David M. Russell

The Global Financial Crisis

In Commentary on June 27, 2009 at 11:07 pm

The sky has fallen in. The forces of darkness have taken control. The world as we know it has come to an end.

There is no proof that these are actual newspaper or television headlines but they have a familiar ring, don’t they? If you let it, media coverage of the Global Financial Crisis would keep you awake with nightmares for the rest of your life. And, to be fair, there’s no suggestion the reporting of this dramatic event has been overstated. It might well be the worst economic disaster since the Great Depression. Hey, it might even be the worst financial nightmare anyone has ever envisaged. But that’s not the point.

The point is – almost certainly – that we have survived this supposedly cataclysmic event. There is evidence to suggest we are already turning the corner, albeit it remains a very bumpy ride. It should be borne in mind that recessions are not that uncommon even if it is the first time Gen X and Gen Y have come face-to-face with the harsh realities. For Australia, this is the sixth recession since World War II. The others were in 1990, 1981, 1974, 1961 and 1952. There were very close shaves around the 1997 Asian Crisis and in 2001 but even if they weren’t deemed actual recessions it is obvious these downturns are reasonably regular events. Millions of people have suffered substantial losses this time around. Many have been completely wiped out financially. They are the stories of tragedy that send shivers down our back. What is really scary is that we have already started to gloss over what caused this disaster and, more to the point, what can be done to prevent a repetition. Because if history teaches us nothing else, it makes clear that what has happened once will occur again if we don’t act to stop a repeat. What we are hiding from is the role that most of us have played in this mess. What’s that you ask: We are to blame? Who the hell does he think he is to make a claim like that? There’s an adage as old as Methuselah that says the truth hurts. It does. The more pertinent the truth, the greater the hurt. But aren’t innocent mums and dads the victims in all this? Hasn’t the crisis been caused by rapacious company bosses who have betrayed every ounce of trust placed in them, aided and abetted by sleazy screen jockeys who would willingly mortgage their grandmother if it turned a profit? All true. Yet, the really unpalatable truth is that they couldn’t have done what they did without us creating a market for their acts of evil.

Yes, some of the scandalous things that have been uncovered can truly be described as evil because of the harm they have caused to so many apparently innocent people. Yet, like beavers building a flood-resistant dam wall one twig, stick and log at a time, real evil can only flourish in a climate where small sins are commonplace.  And the most common sin of the past twenty years or so has been greed. Sure, greed is a fairly constant companion as we wander the highways and byways of life – always there as a temptation if not an actual manifestation. But every so often we experience an explosion of greed that is characterised by a widespread belief that good times are here in a manner so bountiful that most of us can enhance our customary level of wealth substantially. It has infected our whole society. And it all started on the premise that capitalism can make us all wealthy. What a fool’s dream. Capitalism is a system that has – generally – served us well. It has created an environment in which many of the people in the first and second worlds have enhanced their quality of life and the scope of their opportunities. Even many of the third world’s citizens have benefited. But we have glossed-over an inescapable reality: capitalism is not a perfect system.

The integral feature of capitalism is a divide – the haves and have-nots. You can’t be rich if no-one is poor. Just as you can’t understand sweet if you have never tasted sour. So, while it is fine for a majority of the world’s population to aspire to become better off financially than they are, it is madness when the majority starts to believe that such an encompassing change in circumstances is not only a reasonable aspiration but actually an attainable goal. It’s not. It’s an illusion – an escapist fantasy. There can’t be haves without the have-nots. Night has to have day to be night. Yes, this can be argued endlessly as an exercise in semantics. Doing so, however, is to ignore the evidence of the broken dreams of those who came to believe capitalism would make them rich. Sure, some have profited from these dark times. There will always be winners. Just as there will always be a numerically greater number of losers. It is not wrong to believe that capitalism can provide us with the means to improve our circumstances – sometimes dramatically so. What has been so wrong over the past few decades is the widespread belief that most of us could and would substantially increase our nett worth. No, we’re not talking about a general improvement in societal wealth. The issue is the belief by so many of us that we could do so much better than our peers. Forget keeping up with the Joneses – we became determined to leave the Joneses in our wake. It was naïve and it was predicated on greed.

Is it any wonder that things have fallen apart so spectacularly? Is it any wonder that so many who appeared to have prospered so well in the boom times have fallen from grace as if in a demonic game of snakes and ladders? Truly, is it any wonder? Yet the issue of greater concern in the Global Financial Crisis is the role of our governments. These are the institutions which establish, co-ordinate and ultimately hold accountable that peculiar class of technocrat: the regulators. That system has failed us miserably. Yes, that means our governments have failed us miserably. What we might debate is the extent to which that failure was a) intentional; b) avoidable; or c) forgiveable.

The remarkable thing is that our political masters have already gotten away with their chicanery. Nowhere in the world has an elected government been given the bum’s rush because the people – yes, us! – thought about things sufficiently to work out just where the blame resides. Sure, George Bush got put out to pasture but that was after eight years as the most powerful human being in the universe (who says you can’t fool most of the people most of the time?). Aside from a constitution that said he simply couldn’t stay any longer, Dubya was found guilty more of ineptitude than a starring role in the globe’s biggest economic meltdown since economists started prodding chicken entrails as a basis for formulating their forecasts. Perhaps no elected official has been hung as a sacrificial lamb over this calamitous collapse because we subconsciously recognise that we are as guilty as anyone. Yes, a collapse this gigantic cannot be sheeted home to the actions of the few. It needed the acquiescence of the many. It was a basic human frailty that brought us undone. A fault that has been with us since Adam allegedly sunk his teeth into an apple. Let’s face it: we just don’t know how to accept that enough is enough. Foolish, indeed.

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