Tuesday, September 16, 2008
Human beings always believe that the present condition - especially if it is favourable to themselves - will persist into the future. They assume radical change is unlikely. Typical of this way of thinking is Guido's disturbing and, in the circumstances, very unconsoling remark, 'Wall Street will figure out a way of making money again'. Radical change, however, is normal. History is one apocalypse after another. So, when I asked John Gray how he thought the present financial crisis would end, he replied wisely, 'It will end with a different world. And not for the first time....' All detailed forecasting at the moment is absurd. I have seen one expert after another pretend that what is happening does little more than confirm the accuracy of their narrow perspective, in spite of the fact that, a few days ago their perspective did not include the collapse of Lehman, the sale of Merrill Lynch and the desperation of AIG. But it should be clear that the issue is no longer money or the cupidity and stupidity of bankers, it is politics. McCain was much quicker and clearer in his response than Obama. He said Wall Street greed had betrayed the American worker, thus confirming his new Palinesque, nativist position. Given the success of Palin, this is a smart, if cynical, move in that it seizes the economy, previously a McCain weakness, from Obama. I think Andrew Sullivan is wrong on this. It also builds on the fact that, in power and in spite of their rhetoric, Republicans have adopted hyper-Keynsian economic policies. This allows McCain to say he will intervene in the markets far more ruthlessly than the Democrats. If he wins, then the hope of the European bienpensants that America is destined to become 'more like us' will be deferred if not cancelled. America will become more like Palin's Alaska than Merkel's Germany. Balancing this, however, will be the increasing weakness of America. This had already become militarily evident; now it is clear that, financially, America is not the power it once was or thought it was. In August the falling dollar was leading to talk of China using the nuclear option of dollar sales. The dollar has since strengthened - was this quiet interventon by Hank Paulson and friends? If so, who is really in charge here? With American banks, especially in the case of Lehmans, now having their comfortably piratical ineptitude exposed, US credibility is at a very now ebb indeed. Apocalypse? Who knows? Personally I want America to remain as strong as possible. All the alternative global bosses seem so much worse in the sense of more alien to my way of life. But apocalypses are such routine events, we should learn to rise above such attachments. As Nassim Nicholas Taleb says, 'You find peace by coming to terms with what you don't know.'
Posted by Bryan Appleyard at 6:14 am