79 Final Project

The History of Distrust in Media and The Current Financial Crisis in the European Union

By: Lauren Van Niel

The banking systems within countries of the European Union have had a rather frightening decline in the past month regarding the stocks of some of their largest banks. Panic among German citizens has begun to spread and policymakers, including the Chancellor himself, are trying to use the media to mitigate the situation. However, statements and analyses that are being published in the media by government officials and other banks are not making much headway in keeping the problem from escalating. With a decline in trust from the German public due to a slew of challenges in recent history, political powers using it for mitigating hysteria, and a gradual rise in violence against journalists beginning during the peak Covid-19 era in 2020-2021, the attempts to use media as a persuasion tool by the government is simply not working to their advantage anymore.

The indicators of a financial crisis in Europe have been building since the beginning of the Ukraine and Russia conflict that is still persisting today. When Russia invaded Ukraine, multiple sanctions were put in place for all countries that are in the EU were not importing gas from Russian companies anymore. Prices for natural gas were driven up causing a lot of stress on countries and their individual citizens. This led to several countries attempting to find solutions such as Spain and Portugal making the decision to act outside of the EU’s common-market rule and introduce a gas cap to try to drive prices down for the public (Kern, 2023). This decision has actually since been extended.

After the attack on Ukraine and the looming energy crisis that was created as an outcome, the European Systemic Risk Board put out an alert of potential future harm to the market . The ESRB is a board that was created to uphold the responsibility for monitoring the financial system in the region and prevent any harm from happening prior to any crisis exploding. This alert was originally put out last year in September of 2022.

Continuing these indicators are the most recent events including currency in the EU and shareholders of the banks, especially in Germany. The Euro has recently fallen in value against the US dollar this year and several banks have fallen into disarray.

Germany’s bank, the Deutsche Bank, is the largest bank that is located out of Germany, the eighth largest bank in the European Union and the 30th largest bank in the world. This year it has seen a significant decline in percentages of shares which makes the present issue the worst shock since the 2008 global financial crisis. Deutsche Bank went down by 8.5% in shares as shareholders began withdrawing in masses once assessing there could be danger in keeping their shares with the bank. The lowest it dropped was in March by 14%.  The bank has also lost a relatively overwhelming fifth of their value in just the last two months.

The decline and amount of withdrawals has caused the German public to panic and follow stockholders footsteps in withdrawing from the Deutsche Bank as well. Because of the large amount of people taking out money in fear of a crisis, the insurance that would protect individuals from being greatly affected by bank crashes has soared rapidly, causing more financial distress. We’ve seen this hysteria flow over into the United States with the Silicon Valley Bank completely tanking recently and more decreases in stock in other large banks such as JP Morgan & Chase.

In several attempts to find a solution to the situation there have been several news outlets, some solely German but most others international, that have released statements from government officials who are beating around the bush on what is going on. German Chancellor Olaf Scholz has spoken to multiple media outlets addressing the situation and claiming that the severity of the financial decline is, in fact, not that severe at all. He has urged German citizens to refrain from taking their money out of the banks as they were as stable as they have been. During a EU leader summit those present began to downplay the situation once again, releasing to the press that the financial system is still in good shape.

JP Morgan & Chase released an analysis done on the financial situation, addressing some of the largest banks world wide, including the Deutsche Bank, stating that the system is stable and that there is no way that a decline so severe would occur anytime soon. Deutsche Bank went down 14% in shares the next week, followed by at least three other major banks in Europe. JP Morgan & Chase saw a loss of 1.4%. Investors are still concerned at the state of the banking system and continuing to sell their shares, lacking trust in the words of lawmakers.

Public trust in the media is essential to journalism and the news. It is completely reliant on the public’s opinion and the ability to publish material that is true and be able to show that it is true. As taught in journalism school, breaking news and outbreaks where information is constantly changing and coming in in mass amounts, it is easy for the information to be difficult to separate. The European Union media began looking at the decline in trust around five years ago in a survey put out by Ipsos showing that Germany’s trust in the media declined by 12% from 2014-2019 ((Ferraresi, 2020).

This decline is shown in the data to have started in the year 2015, when the refugee influx crisis began and pushed trust in the media in Germany to its lowest point in recent history. Following the refugee crisis far-right government parties, such as Alternative Für Deutschland, began waging an information attack on the vocal campaigns of other running officials. The discredited the credibility of the  press accusing multiple media outlets of being serving the government, entertaining its lies and spreading said lies coming from the government to the public. This decline continued when Claas Relotius, an award winning journalist, was discovered to have repeatedly published falsified facts for his articles he published for Der Spiegel. Despite all of the above, the trust in the media in Germany was steady for a while, with most of the public enjoying the data based journalism led by legacy. (Ferraresi, 2020)

Media distrust began declining again in Germany during the pandemic in 2020 through 2021 during mask mandates and an enormous amount of information being published to the public constantly. In 2021 Germany’s ranking on the Freedom of the Net index in 2020 was 80 out of 100. In 2021 it declined slightly and was at 79 out of 100, with violations of users rights at 28 out of 40, limitations of internet content at 29 out of 35, and obstacles to access at 22 out of 25. Overall, Germany is very open with its internet freedom. In 2022, the public’s actions and distrust caused Germany’s internet freedom ranking to decline once again. All of this information came from the Freedom House website, specifically the Freedom on the Net 2022 Germany Country Report.

Post peak pandemic, Germany has seen a record high amount of violent attacks against German journalists. In a federal report released it was discovered that over the past four years, attacks on journalists have tripled, with one fifth of the attacks being directly related to the protests against coronavirus. 320 criminal attacks on reporters were recorded in 2022, the highest it has been since the data began to be collected in 2016. It has been a steady incline from the 93 attacks in 2019. (Deutsche Welle, 2023) In 2020, 71% of the attacks regarding covid, occurred during demonstrations where reporters were getting information and photos (Pfeifer, 2021). These attacks and distrust, according to the Freedom House analysis on internet freedom, have directly resulted in the ranking of Germany to decrease.

According to the Freedom House index overview Germany has contradicted its authoritarian past with a representative democracy with little limitations on speech. However, during the covid-19 pandemic distrust and disinformation accusations were frequent. Currently in Germany there are no laws regulating circulating disinformation online and in the media nor is there even a concrete definition of disinformation that the government uses. This may be because in most discussions regarding speech limitations, hate speech has been focused on more in the country than disinformation.  (Kettemann, 2022)

The history of Germany’s use of media is a rocky one, and while one might consider the trust of 65% of German citizens to be a positive statistic, the social and political fallouts suggest a further increase in media distrust. This mistrust manifests with the recent decline of the financial system and the contradicting comments from policymakers versus what is actually happening to the banks in the EU. It is no surprise that we see the mass distrust in the words of the media and the ensuing panic that is beginning to spread globally.

Currently, there is little being proposed as solutions to the problem in media trust other than the left party’s media spokeswoman, Petra Sitte, suggesting creating a federal plan for protecting the freedom of press and further legislation on protecting journalists in the field.

Citations

Arnold, M. (2022, September 29). Europe Faces ‘severe risks’ to financial system, Regulators Warn. Financial Times. Retrieved April 9, 2023, from https://www.ft.com/content/ddfd0379-5b23-44fa-ae3f-b7fb4b11295d

Deutsche Welle. (2023, March 13). Germany sees record number of crimes against press: report. dw.com. Retrieved April 22, 2023, from https://www.dw.com/en/germany-sees-record-number-of-crimes-against-press-report/a-64962697

Germany: Freedom on the net 2022 country report. Freedom House. (n.d.). Retrieved April 18, 2023, from https://freedomhouse.org/country/germany/freedom-net/2022

Ferraresi, M. (2020, May 28). As Europe confronts Coronavirus, the media faces a trust test. Nieman Reports. Retrieved April 23, 2023, from https://niemanreports.org/articles/a-trust-test-for-the-media-in-europe/

Kern, M. (2023, March 28). EU extends natural gas price cap for Spain and Portugal. OilPrice.com. Retrieved April 23, 2023, from https://oilprice.com/Latest-Energy-News/World-News/EU-Extends-Natural-Gas-Price-Cap-For-Spain-And-Portugal.html

Kettemann, M. C. (2022, September 7). Germany: Disinformation in pandemic times. AGI. Retrieved April 22, 2023, from https://aicgs.org/2022/09/germany-disinformation-in-pandemic-times/

McHugh, D. (2023, March 24). Shares of Germany’s largest lender Deutsche Bank Fall Amid Global Jitters over banks. PBS. Retrieved April 1, 2023, from https://www.pbs.org/newshour/world/shares-of-germanys-largest-lender-deutsche-bank-fall-amid-global-jitters-over-banks

Pfeifer, H. (2021, April 6). Anti-pandemic protests: Attacking press freedom – DW – 04/01/2021. dw.com. Retrieved April 23, 2023, from https://www.dw.com/en/covid-19-protests-an-attack-on-press-freedom/a-57072336

Shankar, S., Cooper, A., & Khandekar, A. (2023, March 24). Deutsche Bank tumbles as Jittery Investors Seek Safer Shores. Reuters. Retrieved April 2, 2023, from https://www.reuters.com/business/finance/deutsche-bank-ubs-hit-bank-fears-spark-stress-signals-2023-03-24/