Tuesday, 23 September 2008

Buy a pint and save the planet

Be careful what you joke about; it might come true. The warning has been ringing in my ears for half a century now, to precisely no effect.

So last week I jested about the entirely hypothetical black hole being brewed up by Europe’s physicists, just as a very real black hole was greedily consuming our savings and attempting to devour the world’s financial system.

I was torn between delight at the sudden and spectacular impoverishment of the spivs and speculators in the City, and the numbing realisation that I am going to have to spend the rest of my life shopping in discount stores, and perhaps also stacking their shelves.

One of my nuttier friends has long been predicting that the world will end shortly before Christmas 2012. One of the portents he told me to watch out for was the US dollar becoming as worthless as the currency of Zimbabwe. It seemed an extremely long shot 10 days ago. Now I am not so sure.

The proposed bail-out which prompted Friday’s spectacular market rally may do the trick, unfair though it will be. It is as if we all went to a bookie and placed massive bets on something offering ridiculously long odds, like Gordon Brown winning the next general election. If we won, we would pocket the winnings and rejoice in the fact that we could now afford to emigrate. While if we lost, we would ask the taxpayer to refund our stake money.

I worked in the City for more than 25 years and count myself a reasonably sophisticated investor, yet even I have been bamboozled by my advisers into putting some of my pension fund into complex, structured financial products which I do not even begin to understand. Nor, I now suspect, do they.

Left to my own devices, I preferred to buy shares in companies that made and did things I understood. Then I watched their share prices plummet at the turn of the century as the teenage scribblers pronounced that the old economy was finished. If you weren’t trading on the internet, you were toast. As a PR man, I spent many hours asking just how many people were going to buy a lunchtime pasty and doughnut online, rather than from the shop on the corner, but to no avail.

Similarly I instinctively preferred companies which owned freehold properties and had cash on their balance sheets, rather than towering debts. I watched in helpless dismay as the City persuaded so many of them that this was inefficient and that the only way forward was to gear up to fund reckless acquisitions or just to buy back the shares they had been urged to issue only a few years before.

Shamefully, I helped some companies in intrinsically cyclical industries to explain why boom and bust was now a thing of the past. To be fair, they were taking their lead from the very top, in Downing Street.

It was never going to happen. The longer and bigger the boom, the more painful the bust. That is the nature of capitalism. Which, like democracy, has absolutely nothing to recommend it, except that it is better than any other system yet tried.

We were mad to believe it could ever be any different. Now we must rely on common sense and maintain a sense of proportion. If we all stop spending, the wobbly wheels really will come off and Private Frazer’s doom-laden predictions will come true.

So buy that pie and pint, and maybe some new shoes or a sofa. You will be doing your bit to save humanity from catastrophe. Remember that if my eccentric friend is right, you only have four years left to spend it anyway, and you can’t take it with you when you go.


Originally published in The Journal, Newcastle upon Tyne.

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