Saturday 15 September 2018

Was Mark Carney misreported?

This is interesting:

Instead of "makes front pages and becomes 'fact'" Andrew might have said "made headlines on the BBC and becomes 'fact'", given that the BBC was also front-and-centre with reporting this story.

He’s always made clear he’s talking about the stress-testing the Bank has done for all scenarios including the very worst case. It’s not his fault if the #looselips in parliament and journalists don’t understand this. Fortunately we do still have some real journalists. 
And she then linked to Sky's Ed Conway (tweeting two days ago, as the story was first breaking). His tweets, however, suggest that Georgy may actually have seriously understated the 'lack of understanding' from journalists (including BBC journalists):

  • Short thread: major note of caution needed with this Bank of England house price crash forecast story. Now (clearly) I wasn’t in cabinet & wasn’t privy to what was discussed. But I have a strong suspicion people are getting the wrong end of the stick here. Let me explain: 1/
  • The past few years the Bank has run stress tests to see how well capitalised the banking system is. The fictional scenario is v ugly: house prices down 33%, unemployment up over 9%, interest rates up to 4%. Worse, in many senses, than what UK went through in the crisis 2/

  • These stress tests are explicitly not designed as forecasts. They are BEYOND WORSE CASE SCENARIOS which, like caps lock sentences, are supposed to shock the city into safe balance sheet behaviour. The good news is last yr the UK banks almost all passed 3/
  • Mark Carney has said in public a number of times that he is worried about a no deal, before adding that the financial system would be able to withstand it. As if to prove it he has then trotted out that stress test scenario: look, the banks can even survive THAT! 4/
  • Yes: part of his point behind such illustrations was that Brexit could indeed be bad news for house prices etc. It could be really bad. But 35%…? Not likely. Even the Treasury’s worst case scenario for house price falls pre-referendum was literally HALF that 5/
  • Mr Carney prob trotted out similar lines at Cabinet today. But someone there seems to have gotten the wrong end of the stick and has leaked that this was a Brexit-specific forecast/scenario. No. This (below) is the Bank’s stress test scenario. Compare to my 2nd tweet in thread. [Here he cited Jim Pickard of The Times, saying "Bank of England has modelled a worst case no-deal Brexit scenario where real estate prices fell by a third, interest rates rose to 4 per cent, unemployment to 9 per cent and the economy went into a 4 per cent recession"] 6/
  • I don’t mean to undermine news stories running tonight. Those reporters were briefed on the cabinet meeting & are reporting what they’re being told. But I suspect what they’re being told isn’t quite right. I’d be amazed if the BoE was really forecasting anything like this 7/
  • It’s the same problem as happened before the referendum. Most of the economic community produced sensible analysis warning of risks around Brexit. But (& @George_Osborne deserves some of the blame for this) in the end all everyone remembers was that scary HMT recession warning 8/
  • What if the same thing happens again? I’m willing to bet if the UK crashes out of the EU house prices won’t crash 35%; interest rates won’t suddenly leap to 4%. Then, because of these stories, the BoE’s credibility will be further undermined. Along with their fellow economists 9/

If Ed Conway is correct then lots of lazy journalists with insufficient understanding simply swallowed some leak and then regurgitated it wholesale.

And the BBC? Would they be 'guilty' of that charge too? Well, yes because they led the reporting of the story, and this was their headline about it:

And this is how their online report began:
The Bank of England's governor has warned the cabinet that a chaotic no-deal Brexit could crash house prices and send another financial shock through the economy.
Mark Carney met senior ministers on Thursday to discuss the risks of a disorderly exit from the EU.
His worst-case scenario was that house prices could fall as much as 35% over three years, a source told the BBC.
("A source told the BBC". And the BBC told the nation.)

And BBC Breakfast, on Thursday morning, was telling it like this:
House prices could plunge by more than a third in the event of a no-deal Brexit, according to the Governor of the Bank of England. Mark Carney briefed senior ministers Thursday to discuss the potential risks of leaving the EU without a deal. According to sources, the Governor said a slump in the pound and a rise in interest rates could mean house prices would fall by as much as 35%.
("According to sources". According to the BBC.)

What do you make of this? Is Ed Conway correct? Because if he is then there are a lot of very poor quality journalists out there, including at the BBC, pumping out what can only be called 'fake news'.

And here's where we return to Andrew Neil's tweet because Mark Carney, as reported in (say) the Guardian, is now insisting that he wasn't predicting a no-deal house price slump and that "he set out to cabinet worst-case scenarios used in bank stress tests" - just as Ed Conway said two days ago. 

So was this 'loose lips' from Mr Carney the other day followed by a later 'clarification'? Or did the 'sources' cited by the BBC & Co. get 'the wrong end of the stick' and most of the media (including the BBC) simply not have the knowledge or the journalistic gumption to scrutinise the story properly?

P.S. The BBC's Kamal Ahmed 'clarified' the BBC's own reporting nearly 10 hours after the BBC website first published the report by adding an 'analysis' (as Newsniffer shows):
It appears that the Governor wasn't providing the Cabinet with a forecast of what the Bank believes would happen in the event of a no deal Brexit. He was briefing the Cabinet on what preparations the Bank was making if that does happen, including last November's stress test.  
It was not a forecast.  
It was an apocalyptic test where the Bank deliberately sets the parameters beyond what might reasonably be expected to occur.
Checking BBC One (using TV Eyes) I see that this 'clarification' didn't make into on BBC TV and that even yesterday evening BBC London was still trotting out "Because the Governor of the Bank of England, Mark Carney, says house prices could dip by more than a third if Britain leaves the EU without a deal..."  


  1. I mentioned this on the open thread yesterday.

    In another case of the BBC cherry picking what they want to report, the BoE MPC minutes published yesterday said :
    The Bank of England lifted its estimate of the economy and noted recent strengthening pay, keeping officials on course for future series of gradual interest-rate increases.

    Policy makers said recent activity has been better than expected, raising their third-quarter estimate to 0.5 percent from 0.4 percent, according to minutes of their latest meeting at which they left rates on hold. Officials also noted that consumer spending and pay settlements appear to have been stronger than anticipated.

    What did the BBC report on these minutes? As you might imagine they completed ignored the positive news and focused on the negative.

    The Bank of England has left interest rates on hold at 0.75% as expected but flagged "greater uncertainty" around the Brexit negotiations.

    1. Yes.

      I see the phrase "mounting fears" in that report is the BBC's own. The minutes put it more cautiously, talking of "indications...of greater uncertainty".

      Looking at Newssniffer, the earlier version of the report said in its third paragraph:

      "The MPC said there had been indications of "greater uncertainty" in the process of withdrawing from the EU since its last meeting."

      The later version lifted the Brexit point into the opening paragraph and dropped the word "indications", thus ratcheting up the bias:

      "The Bank of England has left interest rates on hold at 0.75% as expected but flagged "greater uncertainty" around the Brexit negotiations".

  2. They must think we were born yesterday. Which Remainiac in the Cabinet leaked this? My suspicion is Hammond himself.

    Doesn't the Bank of England have a press office? I bet they do and I bet it's well staffed. They will have seen how the story was being treated and would have asked Carney if he wanted to comment immediately. He chose - I use the word deliberately - not to comment, to let the story run wild. Now it's CYA time so when he is next up againt JRM, he has got plausible, or at least implausible, deniability in place.

    Hammond and Carney work as a tag team to undermine Brexit, to talk down the economy and to plot for a second referendum. There can be no other explanation really can there? I am not saying they don't genuinely think we are better off in the EU - but that's the problem really.

    The BBC is just helping amplify their propaganda.

  3. '...that a chaotic no-deal Brexit could crash house prices...'

    That's a new one: crash house prices. Part of the BBC's own special language.


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