Wednesday, May 05, 2010

The Sleepwalkers

You know those reports you see occasionally in the press about people drowning and how a crowd of spectators gathers to comment but no one does anything to help? That's an image which comes to mind when I think about the current assault by the financial markets against several European countries, most notably Greece. Except there is an important difference, apart from the spectators we have a group of people off to one side who place bets on whether those in the water will drown or not. Whenever they do, the same gamblers then select the next victim so that the spectacle doesn't end. If anyone looks like bucking the trend then they get their head held under the water for a while.

Greece is now being treated to modern capitalism's very own version of medieval medicine. The patients will not get better unless they are made much, much sicker than they were in the first place. You're looking a bit poorly, the best thing is for you to be left to bleed for a few years until it gets better. What happens if the patient dies? No problem, shit happens. Anyway, the next one will be along in a minute and payment was charged in advance. I was completely wrong when I thought that the next crisis would follow the previous one after a short interval, we are now living in the age of permanent recession as countries see any prospects of recovery smashed by the very same people who did so much to provoke the original crisis.

The commentators who support the gamblers like to entertain us with legends of Greeks who retire before they are old enough to work, but it won't be Greek pensioners who will be sipping mojitos on Caribbean beaches as a result of this crisis. It's those who are doing the betting who will enjoy the benefits of a comfortable early retirement. With the added advantage that they get applauded for it by the same people who criticise anyone else who gets such a privilege.

As we saw yesterday, all it takes is one fuckwit to start a false rumour, and a whole bunch of other fuckwits then spend the day doing everything they can to spread the same rumour. It all seems like lunacy, but there is a whole bevy of commentators and sleepwalkers who will, a posteriori, always find perfectly rational reasons to explain what has happened. Who cares whether it's genuine or not. The best thing about the current crisis for those busy earning a living out of it is that each further attack creates a state that can be used to justify the next one. "They're having problems paying their debts, so we have to make it more expensive for them to do it". "Oh, we've pushed them further into recession, better downgrade their credit rating".

I read a report a report last week of how traders had a "crazy, fun week" stuffing the future for yet another country. It's leading to a ridiculous situation where the prospect of an Argentinian style "corralito" becomes more real. More than anything because defaulting on debt will start to look more attractive for those running the countries concerned than implementing measures whose main effect is to prolong indefinitely the recession in the affected country. Of course such a corralito affects millions of people who might have a bit of money saved from doing real work, whilst the wealthy usually have their money stashed somewhere else. If anyone has seen any sign that the markets are not prepared to take their victims to that extreme then please point me to it. It's pointless to criticise the governments for not doing the right kind of reforms, the Greek example demonstrates that nothing will be enough whilst the opportunity to profit from the crisis remains.

So many millions of people now face a future even more uncertain than that which existed a few short months ago. Trapped into this situation by a political class that talked so smoothly of reinventing capitalism, but which has instead buckled at the first push from financial institutions rescued at public expense and who bring nothing to the table but who take so much away. Insanity in motion. They say it can be dangerous to wake up sleepwalkers, but surely not when they are about to take us all over a cliff?


lavengro said...

This is reminding me a bit of AJP Taylor's railway timetables and the start of WWI.

Tom said...

An excellent post, Graeme.

The current situation takes Naomi Klein's Shock Doctrine and adds a new dimension: the capitalists manufacture the crisis and then profit from it (like in the first 'dip', where we all bailed them out of a basically non-existent 'crisis' of their own invention).

The Daily Mail today warns of anarchist riots in the UK should the Tories NOT win the election.

Expect Cameron's first summer to be very hot indeed.

Colin said...

Graham, If I understand you correctly, you ultimately place primary responsibility on the politicians. As Charles Butler does today too.

Which is right.

Capitalists will always be capitalists. It's the nature of the beast. The failure is not theirs but that of the politicians who didn't curb the descent into casino capitalism. And the rampant, debt-based consumerism which even some of us capitalists abhor.


Tom said...

@Colin - what exactly is 'casino' capitalism? In a casino, a gambler gambles his/her money and stands a good chance of losing. In world finance, people gamble other people's money and win whatever happens.

Graeme said...

Yes Colin, I do hold the politicians responsible because the growth of this cannibalistic and destructive activity has only happened because governments have decided to let it happen. When you think that Spain and the UK have both recently collaborated to hold back some tentative moves towards regulation. Look at the reward we get for the wisdom of those who lead us.

Colin said...


Marco Annunziata from Unicredit said EU leaders were losing the plot. "The threat that contagion might eventually morph into panic and spiral out of control is very real, and the reaction of policymakers remains dangerously counterproductive. Demonising markets, implicitly casting investors as heartless speculators against the tragic background of the Greek riots, is irresponsible," he said.

I don't hold out much hope for the sort of political leadership required. It's essentially a war but minds aren't being concentrated the way they usually are when people are dying.

It will get a lot worse before it gets better. And maybe it really will end up with Germany leaving the eurozone. At which we all laughed a few short months ago.

Who the hell knows? Anything.

Colin said...


Yes, I totally agree on this. But I was just using the word which has gained common currency.

Yes, there were many, many no-risk bets taken with someone else's (easy) money and this is exactly what shouldn't have been allowed to happen.

Not many people wouldn't speculate for huge rewards with someone else's money, with no comeback if they get it wrong. Simples . . .

Graeme said...

Colin, when Marco Annunziata shows just the tiniest hint of recognition of the consequences for people outside of the "markets" from what is going on here - then, and only then, should he come giving lectures on who is behaving responsibly or not.

Colin said...

Well, not really. We have free speech and his lack of other perspectives doesn't de facto make him wrong on this. Even cannibals are entitled to have a view on the taste of lamb, I guess.

Graeme said...

I'm not saying he doesn't have a right to say it Colin. He can talk as much shit as he likes, my point is that I prefer lessons on responsibility to come from people who show signs of understanding what it means.