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Crashing Markets - The Best Thing That Could Happen To Us! . . .it's not WHAT happens - but HOW we deal with it

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For too long the financial “free” markets have been allowed to exercise a level of influence over our lives that is out of all proportion to the actual pleasure, comfort and security they are able to deliver. 

Don’t get me wrong however. The current hiatus is far more serious than anything before because trust has left the arena, causing a panic to set in that is confusing even to the experts, particularly in China and India whose economies are relatively sound. So why should panic occur? Because the whole market mechanism is driven by fear, rumour and greed, which like any emotion is prone to over reaction when confronted with uncertainty. 

However, we need to go behind the panic and be clear about the motivating forces that are taking us to the brink of recession, or beyond. The economic growth in both America and Britain has been fuelled by consumer spending, this is no secret. But how financially responsible has this strategy actually been, and are we now paying a very dear price for this direction? 

I am sure that you, like me, have always understood that sound financial management can only be achieved through a “spread of risk”. When setting up a portfolio of shares it is an automatic reaction to buy both high performing, blue chip and government stocks, depending upon the financial return required – income or growth or a bit of both. The old idiom “don’t put all your eggs in one basket” is as sound a piece of advice today as it was when first conceived, and few of us would argue this point concerning our assets. 

So how is it that the entire growth strategy of western economies is supported by just one asset – property?  And to add insult to injury we invented “plastic” money so that when we have spent all of our own money supporting the system, we can borrow someone else’s money to keep the whole process alive. 

To finally rub salt in the wounds, I am convinced that credit works against the human condition, and is the reason so much misery has been experienced with the vast debts that have been accumulated by individuals around the world. 

We are designed as a species to strive for reward – the athlete, entrepreneur, family unit, in fact every aspect of humanity seeks to achieve in some way or the other, and then bathe in the warmth of personal achievement that their endeavours have attained – be it painting the house or building a business. 

Credit works in complete opposition to this basic human condition, by providing the reward first and then the striving necessary to pay for it. Where are the motivation and the sense of achievement in this way of life? We never actually succeed at anything because the yoke of debt grows larger as we build the myth of material support around us. 

And if your self esteem can take this next point, consider the fact that in making business more competitive and efficient, the individual workers job security - the very means by which we might undertake long term credit with any degree of confidence - is removed from the equation. The old concept of “customers” purchasing shopkeepers goods has been replaced by “consumers” underwriting corporate cash flow. 

Here in the UK we have seen a run on a British Bank for the first time in 150 years. The virtues of the “Free Market Economy” have been extolled by politicians and business people alike for years. And yet when financial collapse is threatened because of dubious business decision making, instead of the market forces being allowed to function, a false economic tool is introduced in the shape of taxpayer money. Not only is it utilised to bail out the unsound business, but to underwrite for years into the future the activities of yet another group of business people. 

We may be headed for recession and all the unpleasantness that goes with it for all of us but we have a very real choice in front of us now. Either to struggle through and start up where we left off when things get better – much as happened after the ’29 collapse – or we can learn from our experiences and come out the other side stronger and more in control of our society. 

For me the choice is a “no brainer”. We need leadership that understands who and what we are, and can set in place infrastructures that allow us to strive and achieve by being masters of our own destiny. I am a firm advocate of the need for corporate activity within our society because it contributes more to our evolutionary process than any other area of human activity. 

However, like all human activity “all things in moderation”! Business should be allowed to pursue its all important activity to secure employment, growth and spearhead human endeavour, but be held fully accountable – the price of a “free” market must surely be “full responsibility”. To this end industry self policing would become a thing of the past as proper oversight of business practice is introduced. 

(FDR introduced greater policing of the corporate sector, only to have it rescinded by Nixon when he came to power – maybe today’s problems are routed in this simple act of reversal.) 

Any business worth its salt would quietly welcome better policing and this is never truer than now, with trust between banks at its lowest ebb ever. Surely a stringent action such as this is the only way to restore that lost trust if we are ever to have a return to sound banking relations. 

As far as politicians are concerned, as I have said before, we need leaders who better understand who and what we are, and in so doing define structures within society that better meet our needs. A society run for profit doesn’t work, as is now becoming painfully evident. 

Democracy can only work and flourish when our leaders actually show that they care about the people who put them in power (Hilary Clinton recently touched a nerve in this respect – whether intentionally or unintentionally). What we have experienced over the last two decades or so is the advent of the “professional” politician, caring more for the needs of his or her sponsors than those who elected them, and this doesn’t work either, as Americas dip in world popularity is witness to. 

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At a time when this planet and its inhabitants do not appear to be working in synergy, causing serious imbalances and Global Warming, I offer a personal view of our current plight in a combination of personal experiences, science, religion and (more...)
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