The dangerous power of Media

Normally journalists should work in order to help people. Their goal is supposed to widespread information to protect people…thus there would not be asymmetric information anymore. Consequently journalists should fight for justice. Unfortunately truth is by far different…in fact the appearance of many financial scandals, turmoil and crisis has lead people to open their eyes. Media has a huge power…and this power can be used in very dangerous ways. What is the real impact of the revolution of media? We will focus on different examples which emphasis the danger of media.

So, let’s start by looking at the current example of EADS. A few months ago, this company was about to announce a very bad news to the market about its activity. To avoid a big decrease in their shares value, EADS asked to the French media Le Figaro, to publish a false rumour which could enable them to attract investors before publishing the bad news. Thus Le Figaro wrote an article, which claimed Mr Abramovich was about to buy the biggest plane of EADS. Obviously, investors have been attracted. In the end this false rumour has enable EADS not to lose shares value, instead of bad results.

Let’s move on to the example of the French bank Caisse d’Epargne. In the 1990s, media widespread the rumour that this bank was about to go bankrupt, which was false. Thus all the customers went to their bank to take back their money…people were afraid to lose all their money. Because of this panic movement, Caisse d’Epargne has been in a very dangerous position. They manage to stay alive only thank’s to the bank of France.

To sum up, media can create rumours to help companies showing a false image about their results. And the danger of these rumours is their ability to create panic movements in the result financial crisis.