Squeeze me tight

Let me see if I’ve got this right.

We give our money to the bank, the bank plays with it, makes a nice profit, and dribbles a bit back to us in interest, below the rate of inflation. We happily assume that it won’t gamble our money away, and when we want to withdraw some, it will be able to oblige.

So if it is discovered that some crooks and ruffians have indeed gambled away our money, through reckless speculation or by lending it people who can’t repay, then we assume they will get thrown into jail; they will be ordered to pay it all back, or at least be sent into retirement in the Cayman Islands.

And if they lose so much money that they bust their own banks and investment companies, and bring whole countries to the verge of ruin, then we parade them down Wall Street in rags to be publicly whipped. Yes?

......

But no, that can’t be right.

Because when this actually happened, everyone started saying, heavens, poor banks, we must move quickly to fix this, we must restore confidence in the financial system. The American “crisis” spread like a liberated cancer. Governments started pouring billions, trillions of dollars into the banks and the brokerages (all except Lehman Brothers, mysteriously) to “rescue” them, “bail them out”, “prop them up”. No questions asked, it seemed, or at least very few. We were told this was absolutely essential, and in our own interests, even though it was our money being drained off into the black hole of financial malfeasance.

Where were governments getting all these trillions from? Had they been stashed away for a rainy day? Were they borrowed from China? Nobody said. And nobody said where all the money was going, either. No banker or broker or speculator stood up to give an account of himself, to admit his wickedness and stupidity, to beat his breast in sorrow, beg for his $100 million bonus to be paid in spite of all, and ask forgiveness — let alone explain exactly what he was going to do with the $100 billion or whatever that was kindly being provided for the use of his enterprise, by enforced courtesy of you and me.

Instead, the governments said, right, with all this new finance, you can all start lending to each other again, as we need you to. Get going. But to everyone’s dismay, a great howl went up: we can’t, we can’t, we don’t know who to trust, give us more, give us more, lest the whole system come crashing down, and you wouldn’t like that, would you?

It all sounded like an unfortunate but unavoidable event, an “act of God”, a financial tsunami, beyond anyone’s control. It was all to do with mysterious difficulties with sub-prime, hedge funds, derivatives, deals not backed by the proper instruments, and so on and so on. It was “the credit squeeze”, “the credit crunch”, “the global crisis”, no author identified. It just appeared, like a UFO in the sky. It was protected by a forest of mixed metaphors too tangled for anyone to penetrate. But we did get the bottom line: no one was responsible.

Even Alan Greenspan’s jaw dropped open in astonishment. Mister Economy for four decades. He couldn’t believe it. What was happening? It wasn’t supposed to happen. So how was it happening, this thing, whatever it was?

.....

Am I getting this right? I think not.

If you said to the experts, “Isn’t this surely the end of the absurd idea that The Market is king?”, you were told:

“No no, the market may have contributed to this, but the market will sort it out. O ye of little faith! Trust in The Market!”

“But,” you might persist, “if you have to regulate The Market, doesn’t that prove that market forces cannot be trusted? If George W Bush starts buying out banks with public money, isn’t that nationalisation? Isn’t that intervening to protect The Market from itself? Isn’t that a true believer’s ultimate heresy?”

“No no, my lad,” (paternal pat on the head, slight irritation), “You don’t understand how these things work. It would have done no good to anyone if we let the system collapse. Not even you with your wretched little savings account, you could have lost it all.”

.....

No, this can’t be right. Really. It can’t.

Because if all these big boys, with their account books bulging with new capital inflows, all written in black – if they really wanted a solution, they would have gone around exuding confidence, reassuring the global population, lending money to each other as apparently they must do. “The banks are safe,” they would declare, “you don’t have to stash your savings under the bed. This is a mere aberration, it will never happen again.” That might perk the stock markets up a bit.

But instead they jump up and down yelling Recession! Depression! 1930! Unemployment! Layoffs! Trust and confidence gone! Disaster, catastrophe, emergency! And so the stock markets “plunge” again, and the pundits stoke the fire by declaring the biggest fall, the lowest point, the steepest decline, since 1987 (or whatever), making that date sound as distant as the fall of the Roman empire.

In other words, the big boys react to problems by causing more problems. They react to mistrust by spreading more mistrust.

.....

But what sense does that make? No, I feel sure now that I’m getting this wrong. Really.

Because, if this has really been going on, why did no one notice, or say something? Didn’t Blair and Brown know what was going on in the City, right under their noses? Didn’t Bush notice a nasty smell from Wall Street – or do nasty smells perhaps rejoice his little heart? Why did all this bypass Sarkozy and Merkel and the rest of the Gang of 9 which determines what goes on in this world and what does not? If they didn’t know anything, why are they still in their jobs?

But logic — O how wrong I must be — would trace the nasty smell from Wall Street southwards, to Washington and Pennsylvania Avenue and the big desk of George W Bush himself. One has to be impressed by a man who can wreck global relations, trash Iraq, run up an unimaginable debt (so large that the debt clock in Times Square has to be taken down to have more digits added to it), and leave America more divided and aggressive than at any time since Vietnam, all in one presidency. (Thank heaven for the two-term limit.)

But the man is not done yet. If all this stuff is true, then this man with his gang of fools has presided over — some might say created — a political and financial environment in which anything goes, from the corruption in Iraq and the privileging of the rich at home, to a financial system where the only sin is being found out. Gamble away, my friends (he would imply), play the market, governments don’t interfere (that wouldn’t be democratic)! You have quotas to fill, targets to meet, bonuses to earn? Go ahead! No one minds if you lend money that won’t get paid back — it’s one more deal on you record, my friend. This is the land of opportunity, remember, where you can make something from nothing once you make the right call and have the money to join the game.

No, no, this still can’t be right. Tell me it isn’t so. Tell me what’s really going on.

.....

Here in Port of Spain, the Global Financial Crisis is reported as if it’s something happening far away, unconnected to us. Another of those mysterious emergencies which so preoccupy the outside world, like a distant earthquake which buries a thousand people in China or Turkey or someplace, and then you don’t hear any more about it.

News stories about The Crisis come straight off the wire; it’s barely registering on columnists’ radar.

Perhaps this is the sort of objective sophistication to be expected of a developed nation, which is what we are supposed to be in twelve years’ time.

But but but.

If Americans and Europeans are in a financial panic, if their assets are being squeezed, if they are losing their jobs and livelihoods, if their houses are suddenly valueless or repossessed, if they can’t make ends meet ...

My faith isn’t all that strong, it seems. For surely they might review their holiday plans (“Honey, we’re going to Disneyworld this year instead of the Caribbean, OK?” “Great idea, sugar”). Caribbeans in New York and London and Toronto might not be able to send home the remittances their folks rely on. Investors might read the tealeaves and hold back. This might translate into people losing jobs and livelihoods in the Caribbean, fewer visitors, bigger deficits, less foreign exchange, less investment, less capital ...

.....

Even here in Trinidad and Tobago, awash with cash and smoking with smelters and industrial monsters of one sort and another, no one seems to have thought very much about what might happen. Last month the record 2008-9 budget of nearly TT$50 billion was based on an assumed oil price of $75 a barrel. At the time, the price was well above that. A month later, it’s below $64.

So even the richest economy in the Caribbean either has to make some serious cuts, or round up a pile of new money from somewhere.

So far, we have not heard of any hooligans at large in our own financial system. Smartmen amusing themselves by gambling away our money But who would be surprised? The Caribbean is so good at picking up the latest tricks from “away”.

I try not to believe most of this stuff. Block my ears. Quieten heretical suspicions. It has to be wrong.

For what’s the alternative? If it turned out to be true, it would be such an outrage, such an unforgivable global scam, that I can’t even think of a word to describe it (and English is a language rich in vituperation).

It would mean that the capitalist system as we have known it since World War II has buckled. It would mean that “market forces” eventually eat themselves up. It would mean that the elites of the western world are living in delusion and denial so dark and deep that they are no longer connected with reality. It would mean that ordinary people — you and me and the people we know — have become so disillusioned and disappointed and cynical and weary and apathetic that we don’t even think of tearing down these leaders and their cronies and calling them to account.

Come on, someone, tell me I’m wrong.