Has the media exacerbated the eurozone crisis?

Sitting in Athens, that is a question I've asked myself many times in recent months.

Certainly, there are people close to George Papandreou, the Greek prime minister, who complain bitterly about the reporting of Greece's economic woes by what they call "the Anglo-Saxon press" (which, in a pantheon of villains, is apparently right up there with greedy speculators and unscrupulous hedge-fund managers).

Their argument goes as follows: parts of the British press have always distrusted the euro and have repeatedly predicted the failure of the single currency. The eurosceptics have waited for this moment, and now they smell blood. One example: this opinion piece in the Daily Telegraph.

Or look at this blog post from the Economist, which somebody close to Papandreou described to me as essential reading, as it supports the Greek theory of widespread schadenfreude in the British press, and suggests that even the BBC (certainly not beloved by eurosceptics) has gotten carried away by the prevailing mood.

'Market sentiment'

Over in the United States, many right-wing opinion makers are also having a field day with Europe's economic problems, although their motivation is slightly different to that of the British eurosceptics (many Americans, on both the left and right, tend to be in favour of closer European integration, which they believe is in their national interests).

Rather, domestic opponents of Barack Obama, the US president, argue that Greece is what you get if you go down the "socialist" road, which, they fear, America has also embarked on. For example, read this.

But I'm not concerned as much with the impact of opinion pieces and commentaries as I am with that of the day- to-day reporting of the eurozone crisis. 

All of us who have covered these events in recent weeks and months have talked a lot about "market sentiment" - sometimes markets are "nervous", or "jittery", and occasionally even "panicked".

But as reporters, we help to form that sentiment. Or at least, we surely aspire to, as all journalists would like to be thought of as influential. 

In this case, the journalists, the currency and bond traders, and the market analysts create the conventional wisdom between them: that Greece is doomed, that Portugal will be next, that Spain is in trouble, and so on.

At times, it can feel as though we are all in a giant echo chamber, repeating the same analyses again and again, passing received wisdom back and forth. The danger, of course, is when our prophecies become self-fulfilling.

Repeat enough times that Spain will eventually have to go to the IMF as its borrowing costs rise, and, sure enough, those costs will rise further, and the prospect of an IMF bailout will become more and more realistic.

But were the fundamentals really that bad to begin with? In Greece's case, the answer, I would argue, was yes, but elsewhere I'm not so sure.

Avalanche of speculation

Take the events of the past few days. A Spanish newspaper reported that the head of the IMF, Dominique Strauss-Kahn, was coming to Madrid to negotiate a bailout with Jose Luis Zapatero, the Spanish prime minister. The rumours were furiously denied, by the IMF, the Spanish government, and just about everyone who matters in Europe.  

A calm reading of the situation did suggest a Spanish bailout is a very unlikely development at this stage. 

But that didn't stop an avalanche of speculation and excited talk, in newspapers, on the radio, and on television stations across Europe, all of which have helped to strengthen the idea that Spain is in trouble. 

In the event, Strauss-Kahn used his visit to Madrid to voice strong support for Zapatero, and the austerity measures he is trying to introduce.

This is not, obviously, a call for journalists to lose that instinctive scepticism we should possess. The moment we stop asking tough questions of those in power, and start taking soothing announcements at face value, is when we lose our credibility and relevance. 

Jean-Claude Juncker, the leader of the eurogroup of finance ministers, complained this week about financial markets behaving in "a very irrational way". 

A retort might be that several European governments have managed their budgets in a fairly irrational way for some time now, and many people are now suffering the consequences of that. There is a real debt crisis in the eurozone, and the strains within the EU are very real. 

But we must also recognise how markets are sometimes driven by psychology and fear as well as by economic fundamentals, especially at a time like this. 

And, whether we like it or not, we journalists help to shape that psychology and direct that fear.