Tuesday 30 September 2008

From the edge of the abyss

Doesn’t global warming seem much less of a worry since we began teetering on the edge of the financial abyss?

Our current situation can be likened to taking a hiking tour of Colorado in dense fog. The fact that we can feel nothing immediately in front of us could mean that our next step will plunge us 5,000ft into the Grand Canyon. Or it could just indicate that the end of our state-of-the-art carbon fibre walking pole has dropped off.

If this situation ever arises in real life, I would recommend deciding the issue by exploring whether you can feel anything behind you, either. But the regrettable importation of US-style ambulance-chasing (or, in this case, hearse-chasing) lawyers means that I would then have to fill the rest of this page with a disclaimer explaining that The Journal and I can accept no liability if it all goes horribly wrong.

Crack teams of lawyers are already at work updating all the other disclaimers you see on advertisements for financial products. Share prices can go up as well as down. Failure to keep up the payments on your mortgage may result in the loss of your bank, and the entire global financial system going down the plughole.

How well are the world’s leaders responding to the crisis? With all the calm thoughtfulness of rabbits reacting to fast approaching car headlights. But at least our own Government has belatedly discovered an ability to take decisions. Compared to the months of dithering over Northern Rock, the takeover of Bradford & Bingley has been swift and brutal, and they have even apparently rediscovered that banned “N” word, previously replaced by the euphemism “temporary public ownership”.

I am well old enough to remember dealing with the nationalised utilities of yesteryear: lumberingly inefficient bodies, starved of investment, which seemed to exist primarily for the benefit of the surly jobsworths who staffed them. But at least anyone with a modicum of intelligence could understand what these entities did. The thought of any government trying to run financial institutions that have been brought to their knees by their own complexity and self-delusion should be enough to fill us all with horror.

Not that the present administration does not have form in this area. As Chancellor, Gordon Brown was famed for his love of complicating the taxes and benefits system. And if the root of the financial black hole into which we are all staring has been excessive borrowing, foolish lending and the dressing-up of bad loans as blue chip investments, surely there are obvious parallels in the world class scam known as the Private Finance Initiative.

Whether this crisis turns out to be Gordon Brown’s “get out jail free” card will depend on whether people remember who steered the ship into the iceberg in the first place, while constantly asserting that icebergs had been banished forever. If he is still in place by then, the next election could see him in the position of John Major either in 1992 (snatching an unexpected victory because “better the devil you know”) or in 1997 (utterly, hopelessly doomed). To me, the latter outcome seems much more likely.

I am therefore happy to accept the £50 bet offered in a recent email from that lifelong socialist Tom Gutteridge, who believes that Gordon Brown is on course for victory. I foresee quiet satisfaction either way - because, if we really are about to step into the abyss, the lucky party in 2010 (as in 1992) will be the one that loses.

Of course, in those circumstances, £50 won’t actually be much use for anything. But at least every factory chimney that gives up smoking helps to prolong the survival of the human race. Let us spin it as going fashionably green: poverty is the new prosperity.


Originally published in The Journal, Newcastle upon Tyne.

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