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Making Sense Of The Crisis
What has happened to the Independent?. Britain's other left-leaning serious newspaper has been, for the past five years, a harbinger of doom. Its front covers have focussed on the worst possible case scenarios for everything from global warming to bird flu, while it regularly publishes claims that everything from wifi networks to vaccinations will kill us.
Yet, with the financial crisis lurching from bad to worse, the Indie has kept the coolest head of any British newspaper.
Today's edition continues the trend. The main business story is a profile of Britain's most successful fund manager, Anthony Bolton, who believes UK stocks are bottoming out. Bolton is buying, and with his own money.
While the profile points to Mr Bolton's "contrarian nature", it adds the the company he works for is claiming research which "shows that the value of many companies, particularly in bombed-out areas of the stock market such as retail, media and property, suggests that even were there to be a recession as severe as the downturn seen in the early 1990s – a more punishing correction than the vast majority of economists are currently predicting – shares would still prove to have been oversold.
"My feeling is that we're going to have a recession, but not a super-bad recession," Mr Bolton said. "Shares in some consumer-facing firms are as cheap as I have seen them in my lifetime."
The Independent's top business correspondent Hamish McRae has kept a cooler head that most of his peers as the financial crisis has developed.
While certainly not painting a rosy "hello clouds, hello sky" picture of market chaos, McRae's strategy has been to avoid front-line reporting from the turmoil in the world's bourses and try to get a bigger picture of what's happening in Britain, at least. His commentary sees much that is positive as well as plenty to be concerned about.
"People have been told the economy is going to hell in a hand cart so some will believe this might happen," runs the introduction to today's story. For now, much of the damage has been done to the markets. What about the wider economy, outside the City, he asks.
Consumer confidence is very low and savings need to be replenished, he says, but there is little surprising about these claims. Consider, however, other elements in the picture.
Citing what he describes as "excellent work" by Simon Ward, of New Star Asset Management (see graphic in this story), he points to the probability of deep recession being rather lower than predicted. Two major things can go wrong, though: Governments could fail to act where needed, though McRae says that surely no-one could be that incompetent. Secondly, consumer confidence could simply dry up, causing a collapse in retail sales, one of the main motors of the economy.
"Though confidence is dire and sales of big-ticket items such as cars are weak, actually day-to-day spending does not seem to have come off that much. But there is a clear risk. We need some cuts in interest rates PDQ and I would not be surprised of the first one came next week.
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"All this emphasises how important it is that the banking system gets functioning again. The horror story will not carry on that much longer, for all previous experience of banking crashes shows that they have a natural cycle and this feels like the moment of catharsis. Once the turning point is clearly past, the focus will shift to the real economy and not a moment too soon."
McRae has come in for some stick on the comments section of the website, however. This isn't necessarily a surprise, given the Independent's natural readership, but it does suggest that his analysis is controversial, to say the least. That's not to say it's unpopular - the top business stories on the newspaper are his and the report on Anthony Bolton's call to buy. People are looking for some light at the end of the tunnel.
Is there anything in it, or Anthony Bolton's claims? Or are the Jeremiahs on the other papers (notably conservative newspapers like the Telegraph and the Times) right? The home page of the Times, for much of this week has depicted horror-movie black clouds hanging over Capitol Hill; its news cycle has struggled to keep up with market volatility. One headline cried "Shares Plunge" even as the site's market ticker showed them to be up again; another spoke of "Surging Shares" as earlier gains were lost.
Business journalists act as pack animals much as market traders. No-one wants to recommend a course of action and risk being cast out from the pride; few want to find themselves isolated when their peers are forecasting a wipe-out on a par with the Black Death. McRae is taking risks, and it's good to see: Time will tell if he's right or wrong, but if things work out half as well as he says they may, his stock will rise substantially - and the Independent might realise that there's something in good news stories after all.
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