Article by Michael Knell

Well Darlings,

The stock market behaviour of late, with banks and financial institutions either being nationalised, taken over or going to the wall, is reminiscent of the 1930s. Strangely, it seems our pubs are only selling the equivalent amount of beer today as they did in the 1930s. And at just 2.3% of GDP, our military spending – which the UK National Defence Association warns has put our armed forces “in crisis” – also turns out to be the same as we had in the 1930s. All we need is the Lindy Hop to become fashionable again and I might start to believe in time travel.

It is almost like science fiction how that darling little dark horse of LloydsTSB managed to snake-like open its mouth wide enough to swallow the much larger HBOS, isn’t it? Who would have thought it possible only a few weeks ago? I do hope it doesn’t go down with indigestion. If you have ever suffered a flatulent horse, you will know what I mean.

I see the US government was forced into an attempt to save Freddie, Fannie, AIG and one or two others, but against all bets it decided to allow the Lehman Brothers to go under. A bit strange that, isn’t it? Different Lodge, do you think? Anyway, if you can bear the thought of it, Barclays are now happily nibbling away on all their bits, whilst we are told e-Bay is doing a roaring trade selling off stuff like Lehman Brothers coffee cups, bank towels, calendars, baseball caps, T-shirts, thermos flasks, and pens as souvenirs. There too the bidding for the domain name of: http://www.falloflehman.com reached a staggering ,025 in just nine hours. I just wish I had thought of that one!

Whilst we may be cringing at the thought of how all this financial turmoil will affect us, I have yet to find anybody who has even the slightest sympathy for those people of any rank now suffering redundancy in these floundering financial institutions. For too long now we have witnessed their almost unbelievable lifestyles of greed, with massive bonuses being paid to them often for doing no more than taking stupid and unnecessary risks with our money. Really, as it is those risks that have caused so much damage, perhaps today we should be asking for some of those bonuses to be paid back. Do these people not feel any guilt?

Probably not. They will simply tell us they are only guilty of seizing the opportunities made available to them, and perhaps ask: would we not have done the same? And I guess we easily might have done. So, who then is really to blame for this mess?

With the effect of these crashing banks so global, and yet those countries suffering the most being the United States and the United Kingdom, it doesn’t take too many seconds before that cosy little club the G8 springs questioningly to mind, does it? The Group of Eight is an informal international forum for the governments of the United Kingdom, the United States, Canada, France, Germany, Italy, Japan, Russia, and the European Union.

If you have ever wondered just how so many different places around the world are becoming so similar, and in so many ways these days, then wonder no more – it all stems from the G8. From each of the eight places ministers meet regularly to discuss issues appertaining to health, law enforcement, labour, economic and social development, energy, environment, foreign affairs, justice and interior, terrorism and trade – and in addition to this there are other meetings known as the G8+5 where the finance and energy ministers of China, India, Brazil, Mexico and South Africa are included too.

Hello, sailor! Whilst it may indeed feel cosy and safe all being in the same boat, it does mean that should one member come up with a stupid idea and convince the others to adopt it, everyone immediately becomes liable to the same risk. So with that now in mind think back to a few years after Nu-Labour inherited one of the healthiest economies ever enjoyed here. At a time when along with some other currencies the Euro currency was not doing well, egged on by a load of spin and a gloating government, the newspapers here made much of Chancellor Gordon Brown having to teach his fellow G8 voyagers the secret to a successful economy. The government absolutely bathed in it, but I think most of us found it a little embarrassing at the time.

The freedoms being enjoyed by the financial institutions of both the US and UK in their joint private quarters on this G8+ boat soon became to be emulated around the globe. And then came Gordon Brown’s philosophy of: so long as you allow easily attainable and unlimited credit the economy will continue to grow and grow, and you can extract unthought-of before amounts of taxation from both companies and people without them complaining. It was every Capitalist’s dream, many countries adopted the idea, and it worked – for a while. We are only affected worse than our European neighbours today because we employed the system a few years before them, therefore our debts are that much greater.

This illusion of success lasted until, like in the story about The Emperor’s New Clothes, someone finally stated the obvious – as with those fictitious clothes, our economies had no substance whatsoever. All the money is merely paper promises. Debts owed by nations of people and companies sold on or borrowed against time and time again with all the added interest, so further inflating the illusion of wealth, when in reality the debtors at the base of it all had very little hope of ever paying their dues.

Today, with almost weekly increases in the cost of food, raw materials and power having to take priority over everything else, the bad debts are piling up alarmingly with the result being already failing housing markets are going further into decline as more and more people default and have their fast falling in value homes repossessed. The wealth that never really existed at all amounts to many hundreds of billions of dollars today, and maybe several trillions worldwide – only time and the last domino to fall will tell the true story.

Recently financial markets and whole economies worldwide have been based mainly on pieces of paper, promises and debts owed, with a lot of trust. So no matter how much taxpayers’ money governments insist on diverting into trying to save their financial institutions, and that is not without its limits, I am not convinced any substantial recovery is at all possible before that trust is restored. Simply throwing money at a problem rarely works.

But with so many of the investment banks’ assets still evaporating in front of our very eyes, until we may be forgiven for suspecting they amount to little more than their ultra-plush edifices, some ornamental palm trees and the company cat – with those too losing value as each day passes, what is there left to trust? It might be quite some time before enough of that trust is able to return. Meanwhile, despite the latest UK knee-jerk regulations on short selling, the market speculators will attempt to find a way of continuing to have their field day, making money by destroying companies around the world almost at a whim.

Folks, we may have seen nothing yet! Tony Blair will forever be remembered as a warmonger; Gordon Brown possibly for being one of those whose economic policies were responsible for taking the world to the brink – of what we may still have to discover.

Before I go this week, perhaps it would be appropriate if we all joined together in a few verses from that immortal American song of the 1930s with lyrics by Yip Harburg:

They used to tell me I was building a dream, and so I followed the mob, When there was earth to plow, or guns to bear, I was always there right on the job. They used to tell me I was building a dream, with peace and glory ahead, Why should I be standing in line, just waiting for bread?

Once I built a railroad, I made it run, made it race against time. Once I built a railroad; now it’s done. Brother, can you spare a dime? Once I built a tower, up to the sun, brick, and rivet, and lime; Once I built a tower, now it’s done. Brother, can you spare a dime?

Once in khaki suits, gee we looked swell, Full of that Yankee Doodly Dum, Half a million boots went slogging through Hell, And I was the kid with the drum!

Say, don’t you remember, they called me Al; it was Al all the time. Why don’t you remember, I’m your pal? Buddy, can you spare a dime?

Unlike the 1930s, may commonsense and decency prevail today. Should it not, and you see one of my articles in the coming weeks on how to catch and skin a rabbit, along with a guide to making fire through rubbing pieces of wood together, it might be prudent to print off a copy!

“The Bitch!” 18/09/08.