantified here, are drawn in as a possible factor in future negative equity. As Cohen expresses it, ‘…there are concerns that a lifting unemployment rate could bode a rise in arrears and defaults among householders, some of whom will happen themselves owing more than their house is presently deserving on the market.’ The generic and unscientific nature of this guess, it may be argued, sums to really small in footings of truly utile and nonsubjective coverage. What so, is the map of a text which tells us, in general footings, something which we already know, or at least may assume?
The really least which may be gleaned from this is that the coverage protocols of the mortgage loaners and their trade associations are good adapted for their intent, but that intent is non, it may be argued, the information of the interested reading populace. Rather, it is much better adapted to its underlaying jussive mood: the airing of bad intelligence to stockholders, regulators, and other straight affected stakeholder groups. There are a figure of possible grounds for this. Most significantly, imputing the causes of the current state of affairs to the general recognition crisis is a fantastic economic system of graduated table for CEO’s who are diversely beleaguered, discerning, or, in a surprising figure of instances, merely non up to the occupation. Contemporary concern and finance is littered with the debris of apparently competent or even exemplar practicians, who, it was later revealed, had been presiding over long-run catastrophes whilst smilingly in reception of industry – and analytical acclaims. The first high profile casualty of the current fiscal crisis, it may be recalled, was Matt Ridley, president of the doomed Northern Rock bank: he resigned without a rupture payment in October 2007, and for good step was accused by the influential Treasury Select Committee of ‘clinging to office’ . ( Croft 2007 ) . Mr. Ridley was, it may be argued, a small unfortunate in that Northern Rock did non remain afloat merely a twelvemonth longer than it really did. Have it limped into the 2nd or 3rd one-fourth of 2008, its perilous province could hold been attributed to the general meltdown of the retail money sector. As it stands, Mr. Ridley now has to stand back and ticker as many of his former rival CEO’s soak up one million millions of lbs of revenue enhancement remunerators money to shore up their creaking concerns. We do non cognize – and may ne’er cognize – how many other UK Bankss were destined for the same destiny a Northern Rock, without the extra load of the planetary recognition crunch.
Does this mean that the discerning or concerned reader should abandon the FT and its assorted advocates? In the long term, the reply is, likely non. What they should bear in head nevertheless, is that the newspaper has its ain concern jussive moods, non least amongst which is that pages must be filled in order for each edition to be sold. It is non unusual for theFinancial Timesto transport closely related narratives on the same affair in several back-to-back issues. There is nil basically at mistake in this policy, nevertheless
In common with more populist and less objectively finance-driven variety meats, theFinancial Timesis, it may be argued, more enlightening through an collection of its articles than in a individual one of them. The UK Housing Market plot line is no exclusion. Within a two hebdomad chronological radius of Cohen’s study, the specificity of Britain’s mortgage loaning crisis is more helpfully outlined by other articles in the same paper. As Croft reveals, variegation into sub premier mortgages, commercial belongings and Icelandic bank securities have prompted the death of the Barnsley Building Society, the Derbyshire Building Society, and the Cheshire Building Society, whose continued presence in the high street is assured merely by take-overs. ( Croft 2008 ) .
Why so, are serious journalistic inquiries non being asked about the administration and stewardship of these concerns? In instance we needed to be reminded of the general rules which should inform such functions, we may usefully mention to the advice provided by Monks and Minow, who argue that ‘ … stockholders should try to maximize contestability in the corporate paradigm by seeking board members who will replace under-performing directors when necessary, and by replacing board members who will non accept this responsibility.’ ( Monks and N. Minow, 2004: p.516 ) One possible reply is that the sheer graduated table and Numberss of the current prostrations, bail-outs and coup d’etats exceeds the journalistic capacity of the FT and the remainder of Fleet Street. The other is that unfortunate, timeserving or merely awkward bank CEO’s can thank their friends in the imperativeness for reigning in what might otherwise be an avalanche of unmaskings. If this is the instance, it is really much a instance ofCaveat Emptor,non merely for prospective retail clients of the Bankss concerned, but of the FT’s related end product.
Cohen, N. , ‘House monetary values suffer biggest bead in 25 years’ ,Financial Times,6ThursdayNovember 2008, INTERNET, available at hypertext transfer protocol: //www.ft.com/cms/s/0/ad9f650e-abeb-11dd-aa46-000077b07658.html [ viewed 19.11.08 ]
Croft, J. , ‘N Rock’s Ridley resigns as chairman’ ,Financial Times,9 Oct 2005, INTERNET, available at hypertext transfer protocol: //www.ft.com/cms/s/0/27e729dc-7e43-11dc-8fac-0000779fd2ac.html [ viewed 19.11.2008 ]
Croft, J. , ‘Risky Mortgage Lending by Mutuals Drives Consolidation’ ,Financial Times,25 Oct 2008, INTERNET, available at hypertext transfer protocol: //www.ft.com/cms/s/0/5fcf2286-a22e-11dd-a32f-000077b07658.html [ viewed 19.11.2008 ]
Monks and N. Minow, ( 2004 ) ,Corporate Administration, Basil Blackwell, Oxford.
House monetary values suffer biggest bead in 25 old ages
By Norma Cohen
Published: November 6 2008 UK house monetary values fell 2.2 per cent in October from September, and 15.5 per cent from a twelvemonth ago, harmonizing to the latest Halifax House Price Index, pass overing out additions on lodging equity earned since October 2005.
The diminution in house monetary values confirms the tendency seen in the monthly study produced by Nationwide and suggests that the value of indirect endorsing outstanding mortgage loans continues to be eroded. It besides comes in front of the latest involvement rate determination from the Bank of England.
In the three months to the terminal of October, house monetary values fell 13.7 per cent compared to the same period a twelvemonth earlier. But Howard Archer, economic expert at Global Insight, points out that the 15.5 per cent year-on-year bead in October exceeds the peak-to-trough seen in the recession in the early 1990s. Indeed, Mr Archer said, it is the individual largest bead since the series began in 1983.
“Housing market basicss remain overpoweringly unfavorable, clearly indicating to farther pronounced monetary value falls. Affordability ratios are still comparatively stretched, even though they have come down significantly in recent months, ” he said.
Martin Ellis, main economic expert at Halifax, said: “Housing market conditions remain disputing in the face of the important force per unit areas on householders’ incomes and the decrease in the handiness of mortgage finance since last summer.”
However, the impudent side of falling house monetary values is that the mean place is now going more low-cost and Mr Ellis noted that the ratio of mean house monetary values to average incomes is now below 5.0 for the first clip in four and a half old ages.
Economists have suggested that even without a recognition crunch, house monetary values needed an component of deflation merely because they have become unaffordable. The long-run ratio of house monetary values to mean net incomes is about 3.6 to 4.0.
However, strong house monetary value rising prices in recent old ages means that those who purchased places some old ages ago retain important lodging equity. The mean UK house monetary value is still 22 per cent above where it stood five old ages ago.
Mr Ellis noted that the pinch on householders’ incomes and decreased mortgage handiness are badly restraining demand for lodging. With mean net incomes turning at a slower rate than retail monetary values, consumers are really seeing shrinking in existent incomes.
The information attention deficit disorder to a image of increasing somberness for consumers as the Society of Motor Manufacturers and Traders released new auto enrollment figures for October down 23 per cent year-on-year in October.
It was the 6th consecutive month of worsening auto gross revenues, and confirms the anecdotal grounds from a assortment of motor industry studies demoing fall ining demand for autos and for the workers who make them.
Meanwhile, there are concerns that a lifting unemployment rate could bode a rise in arrears and defaults among householders, some of whom will happen themselves owing more than their house is presently deserving on the market.
“Rising unemployment, major concerns over the deepness and length of the recession, and widespread outlooks that house monetary values will come down markedly farther seem set to deject lodging market activity and monetary values for some considerable clip to come, “ Mr Archer said.