very young people start talking about a financial crisis, you know it’s
big. I live in Glasgow, a city not noted for its obsessive interest in
matters financial; when very young people in Glasgow start talking
about a financial crisis, it signals a global calamity of gigantic
to see ourselves as others see us
When very young people start talking about a financial crisis, you know it’s big. I live in Glasgow, a city not noted for its obsessive interest in matters financial; when very young people in Glasgow start talking about a financial crisis, it signals a global calamity of gigantic proportions – possibly the biggest since the Great Depression.
“This big American insurer has gone, like, totally bust, and the Bank of Scotland is gonna, like, disappear,” said girl to boy in my local café on Glasgow’s Queen Margaret Drive last Wednesday, just before the deal was definitively clinched that signalled the end of the independent existence of the Bank of Scotland, the UK’s oldest bank.
Dark skies over Edinburgh. Dark skies everywhere. And am I alone in finding the massive surge on the London market on Friday after the Federal Reserve announced its $700bn (€485bn) rescue plan for the US financial sector almost as worrying as the dizzy falls that preceded it?
These are crazy times when it’s sometimes been hard to know who’s flying the plane. And the reaction in many quarters has been borderline hysterical. A trawl through the BBC noticeboard, for example, makes for frightening reading.
“It's my belief that this global credit crisis is entirely manufactured, partly so that various people will become even richer and partly to recreate the environment that spawned Hitler's dramatic rise to power in the 30's,” opines one particularly sober individual.
We could dismiss this scribbler as an unrepresentative crank. But his/her comment made it into the top ten most recommended and 90% of the comments on the BBC noticeboard (which, unlike many boards, is moderated) run in a similar vein.
I urge you to look at it; it’s an unparalleled opportunity to see ourselves as others see us.
One thing’s for sure, there isn’t much sympathy out there for the finance industry – even among previously vigorous supporters.
Curb on the City spivs – and about time too, crowed the right-wing UK tabloid the Daily Express, never previously a fan of a tightly regulated financial sector, in response to bans on shorting banking stocks on both sides of the Atlantic after the punishment inflicted on the likes of HBOS.
This morning we woke up to find that Wall Street as we knew it effectively no longer exists. Goldman Sachs and Morgan Stanley, the two remaining independent investment banks, have been recombobulated as bank holding companies in order to allow them to take deposits. Whether this means Morgan Stanley can avoid a takeover by Wachovia, the midwestern banking group that sounds more like it should be selling crystal trinkets than doing deals on Wall Street, is unclear.
What is clear is that we are now entering a new world. An industry that pushed so hard for deregulation must accept responsibility for the current crisis. And now tighter regulation looks inevitable, it’s up to the finance industry to rebuild in a way that accommodates that inevitability.
This is an industry that has often had to talk about rebuilding trust in the past. Today, it actually has to do it – in ways that are demonstrable and (key word) genuine.
Fiona Rintoul, Editorial Director
© 2008 Funds Europe