Staring at the ceiling

Where next?

By rush
There has been a lot of debate on the causes on the financial crisis. President Obama's latest policy proposals have put the entire debate into overdrive. The banks that are too big too fail should be cut down and broken up into smaller, less dangerous institutions. Client deposits will no longer be used in speculative investments. There has been plenty of blame handed out, liberally distributed amongst the financial services industry. But, are we missing a trick here?

I am a regular reader, and a somewhat regular contributor to the comment pages of a leading liberal newspaper here in England. The number of vitriolic and downright nasty comments about bankers, and the banking industry are quite mind-boggling. Some people seem to believe that this entire crisis, this issue was all down to a small number of spivs, speculators and greedy (almost Dickensian) characters. Only by tarring, feathering and parading these villains down the high street may we have some sort of resolution to all these problems.

Indeed, President Obama's latest statements are a very overt hat tip to this sort of populist anger. I am no apologist for the actions of the banking community, but no community exists in a vacuum. Its not as if everybody woke up one day to find that their manufacturing industries have been stripped bare and replaced by a disproportionately large financial services industry. These banks became big, and invented all sorts of esoteric debt and investment instruments to service the need for every higher returns from investors, to service the every increasing demand for credit from us, their now extremely indignant customers.

When you look at the amount of money one has to shell out for a flat in London, or even in a decent area in good old Baroda, India; you can't help but be amazed. But still, people agree to taking out massive mortgages to get onto the ladder. We still believe that house prices will go up, the pay checks will keep coming, and that debt is just a way of life. After all, as long as there is money to spend, what is debt but another monthly expenditure, just like the phone bill that comes with shiny new smart phone gadget.

The human instinct is to expand, conquer and accumulate. From clubbing and grilling tasty Neanderthals, to upgrading from a 2 bed starter flat to a semi detached bedsit in the suburbs. An instinct that has served us well for thousands of years. It has brought lots of misery and death, but also almost unbelievable technical, societal achievement. If you think about it, we have become the dominant species on this planet in an relatively short period of time. The dinosaurs were around for three hundred and fifty million years (350,000,000 years). That is a mind-boggling number. What is left is a bunch of bones and thats that. The legacy of the last thousand years of human domination alone going to be around for a very long time, and it won't just be a pile of fossilised bones on a dry river bed.

That rather convoluted analogy brings me (not quite succinctly) to what has been troubling me a little bit the last couple of days. How much is enough, really? Will we end up expanding, ever outwards in search of new colonies, more resources and a more comfortable lifestyle? Will we every get to the point, where all humans, everywhere will decide, that their existing phone is good enough thanks.. that there is no need to use that old credit card one more time? Or is that point nothing but catastrophe and an end to civilisation as we know it?

I think that we are doomed to cycles of booms and busts, of aggressive expansion and tentative, confused contraction. Before we get carried away blaming the bankers, we should reflect just a little on why we always end up in these situations. How do we always end up with a small, clever and influential clique vested with disproportional wealth and power, and with the ability to have a significant impact, one way or the other, on society?

Where there is demand, there will be supply. The concentration of wealth, the creation of exotic financial instruments was a direct result for the ever expanding appetite for risk. Who wants to have a nice boring old savings account yielding 5% per annum when you can invest in an exotic financial product backed by a mind numbing complex financial transaction that nobody seems to understand?

Maybe our politicians and decision makers can be persuaded to not take the populist, reflexive road that comes naturally to them. Maybe we should consider the causes of these crises by looking inward instead of trying to find a convenient scapegoat. If it becomes just a little more difficult for someone to take advantage of the madness of crowds to take control (or make stupendous profit), it would be a result, and a lesson learnt from the last two years of anguish and anger.

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Shooting fish in a barrel

By rush

The video clip was all over the websites I read.  On the economics blogs, on the entertainment websites, and even on boing boing.  "Watch Jim Cramer get creamed by Jon Stewart" the posts loudly proclaimed.  I clicked on the link and I watched the interview.  In typical Daily Show fashion, it was funny, timely and great entertainment.  Jon Stewarts mining a rich seam of material here; taking on CNBC and its demented financial cheer leader squad.  And he's doing good work.  Maybe some of his best.  


But what is the point?  Proving that the financial journalists were wrong?  That they are not trustworthy, they are all charlatans and we should not take them seriously?  Anybody who can read, watch TV or even pick up the recycled trash every evening on the way back home for work knows that its open season on anybody connected with the financial services industry.  Not just the journalists; the CEOs, the traders, the brokers, the bankers, anybody who is involved or related to the industry so far has been tarred and feathered.  I wrote some time back about the little awkward situations that come about when I confessed I worked in banking.  Now the situation is not awkward, now it is normal.  


I am not defending Cramer or CNBC or Goodwin or Madoff.  I am not saying that they are not culpable.  To quote Jon Stewart, some of the things they did were "disingenuous at best and criminal at worst" (or in Madoff's case, criminal for sure).  I cannot match the man's eloquence.  My point is that this financial bubble or mania did not magically appear out of thin air.  It did not come about on its volition to suddenly swamp us like a "tsunami".  It was not something that was unprecedented.  Booms and busts have been part of human history since times immemorial.  There have been periods of mass jubilance and hysteria that led to the South Sea crises, or the dutch tulip crisis, or the great depression, or for the sub-continentally inclined amongst us, the Harshad Mehta stock scandal in the India in the early nineties.


All of us are to blame to a certain degree.  Who didn't want easy credit, or holidays abroad, or a comfortable lifestyle without having to worry too much about where the money was coming from?  How many people do you know who bought new build flats in the docklands five years ago and payed over the odds for these concrete soul-less monstrosities towering over a deprived, semi-industrial part of east London.  It was these mortgages that were sliced, diced, deep fried, packaged and sent out to hungry investors for mass consumption.  Where there is demand, there is supply.  We fed this monster, one way or the other, and now it towers over us threatening to consume us all.


It is easy for us to get on the moral high horse now.  Very easy.  But before we launch next week's witch hunt, or look for the next person to blame for this mess we find in, maybe it is time to assign some of that blame inward.    

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Generation A

By rush
I was a teenager when I first heard the term Generation X.  It was difficult to understand what the 'MTV Generation' meant when I hadn't even seen MTV.  It was something that was printed in the middle pages of the Sunday supplement of the newspaper.  The bit where they copied in articles from the Western press.  'Generation X' had a nice ring to it.  Self deprecating, sarcastic and unbelievably cool.  Atleast to an impressionable teenager reading about a music scene without any context whatsoever.

Us? They call us the Internet generation, or perhaps the facebook generation.  Or perhaps we are called Generation Y, or the Millenials or the iGeneration.  Nobody is really sure what to call us.  This is the stuff of nightmares for statisticians, historians, market researchers and people with a fetish for demographic classification.

If I may, and just to make the lives of these people easier, I would like to suggest a label that could be more appropriate in these times.  I bring you -> Generation A! 

Why?  Well, I am not a literary genius, and English is my second language.   I don't do subtle very well; so my reasons are straightforward.  A is for..

Ambition:  
We are all about ambition.  A gap year isn't a year out to have some fun, it was a year to have 'constructive experiences', a time to do something that 'looked good on the CV'.  Earning more straight out of University than your father did at forty was merely acceptable.  Did it come with international travel?  An undergraduate degree was just middling.  When was the plan to do the MBA?  A drink after work was fine, but Weatherspoons.. seriously?  Is this a post ironic thing?

Ambivalence:
If our psyche could be compared to a house or a flat, it would be the nice new built flat with the neutral decor, the walls (with the one wall painted a deep blue or red of course) and the nice looking furniture from Habitat.  Doesn't say much, but it looks nice and everything matches.  Ambivalence is comfort.  Our conversations have that nice latexy powdery feel of new kitchen gloves.  They might not fit, but its so easy to put them on.  Tell us anything (and they do) and there will be few of us who will challenge something that might not make sense.  It is better to try and see somebody else's point of view in polite company you see.  After all confrontation is offensive.

Anxiety:
I woke up this morning at 5:58. My heart was pounding and I was sweating.  It was a freaking cold morning.  I woke up because I dreamt that I was late for work.  I woke because I dreamt that I was late for work and I got fired.  I got fired and I had no money. I had no money and I got deported and my fiance left me.  The sound that I hear the most these days when I am out and about is the nervous laugh.  Not too many belly laughs, or excited shrieks, just that hesitant chuckle, eyes averted.  Gallows humour perhaps.  
When I first moved to London, I was shocked at how quickly people walked.  They dashed from place to place with drive, knowing exactly where they were going.  Today, we mill about, looking up and down.  Gazing with wonder at the FTSE ticker and the relentless stream of depressing headlines that march across the pervasive giant TV screens and that are splashed with abandon in front of the free newspapers.  
I spend a significant part of my day looking with a sort of nervous excitement at the bbc news page.  There might be a new disaster out there to be discovered, discussed and analysed..

Anger:
Anger is a strange emotion.  I don't know many people who have taken to the streets or who are hoarding wine bottles to make molotov cocktails.   But you know its there, lurking somewhere not too far underneath the surface.  
Will there be a revolution, who knows?  On past form, with our generation, its impossible to tell.  But you can feel its there.  Education was free, and now there is debt.  
Everybody talks about global warming, but who will suffer the consequences?  
Will we ever be able to afford a house, and even if we did, how much will it be worth five years down the line?  
We will work longer, harder and for less pay than our parents.  
If the robots come, who will they attack?
How old do you think the guys who attacked the bus in Lahore were?  How about the guys planting IEDs in Kabul, or the ones throwing eggs at the Icelandic parliament?


So there it is. Hello fellow Generation A'ers..



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