Financial Times Alphaville....Where Comment Is Not Free

Yesterday the Alphaville blog at the Financial Times kicked off its day with a potentially explosive story. They printed a summary of a report alleging that Spain had hugely manipulated statistics on the decline of its Gross Domestic Product (GDP) during the crisis. The central allegation was that it was impossible for there to be such a high increase in unemployment together with a relatively small fall in GDP. The implication of the report was that Spain had maybe "done a Greece" by hiding the reality of its economic situation. The source of the report printed by the FT was anonymous and apparently it had been sent from a gmail account created only for the purpose of circulating the document. The FT claimed that the general strike had prevented them from getting a response before publication from Spain's national statistics institute (the INE).

The publication was enthusiastically received by many of those who follow this blog. However, as the day progressed it seems that others did the basic analysis on the report that the FT itself had failed to do. In the best traditions of classical economics the report had ignored factors - such as international trade - which have an important impact on the performance of the economy. Then came suggestions that perhaps the origin of the report had a political motivation as it had also apparently been sent to the extreme right wing Libertad Digital site. We don't know whether this is the case or not, although it wouldn't surprise me at all if sections of the Spanish right tried to provoke a Greek style crisis for Spain; regardless of the potentially disastrous consequences for their fellow citizens.

Nor, it has to be said, would it be any surprise if Alphaville and their keen followers in the markets also hoped for a bit of action following the publication of the report - nicely timed for the same day as the revision of Spain's credit rating by Moody's. Instead the FT ended up pulling the original article (if anyone has a copy please send it to me) and replacing it with a fairly lame piece telling us what a stressful day they'd had and how much they needed a drink! Now we are often given the impression that the markets take their decisions assisted by a legion of highly paid expert analysts and the professionalism of the journalists who cover economic issues. The sadder reality is what happened yesterday with Alphaville. Forget professionalism, the reason this story got published is because those publishing and many of those reading badly wanted it to be true, such stories help the roulette wheel to spin. You can feel the disappointment as the game ended on a whimper. One comment I read this morning lamented the possibility that Spain's economy might start to recover before the "truth" is revealed. Yes, that would be terrible wouldn't it? We don't want recovery to start anywhere until the takings have been counted!

I left a comment on the FT's revised post. It wasn't an abusive or insulting comment. I simply made the point that the FT's publish rumours without checking and accept no responsibility for the consequences line, combined with the evident enthusiasm of their readers for such stories, made an excellent case for curtailing the power of the markets. The comment was published on the site, but then about 5 minutes later someone inside the FT removed it. No criticism please, we're British.