- 09 Oct 08
The global economic meltdown of the past fortnight is a ruinous consequence of Ronald Reagan's '80s crusade against regulation. The question now is: where will it end?
I went to work this morning, was all set to start
My boss walked up and told me something break my heart
Things so slow, don’t think we need you anymore
He told me things was so slow, don’t think we need you any more
So sang bluesman JB Hutto, and what he says is true. Blues music began as rural folk music and its simple repetitive form generates pointed, economic statements as spartan and precise as a Japanese haiku. Throughout its history, hard times have been a constant thread, the hard times of the 20th century when the poor were always the first to pay for the financial sins of the rich. The blues don’t beat around the bush.
Well, Alan Greenspan, formerly chairman of the Federal Reserve, has described the carnage of the last few weeks as a once-in-a-century occurrence. Like a perfect storm, it doesn’t happen often, but when it does it surges through every pore and orifice and it takes a long time to clean up. So, tune up your guitar and buy yourself a harmonica because we may all be singing the blues for a while!
So, how bad is bad? Okay, in the US they are comparing this crisis to the Wall Street Crash that triggered the Great Depression. The US Government has agreed to give the banks a dig-out but clearly, as we saw when the House of Representatives rejected the bailout, there’s a lot of resentment.
Basically, a lot of people there believe that since Ronald Reagan ushered in the era of deregulation back in the early 1980s, American financial institutions have bloated and putrefied, rewarding greed and exploitation and foreclosing on any social or civic responsibility they ever had (and as any blues singer will tell you, it never was very much).
Insofar as the deregulated American financial system rewarded creativity, ingenuity or leadership, it was for finding new ways to make the rich richer. Above all, the objective was to keep the shareholders happy.
This goal was pursued largely without responsibility, morals or mercy. And for a while, it seemed to work. Along the way, it turned over the Soviet empire and prompted capitalist ideologues like Francis Fukuyama to crow that we had reached the end of history, the time when the American capitalist model of democracy had triumphed and been adopted (bar a few rogues) by all the peoples of the Earth…
But now we find it was just another mythology, a mirage, a house of cards. Too greedy and stupid to heed repeated warnings, the bastards huffed and puffed the US property market and associated financial stocks into a vast candy floss cloud, big and sweet all right, but without substance.
I daresay that Vladimir Putin is amused, buoyed as Russia is by oil and gas. Some are already arguing that it may yet mark the end of America’s primacy in the world. Time, that is to say history, which we now find hasn’t ended after all, will tell.
Were we any different here? In fairness, we have had less greed and more regulation. But there was huge irresponsibility. Risks were taken that were irrational and unsustainable, especially in the property market.
History will probably find errors of complacency rather than competence (and this extends to Government as well). When things were going so well, nobody wanted to apply the brakes.
But whatever, the result of international and local factors is a massive downturn. In times like this, as ZZ Hill sings, ‘there ain’t nothin’ you can do’. It is, to quote Bruce Hornsby, just the way it is. We just have to dig our way out. And it won’t be easy. Huge cutbacks and tax hikes are planned and there is no sense that they’ll be short-term either. And as ever, those most likely to suffer things beyond their capacity to absorb will be the poor.
In Ireland, the six saved banks are contrite and grateful. When the dust settles we might even see the evolution of a new kind of banking system. At the very least, we may look to them to play a more socially responsible role in reconstruction. It’s the least they can do to repay the taxpayers for the use of the State’s good name and credit rating.
Internationally, who knows? America could be on the brink of a revival comparable to that which followed Roosevelt’s election in 1932. And remember, he ushered in such a socially responsible government programme that he was labelled a communist by some.
Since we are so closely woven into the American economic system, that would be good for us. But remember three things. Firstly, America is massively over-extended militarily. Secondly, although it is still the creative engine for the knowledge society, it is no longer the only economic or military superpower – our children should learn Russian and Mandarin! And thirdly, Americans may not realise the clarity and brutality of the choice they face next month.
As all sports fans know, winning demands more than preparation and organisation and resources. You also need spirit and belief. So who can generate that? At this remove, it sounds like a job for Barack Obama…
But will they hand him the flag? And if not, then what? I opened with JB Hutto, let’s close with JB Lenoir
You rich people listen, you better listen real good
If we poor peoples get so hungry, we gonna take some food (to eat)
Uh-huh, I got them laying off blues, thinking ’bout me and you
What’s the president gonna do?