Sunday, September 14, 2008

Denying Reality: Financial Markets on the edge

It's not healthy to deny what is happening around you. Reality is more than just perception, it is what happens while you ignore it until some event forces you to reconsider that perception.

However, the financial markets are built on perception and that has given us the boom in property prices here in the UK and in the US, plus the dramatic "credit crunch" we are now experiencing. Northern Rock was the prelude, a little taster of what was to come. The real performance started this year on Wall Street: the collapse of Bear Sterns with its rescue with public money, the nationalisation ("Conservatorship") of Fannie Mae and Freddie Mac, and now the imminent collapse of Lehman Brothers bank and perhaps the buyout of Merril Lynch.

All these institutions got in to their current predicaments by short term thinking, using massive bonus to reward investments with no long term viability. This was fuelled by irrational group psychology of the trading floors, which in turn is fuelled by testosterone. This clouds the perceptions of not only the dealers but the executives who control the organisations. As one investor has commented "Lehman tried to deny reality until the bitter end."

"Competition and growth" are the bywords of free market capitalism, not "co-operation and sustainability." Competition is a masculine mindset, the same testosterone fuelled psychology that bought us the zero-sum game.

Will it change? That depends on how cynical you are. Hope is normally lumped together with Idealism by those who prefer the status quo. But if the credit crunch tells us one thing, it is that if you live by the market; you die by the market.

When all we had was our labour-power to sell, we banded together to form labour unions. They worked so well that by the 1970s they were too powerful for the ruling elites. The pendulum has now swung back towards the property owners. Capital, the financial markets are all powerful and it seems there is no way we can change things. But we can: We own the means of consumption.

We can choose to borrow. We can choose what to spend our money on. We can even save it. If this financial crisis proves anything, it proves we can take control of the financial markets by withholding our participation within them. By choosing how and where we spend our money, we can starve the markets of what they need: financially ignorant players from whom they can fuel their cancer-like growth.

Change is in our hands. What will we do with it?

Thursday, September 11, 2008

The morning commute

Five years ago my commute involved a bus and short train or ferry journey across Sydney harbour.

London is different. I live close to a tube station on the Piccadilly line, about 30 minutes from the centre of Town and the morning regimen goes something like this:

Get the tube before 8am or it looks like this:



People packed in so tight, face to face, clenched fists hang from rails and expressions universally devoid of emotion, too cowed to even show anger.

Most read free news papers, disposable entertainment and seething predigested anger, a proxy for their own disenchantment at their lives.

The train stops frequently and not just at stations. The "customers," as TFL management call this hot and sweaty cargo, sway and lurch. We arrive at Hammersmith.


Into the underground, as hot as hades, with companions that show few signs of life. No one talks. Not to themselves or to others. Both would be a sign of madness here. We are individuals, not a community. Everyone else here is to annoy "me," the identity constructed by advertising in The Metro.

By Earl's Court the carriage fills once more, the temporary relief of the quick-whitted jumping ship for the District line gone. There is nowhere to put your feet and arms are a cats-cradle reaching for a few inches of empty handhold.

Hyde park. A scramble for the doors. Space, room to breathe and perspire. Soon the scramble for the Bakerloo line. The urgent need for all the exiting passengers to be First through the doors causes a log jam. On the Bakerloo platform the train arrives promptly and once on board the competitors take up positions around the carriage door, ready for the running start for the escalators at the other end.

We swarm out of the train and jostle each other to be first on the escalators. Finally, outside in the morning air of London I can relax. Others reach for cigarettes and take needy gulps of smoke into their lungs to relieve their own tensions.

I savour the moments of space and relative peace, before turning my back on the London Underground experience and begin the working day.