As the great crisis goes into its second phase, we have heard an awful lot about "the markets" and, rest assured, we are going to hear a lot more. There are quite a few main players in the crisis: from governments to banks, from political leaders to economists. But the reporting of it tell us that "the markets" are also one (or several) of them. But who or what are they?
In a piece in the Observer this Sunday, the economist, Will Hutton, refers to "the markets over a dozen times saying:
"The markets have issued a stark warning."
"The markets lurched downward ..."
"To panicking markets, it looked what it was ..."
"The markets have lost confidence"
"The markets have known these truths for some months"
"What has unnerved the financial markets ..."
"The markets' reaction is made worse ."
"The markets need the prospect of sustainable growth"
"The markets' judgments are brutal"
It is strange that reporters never actually tell us who, or what, these "markets" are. It is perhaps assumed that we know already, but it feels more is if the word "markets" refers to some indefinable, ineffable force to which we know we must just bow down. We don't need to question what they are and should not do so. We certainly should never put their authority in doubt, or terrible things might happen.
But in spite if their remoteness, the "markets", from comments like those of Hutton, start to assume something of a personality. This personality resembles more than anything that of the great Greek god of the Olympiad, Zeus: sometimes almightily powerful, sometimes tetchy, sometimes offended, judgmental, pathetic or vulnerable and of course sometimes just plain brutal. But, as for Zeus, we just have to accept and pay homage and try our best not to offend.
The use of the word "markets" is a way of referring to something we are not expected to understand or approach. But the real reason why the "markets" must remain cloaked in mystery is that the truth exposes a sickness that is intrinsic to the whole political/economic model we work under.
It is a curious fact that reporting of the crisis focuses entirely on debt. There is private debt, public debt, debt everywhere you look. But is it hardly sophisticated economic theory to point out that where there is a debtor there is also a creditor. The closest we ever get to defining the creditors is by reference to these invisible "markets".
Also an unstated, but really quite remarkable fact, is that, however big government debt may be, there is always someone or something out there that can buy this debt. That is not to say they always necessarily will, but in practice they do. It is just a question of the price.