EFECTOS DE LA ALBÚMINA SOBRE ASTROCITOS

The recognition of the constitutive nature of financial media content and discursive/ rhetorical forms in the operation of financial markets is an important theoretical development because it challenges the conception of market information being simply representative/ reflective of an objective/ separate market ontology. However, there is a need here to differentiate between the constitutive role of media discourses in the broader ideological formations that legitimate the particular institutional arrangements that have underpinned the growth of financial market activity since the 1970s, and the more specific discourses and communicative processes which underpin the definitions/ framing of market reality and specific financial practices within investment institutions themselves. There is therefore scope for further investigation of how financial communication processes actually constitute market reality and how institutional investors engage with media in their trading activities.

It seems clear that financial news can generate trading activity and move market prices. However, there are very different ways of explaining these processes. The neoclassical perspective would suggest that information about fundamentals (supply, demand, price-earnings ratios, etc.) more or less accurately reflects an external market reality and thus allows efficient pricing28. However, the assumption that market facts can be represented unproblematically and that valuations/ prices reflect objective conditions that are true independently of market actors’ collective (mis)perceptions and emotional dispositions are not sustainable. This is a central theoretical concern of the study being undertaken in this thesis. The communication-based literature that informs this line of critique therefore needs to be discussed here, partly to position the thesis in relation to this work and also to introduce some further contextual information about financial market functions that need to be recognised as a pretext for further development.

Matolcsy & Schulz’s (1994) study of errors in financial journalism noted that what key market actors do/ say can be market-moving, even when they are subsequently shown to be mistaken. Jones (1996) notes that analyst reports affect market prices, primarily because of the influence they exert on institutional investors who trade securities in large volumes. However, as other studies of the impact of analyst recommendations in financial media suggest, prices may move not because significant new factual information has been disclosed but because investors respond to the momentum and direction of price-movements, often anticipating the (over)reactions of other market actors (Beneish, 1991; Sant & Zaman, 1996; Lee, 1998; Hong & Stein, 1999; Huberman & Regev, 2001; Busse & Green, 2002). This may indicate that investors base buying and selling decisions not on the ostensible validity of market information, but on the expectation that other market actors will

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The efficient markets hypothesis (see Shleifer, 2000) basically assumes that prices reflect all publicly available information and that any market news is immediately expressed in prices as traders respond rationally to it through buying and selling activity. This implies that; a) communication is an automatic process, overlooking interpretative processes, and b) that trading is essentially a ‘random walk’ and that there is minimal advantage to be gained from purchasing information or expert advice because market prices reflect all the available information.

respond to the claims opinion leaders; a kind of self-fulfilling prophecy (see Merton, 1968). This is consistent with Keynes’ (1936) suggestion that market behaviour is analogous to a newspaper beauty contest in which readers were invited to pick the winning contestant from a series of photographs. Political incorrectness aside, because the winner was determined by readers’ responses, the accuracy of one’s guess was determined not by discerning any objective quality of beauty, but anticipating the aggregate response of the other readers.

Although it is necessary to be sceptical about attributing the power to move markets to the financial media or market analysts (it is only buying and selling activity which directly affects prices), there is evidence to suggest that some key opinions can be reliably expected to drive trading behaviour. Central/reserve bank announcements are evidently very important, partly because they can change official cash rates29 and implement other monetary policies that directly affect the value of the national currency on the foreign exchange markets (and thus the real level any national debts denominated in foreign currencies) as well as domestic imports/exports. Consequently, central bank statements can strongly influence investors, and as NZ Reserve Bank officials confirmed (author interviews #30 & #32), they have to be extremely judicious in their communications with the media and the markets, since ambiguities and misunderstandings can trigger unwanted market movements (see later examples). The central bank policies in the largest economies, notably the US, also affect global financial markets through their influence of the availability of key currencies used in international trade. The practice of analysing every action and statement of central bankers has been likened to cold war ‘Kremlinology’ where all kinds of behaviour get scrutinised and analysed (from body language to meetings attended, to fast food deliveries) in case it reveals subtle indications of the direction central bank policy might be taking (BBC, 2001). Indeed, one finance professional revealed that hedge funds sometimes employed private detectives to shadow central bankers and report on who they had meetings with or changes in their routines (author interview #7).

The international ratings agencies (the three most significant being Standard & Poor’s, Moody’s, and Fitch) also play a central role in assessing the levels of investor risk across a variety of financial securities. Importantly, the ratings30 assigned to interest rate-based instruments includes the debt securities through which national governments and corporations borrow money and are therefore crucial to the functioning of the global credit system. The upgrading or downgrading of national or corporate debt also affects the value of interest-rate based securities (generically known as bonds). The ratings issued by the major agencies form an important common reference point for financial traders and analysts assessing the risk level of securities, and institutional investors often engage in trading within specified ratings parameters. This means they are prohibited from purchasing securities with lower-grade ratings and may be obliged to sell off securities that slip below the prescribed level. Any change in ratings, especially around the usual investment-grade threshold of ‘BBB’, will often trigger substantial buying and selling activity and thus affect prices.

The institutionalised reliance on ratings as a key component or frame in the decision-making schemata/frames of analysts and traders arguably gives them the status of a market fundamental. In this regard, they are a clear example of how financial theory is ‘performed’ by financial actors and manifested as a market variable with discrete ontological status. The ratings agencies’ issuance of

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The official cash rate or OCR sets the interest rate at which the central/ reserve bank will lend or borrow the national currency without limitation. This determines the basic rate at which credit denominates in the national currency can be issued as credit, and therefore has significance for the whole economy. it is also a central tool of monetarist policies which prioritise regulation of the money supply. Market interest rates are usually slightly higher, but do not normally deviate significantly from the OCR, and will tend to rise or fall in ratio.

30 _{For example, Standard & Poor’s (2008) basic rating system ranges from AAA (extremely strong capacity for}

repayment, such as the sovereign debt of most major industrial economies) to D (in default due to non- payment). Many institutional investment firms have prescribed ratings parameters, and are prohibited from holding or buying securities below a specified investment grade (usually BBB although this can vary). Debt securities below BBB are generally considered to be speculative, entailing increasing levels of risk, while those below B are often referred to as ‘junk bonds’. Although many major institutional investors will not purchase securities graded below BBB, hedge funds and other speculative investors commonly do, especially if they consider the calculated return to be relatively favourable in comparison to the level of risk.

ratings is therefore more than just an interpretation or representation of financial reality, it is

constitutive of that reality. This is underpinned by the uncritical deference usually paid to them by

the financial media. Indeed, as one financial reporter suggested, within the key wire services like Reuters, the ratings agencies were considered to be ‘God’ and any statements they issued would be immediately reported as gospel because of their potential to move the market (Journalist interview #B).

Kunczik (2002) provides an important analysis of how ratings agency sovereign debt ratings and media representations of national economies interact to shape international flows of capital. Noting the socio-psychological basis of money and financial value in relations of trust31, he argues that a nation’s public image can shape financial market attitudes towards investment and that ‘monetary

policy is at least partially image policy’ (2002, p.42). News representations of events in different

countries therefore play a potentially important role in the formation of analyst and investor impressions assumptions about their economic and political stability. This represents a particular challenge for less developed nations (LDCs) whose representation to global audiences typically depends on mediation by the international news media whose primary reporting agendas will tend reflect the priorities and norms of audiences in the advanced industrial economies. Thus the national image of an LDC as portrayed in the media influences international investment institutions’ perceptions of risk when making decisions about loans or foreign direct investment involving that country. Studies of ratings agency decisions (e.g. Edwards, 1984; Cantor & Packer, 1996, 1997) suggest a range of social, political and economic/financial factors are considered in the determination of credit ratings by the major agencies. Kunczik notes that the precise weighting of the algorithms/ models deployed is not made public, although political-economic stability and a good historical record of debt repayment are evidently a priority. However, countries whose economic institutions and policies resemble those of the industrial nations are more likely to be amenable to assessment and comparison, while those which are unfamiliar, complex or difficult to measure or frame in terms of familiar models are more likely to result in analyst uncertainty. Kunczik notes, in line with the earlier discussion of financial analysts, that the ratings agency analysts can be prone to an homogenous and sometimes self-referential institutional perspective on the world (see also Rothkopf, 1999) and that reputations may suffer more if an optimistic rating fails to predict negative developments (negative surprise) than if a conservative rating fails to anticipate positive developments (positive surprise). That would suggest that unfamiliar countries (or corporations) which entail uncertainty or resist straight-forward classification and risk quantification will tend to be disadvantaged.

Although ratings agency analysts will have access to a range of specialised information sources about markets and the countries on which they provide ratings. The IMF (1999) noted that on average, each agency analyst was responsible for covering seven sovereign states. Moody’s (2008) currently covers 100 sovereign nations but has offices in 27 countries, while Standard and Poor’s (2008) also covers 100 countries and has offices in 23 countries, but even assuming there is at least one analyst responsible for sovereign debt ratings in each one, this would still mean that in 75% of cases, they will monitor economic developments primarily from overseas. Rothkopf (1999) notes that at the time of the Asian crisis, Moody’s had only one analyst based in New York handling the sovereign ratings of five SE Asian economies in addition to a further five in the Middle East, and points out that the financial media often suffer from a similar lack of local presence, especially in less developed countries. Kunczik (2002) suggests that such arrangements entail a degree of analyst dependence on media representations for impressions about economic and political developments especially in remote/ unfamiliar countries. He also notes that both reporters and analysts tend to rely on similar sources of information (as well as each other) and identified the potential for countries to be stereotyped by analysts and investors in line with their media image and news frames32. Bryan (2001) also identified national news frames as a factor shaping investor perceptions of Australia’s vulnerability to the emerging currency crisis in SE Asia in 1997-98.

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Kunczik cites Georg Simmel’s seminal work on the relations of trust underpinning monetary forms (1900/1990) and also that of early economic psychologist Albert Aftalion (1923- reference not available in English) who pointed out that currency exchange rates are related to trust in the respective nations.

32 _{For example, Bulgaria complained that the conflict in the Balkans during the 1990s inhibited investors who}

Kunczik (2002) also points out that there is a political dimension to the issuance of ratings. Because the ratings can strongly influence investor responses, a downgrade or upgrade of national debt may have a significant impact on the national economy, especially if a change in ratings crosses the investment-grade threshold. The need to avoid capital flight (sudden large-scale withdrawals of investment capital from a country and selling of securities denominated in the national currency) and sustain inward flows of global investment capital clearly influences the scope of macroeconomic policy in many countries (both developed and less developed). Kunczik mentions instances where the ratings agencies’ emphasis on the policy models associated with the growth of the SE Asian economies during the 1980s-90s led to biases unfavourable to LDCs following different economic development models in other regions. Countries seeking a rating in order to attract or retain investment may be subject to pressure to adopt policies which will be interpreted favourably through the schemata employed by rating agency analysts. A study of global financial regulatory regimes by Soederberg (2002) pointed out that, rather like the IMF, the ratings agencies have actively promoted policies favourable to the expansion of neoliberal capitalism. She notes that the Mexican government negotiated a domestic tax reform favourable to international investors under pressure from Standard and Poor’s to ensure that it helped qualify for the award of an investment-grade rating (and on that basis, on could also reasonably speculate that policy alternatives which the ratings agencies indicate might lead to a negative re-evaluation of the rating might well be inhibited). The trade of legislative concessions in return for what is, ultimately, a symbolic evaluation subject to the institutional bias of analyst models and media reports, suggests that not only that information is a constitutive dimension of economic reality, but that the ability to manipulate or control access to market symbols is a source of significant political influence from within institutional spaces not accountable to civil society. As Kunczik observes;

‘The media and the analysts seem to rely on the same information sources. […] A small group of analysts has the power to affect the quality of life of billions of humans by rating the creditworthiness of the respective countries. […] There is always the danger of self-fulfilling prophecy, which is evident when, for instance, mass media reporting convinces the rating industry that a certain developing country (emerging market) has only itself to blame for its problems because the people living there were lazy or incapable, and/or the government was corrupt and incapable.’ (2002, p.60).

The concern of governments about their national public image among the investment community and their credit ratings identified by Kunczik and Soederberg can be supported by other examples. After the 2002 Brazilian election which brought Lula Da Silva to office, the left-leaning president’s inaugural speech (Lula da Silva, 2003) emphasised macro-economic stability and inflation controls in order to reassure foreign investors that no radical change was imminent in order to avoid a market panic and capital flight. Such concerns are not fanciful; the 2004 election in India (the world’s largest democracy by population) produced an unexpected result which saw the Congress Party-led coalition elected, with Sonia Gandhi (as party chair and official leader of the opposition) ostensibly the prime minister-elect. The election result panicked the financial markets and led to the suspension of trading on the Mumbai stock exchange after it suffered its biggest ever crash (Independent, 19 May 2004; Moscow Times, 18 May 2004). Despite the mandate of the electorate and pleas from her own party supporters, the negative reaction of investors to the political uncertainty led Gandhi to step down in favour of former finance minister, Manmohan Singh (an economist considered a fiscal conservative and hence reassuring to investors).

Kunczik’s (2002) analysis posits an interesting link between media representations of countries, the issuing of ratings and national economic conditions. Essentially this calls into question the