Thirty Thousand Streets

Saturday, October 18, 2008

'Credit Crunch'

As I go about my daily affairs, it's been nigh impossible to avoid the sense of fermenting financial doom, simmering just below the surface of, well, everything (at least in London – Greece didn't seem to care as much, at least the resort I was in a month ago).

Scarcely a day goes by when I don't open the paper to read some hyperbolic sqwawk about the parlous state of the world economy. "Black Friday!" boomed the reassuringly pessimistic London Evening Standard, the Friday last but one.

I'm getting a little bored by all this. The fact that we've entered a period of relative financial insecurity has actually penetrated my cranium by now, aided by soundbytes such as 'The Credit Crunch', and abetted by Brass Eye style graphics of plummeting line graphs, typographical ligatures involving resolutely downward facing arrows, and photographs of worried looking Wall Street Traders.

But it seems to me, the big story that everyone I know is talking about, bar the actual papers themselves, is the role of the media itself in this debacle, the spectre of which looms large in the wings, excitedly wringing its hands. Because, correct me if I'm wrong, but the relentless pessimism of the news regarding the global economy is surely guilty of inculcating the sense of doom, that is all pervasive at the minute (of course, I suppose a headline such as "Story-hungry Media excites mass global panic!" might just be a tad too recursive – a little too close to the truth, if truth be known). This was proven to be the case when the BBC's business editor, Robert Peston, asserted that head of RBoS, Barclays and Lloyds had gone, a beggin' to Alistair Darling for some beads, which promptly wiped £10 billion off the value of the Royal Bank of Scotland alone. Oops.

And there is, oddly, a faint sense of inevitability about all this – the long predicted chickens have finally come 'home to roost' as it were. I remember last year, reading in the broadsheets last year muttered hints that: "This can't go on forever" which it patently could not; but in some ways the paranoia now seems to be a case of prophecy fullfilment.

I've never know much about the dark arts of economics, and at least one thing that's arisen from recent events is a slightly clearer understanding of the greed, naivety and sordid practices that led to all this. It's been a little like training a torch on the underside of a long undisturbed rock, to witness a host of unlovely, armani-clad beetles scurrying away from the questing light – though perhaps it was a lack of scrutiny that led to this debacle in the first place. A couple of things that have only really become apparent to me for is the fact that very little of this money actually exists (i.e. if everyone wanted it back, not everyone could have it) and for all their perceived, grotesque wealth, banks actually operate with a thin skin of capital – the rest being all speculative cash in motion – and in some way it all seems to be linked to some index of confidence, which at the minute, is severely diminished, and shaken yet further by the press's frenzied speculation. To use an analogy in physics I might compare it to the Oberver effect, wherein in the very act of witnessing and recording an experiment ultimately effects its outcome.

For this reason it almost feels like the best thing that could happen, would be for the media to find something else to yap about about for a few weeks, and the eventual trickle-down effect might be people discarding the siege mentality that seems to be the defining zeitgeist of the moment. Ever since Orson Welle's radio play on Well's War of the Worlds it's been pretty clear that the media has the power to precipitate mass panic, if used recklessly, and this is hardly an exception. So why not, I dunno, talk about Madonna divorcing guy Ritchie or something, and everyone can slip back into their normal everyday coma, before emerging blinking, from the bunker, into our brave, new, credit-less world.

In the meanwhile, I'm going to brace myself for an even-more-consumerist-than-usual rendition of Christmas 2008, as all and sundry attempt to claw back some of their collapsing profit margins. I saw my first Christmas advertisement on ITV yesterday; DFS, I hate you.

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