One week before Turkey's June 7 general elections, Bloomberg, the financial data and news company, used inaccurate data in an article critical of the Turkish economy. A chart in the article purported to illustrate Turkey's financial health by graphing the "Short-Term Foreign Debt" of various countries as a percentage of its "Foreign Reserves." The graph continued to be used widely in the media, most recently last Monday in a local Turkish paper. The exaggerated graph signals out Turkey as the worst offender, with a "Short-Term Foreign Debt/Foreign Reserves" of 391percent and its nearest competitor, Malaysia with 80 percent and all other countries on the graph decreasing towards the 23 percent that Brazil is said to have.
When I first saw the graph on Monday, the data depicted in the graph made no sense. In an attempt to replicate these results, I did what most economists do in this instance, look it up on Bloomberg. The Bloomberg terminal (which investors pay tens of thousands of dollars for annually) yielded two numbers, $125 billion in "short term external debt stock" and about $100 billion in "international reserves." The ratio that Bloomberg reported to be 391 percent several months ago ends up being 125 percent according to the Bloomberg terminal. So where did these mysterious figures come from? I called Bloomberg Turkey on Tuesday and spoke to a representative (who requested to remain anonymous) who ultimately forwarded me to the London Media Relations representative (who also requested we not divulge his/her name and refer to him/her only as "a Bloomberg spokesperson.") Why all the anonymity Bloomberg?
Bloomberg reported that despite the fact they are listed as the source by the columnist, Güven Sak, in the column published on Monday, Nov. 9, that this data is actually not theirs but Morgan Stanley's. The Bloomberg spokesperson said the Morgan Stanley report, published five weeks before the Bloomberg "news," uses Morgan Stanley's "calculations of Turkey's net reserves based on the data reported by the Central Bank." The operative word in that statement by Bloomberg is "net." The Bloomberg article never uses the word "net" throughout the article and the graph that depicts the Morgan Stanley data also omits the word "net." To be clear this "data" cannot be accessed by those who subscribe to Bloomberg's terminal services as Bloomberg doesn't publish it there. In fact this data is not published anywhere else. So why hide the actual numbers from the investment community and mislabel charts so as to confuse Bloomberg readers? To get a better understanding of Bloomberg's motives, I spoke with several experts.
I first consulted a Moody's report published last week which also cites a ratio similar to the one whose false data, Bloomberg "stands behind." I asked Moody's what the actual ratio would be and they sent a data table that yields 126 percent at the end of 2014 and 125 percent as of the last reading. The report "Diverging Credit Resilience in Emerging Market Sovereigns" is everything the Bloomberg data is not, using official IMF data, it is clear, succinct, and replicable.
An "elementary mistake" is how Professor Vedat Akgiray described the information in Bloomberg's article. Dr. Akgiray is the former chairman of the Capital Markets Board of Turkey, a world-renowned finance professor who has taught at both the most prestigious universities in the United States as well as in Turkey, and is currently a tenured professor at Bosporus University in Istanbul.*
Akgiray described his observations, saying, "the mistake in the Morgan Stanley report of short-term debt as a percentage of net FX reserves is one of using 'A/(B-A)' instead of 'A/B' and this certainly makes the number look much higher than what it is in reality." Akgiray refers to the use of foreign reserves parked at the Central Bank of Turkey necessary for banks to meet reserve ratios and very much "useable" by the bank as being both an asset and a liability simultaneously, showing up in both the numerator and denominator. Akgiray added, "More importantly, it is even more disturbing to see Bloomberg publish this erroneous figure. Bloomberg data is widely used in investment decision-making globally and such an error is clearly unacceptable. All of these further damage what little is left of our confidence in global financial players and data suppliers. This is unfortunate for these institutions. On a personal note, one is tempted to start thinking of other motives behind such reporting, especially when the timing is considered. "
Such errors are difficult to overlook considering Bloomberg News' track-record in the country. Bloomberg Turkey Bureau Chief Benjamin Harvey and his deputy Isobel Finkel, toe the anti-government line day-in and day-out. Political diversity is non-existent at Bloomberg Turkey and whether this is a decision reached by Bloomberg management or the local office is unclear. The unbridled hatred for the Turkish government and bad faith efforts in omitting facts are evident to anyone who reads any of their "reports" or social media posts. While their profiles proclaim their opinions to be "their own," they simultaneously use the Bloomberg brand to lend credibility to their politics. Finkel's use of a mentally disabled person as her profile picture on social media accompanying the Bloomberg brand is also disturbing.
Bloomberg News' biased reporting is a stain on the reputation Bloomberg has worked for so many years to build. While Fox News and The New York Times have staked their claim to different parts of the political spectrum, Bloomberg is perceived to be relatively impartial globally. Obviously all employees of Bloomberg News (and any news organization) are entitled to their opinions and the right to publish them, however, when "journalists" cross over the line from reporting to commentary, they become columnists. Columnists are meant to share opinions whereas journalists are meant to be fair and balanced, remaining apolitical to preserve the appearance of impartiality. While Bloomberg says they are just that, even opposition-party members admit Bloomberg's anti-government stance is blatant and extreme. A random reading of any article written by either journalist clearly illustrates their bias. It is also possible that they have been instructed to add such spin to their articles by their editorial boards, which would make these articles even more disturbing.
I unequivocally support all members of the media from voicing their opinions anywhere they please, as long as they don't mask these opinions as facts. Benjamin Harvey, Isobel Finkel, keep up the hard-hitting commentary, but for the sake of your readers, do so as columnists.