Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrewDavid Warren :
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.
As one of my more knowing correspondents put it: "Wall Street loves money but hates free markets, because free markets distribute economic benefits to those who earn them, rather than to those best able to seize them."The great Kirk Elder :
The capitalist investment bankers stand accused, rightly, of having invented brilliant kiting schemes -- ultimately to deliver credit to customers who hadn't earned it. Their "greed" is irrelevant -- everyone is trying to make money. The point is that the schemes themselves were basically unsound. The lesson is that when home ownership is considered a "right" instead of a privilege, it is not only the housing market that goes bottom up.
As I write, the Dow Jones index on Wall Street is plunging at the speed of an Apollo re-entry vehicle, and a conservative Congressman is warning that the rescue plan advocated by the political establishment represents "the slippery slope to socialism". Would that it were so. Such a fate might imply a degree of economic planning, albeit with the side effect that the supermarkets would run short of fresh vegetables while being overstocked with tractor tyres and shoes comprising two left feet.
It's at moments like this that I am grateful that my savings are stored in jamjars in the airing cupboard, behind my wellington boots.
The Public Sociologist :
He has a point. We get the debts they can't value, Santander get those nice cash deposits.
Academics, armchair economists, libertarians and House Republicans are the only ones who take the "principles" of neoliberalism seriously. Governments here and across the Atlantic only stick with it in as far as it entrenches the rule of capital. And the way the government has handled the nationalisation of Northern Rock and Bradford & Bingley and waived competition rules regards Lloyds-TSB and HBOS are entirely consistent with this. The state absorbs the the bad debts and liabilities, while it facilitates a transfer of assets to the private sector. As Vince Cable, the LibDem deputy leader observed in February, "Northern Rock’s ‘assets’ include unsecured debts, such as portions of mortgages in excess of the value of the properties concerned. In other words, the rubbish."
While sections of finance capital goes under, the government has and will continue to maintain the strength of finance capital as a whole. Whatever Tories and their ilk may think, nationalisation of this character is nothing to do with socialism. It's asset-stripping by another name.
The problem for most UK banks seems to be that their lending isn't covered by their deposits. You'd think that to encourage more saving you'd raise interest rates. I see that the world and his wife are calling for immediate interest rate cuts - as happened after the dot-com crash. Let's start the merry-go-round again ...
All things are moving at the same time. We have very low savings ratios in this country - spending is seen as a good thing, it keeps the money circulating at an appropriate velocity. Low interest rates encourage "investment" - true. They also encourage asset inflation - which is why we've seen a massive transfer of the housing stock to the wealthy over the last 15 years - while inflation as measured by Gordon Brown has been "low". Trickle-down didn't quite work as planned - instead of those City bonuses and ever-increasing director salaries going into luxury yachts and slate bathrooms, creating employment on the Hamble and in Bethesda, large chunks of it went on forcing up property prices, and making it near-impossible for a first-time buyer to afford property. Thirty years back a poor Laban paid £10,000 for a two-bedroom cottage - with roses round the door - in a country village. He was earning £3,000 pa - bad money even in 1978. There's not a cat in hell's chance that someone on £15-20,000 could afford that house now.
So the money whirls round, we get and spend, the economy booms for twenty years. Trouble is, a percentage of the cash flies off to China and Saudi Arabia, because we import so much more than we export. It's a bit like those penny cascade machines at the arcade - some of those 2p bits fall into a bucket marked "offshore".
We don't save much, while other people do. So as this process continues, we think we're rich - while all the time we're growing relatively poorer compared to, say, China, Singapore, Saudi. Because the money flowing out is balanced by money coming back in - foreigners investing in government and corporate bonds and shares, we end up with what's left of our industry being owned by others. Our current account deficit is terrifyingly large, worse than the US given the size of our economy. How long can this process continue before we're wholly owned, the pound collapses (revealing our true poverty), or both ?
To some extent the same things are happening in the US, although their much stronger Christian culture, while in decline, will postpone any collapse until well after ours. Who knows, our fate may act as a warning and example. (It's scary to see the glee with which the assembled Guardianistas greet the prospect of America's decline and China's rise. They ring the bells, but within their lifetime they'll be wringing their hands).
And at the same time, the British cultural collapse is almost complete, mass immigration is transforming the country into an interesting patchwork of ethnic groups, with all the potential for conflict which that implies, the natives are still merrily aborting their descendants, the group with the highest fertility has also the strongest, most militant and most cohesive culture, education's still pretty shot, the underclass, native and otherwise, shows no sign of diminishing in size or in its range of pathologies. We haven't got the money to pay our soldiers properly, so we increasingly offshore the military. Didn't a chap called Vortigern try that one ?
Will the options for my children be "fight or flight" ?
It's a pretty impressive feat, to have transformed what in 1945 was the third most powerful nation on earth, renowned for its stability and civility, into one with the most tremendous basket-case potential (oh alright, compared to large chunks of Africa it's not - but is that the benchmark ?). Just take away the religion, and all else follows in its natural, horrible and inevitable sequence.