We all know the story for 2009. It reads rather like a recipe (more Macbeth's witches' cauldron than Christmas at Nigella's I'm afraid): take generalised gloom, mix in rising unemployment and bankruptcy and top-it off with large doses of environmentally-tinged moralism and times by an unpredictability factor of 10. Hold onto your stomachs......but what were your crunching news moments from 2008? Which news stories got under your skin and fixed your attention on the changing economic climate. I have 5 small stories that I would like to share and here they are:
1. Capturing the Lehman Brothers moment
I don't work in the City. Lehman Brothers was just a name to me. Less of a name, in my imagination, than Goldman Sachs or Morgan Stanley but still a rather meaningless name. Was I aware of the size of their office in Canary Wharf? Nope. So when the story broke about Lehman Brothers it genuinely felt like a story from another world, a surreal Hollywoodised Wall Street, kinda world. Suzy Jagger's article in The Times chillingly caught the mood in No federal bailout of Lehman Brothers, the free ride was over for financiers (September 16, 2008):
As office workers descended into Wall Street’s Subway station on Friday evening at the start of what was to be an unusually humid September weekend, 30 of the world’s most powerful financiers pulled up in chauffeured limousines, like hearses, around the corner in Liberty Street.
As they crawled through rush-hour traffic in downtown Manhattan, the men who control the world’s banking system could guess why they had been summoned to the huge fortress-like headquarters of the New York Federal Reserve Bank. They were there for the opening hand of what one Fed insider called “the world’s biggest game of poker”.
This is the first two paragraphs of a must-read description of the collapse of Lehman Brothers. It captures the moment when the Fed tried to play hardball and poker-face-out the US banks to save one of its own. The Friday 12th September meeting happened; nothing was resolved. The bankers were called bank on Saturday 13th and Jagger describes how the fleet of black limousines carrying their chino-wearing executives managed to cause a traffic jam in the narrow streets of the financial district.
Just before midnight on Saturday 14th Lehman Brothers CEO, Dick Fuld, threw in the towel. On Sunday the world got let in on the story of the bank's demise. And on Monday the world's financial markets went into meltdown. The rest, as they say in the big movies about big events, is history.
A friend posted a link on Facebook to a photo essay about the decline of Detroit from Time magazine's website (The Remains of Detroit). This evocative slide show is both sad and beautiful. The credit crunch of 2007 is not responsible for the decline of this once industrious car-making city but the pictures show how it is certainly not going to help. For now, Motor City is down and out for the count.
3. Don't take the private jet
We can all laugh at the way that the bosses of the big three Detroit car-makers were cross questioned about their private corporate jet use when attending a meeting in Washington on November 18th to plead for public money to bail them out. When Tom Schatz, President of Citizens Against Government Waste, said that "to come to Washington on a corporate jet, and asking for a hand out is outrageous" he certainly caught the public mood. The US blogosphere went bananas! But the problem I have with this story is the problem I have with all anti-fat cat stories (especially in this climate): the solution to the current crisis is not going to be found in belt-tightening by heavily remunerated CEOs. We can all crow "we're having to make cut-backs and so should they" but we all know that the economising that us employees and small businesses people are having to make are far more significant financially and politically. Dump the private jets and it's all going to be all right? Their "sacrifice" might make us feel temporarily righteous but then we have started to get sucked in to the ever increasing cyclone of sacrifices that government and employers want us to make.
4. Woolies
It has been a terrible Christmas for all the workers at Woolworths. From a purely consumer perspective I would have to say that I am not that sentimental about its demise even though I always found it a useful for buying kids presents. It was a giant of the high street that seem to get caught between the one pound shops and the more up-market department stores and it was never cheap enough! Russell Davies says that he will miss Woolies because there should be room for something unkempt and rubbish in our lives too. Very funny, in a strangely Orwellian kind of way.
5. Blaming the messenger
Bad news is good news. Telling it like it is, spilling the beans and coming out with it are all positives in my book (is that a record for the number of clichés in one sentence?) so when the BBC's business editor, Robert Peston, has repeatedly been blamed for bringing down banks and leading to a run on share prices, then he must be doing a good job. (See my earlier post, BBC Blog Man Blamed by Banks). We need great reporters and analysts in this period and on a positive note, I think there are some great ones around. The two best articles I have read so far on the economic crisis are, drum roll please, by Robert Peston and Frank Furedi. Here is where you can find them:
The New Capitalism, Robert Peston, BBC
The ‘credit crunch’ and the crisis of meaning, Frank Furedi, Spiked
Afterword
Initially my attention was focused on the US. The growth in the lexicon of the crisis was in itself fascinating, this included: sub-prime mortgages, toxic debts, write-downs and my favourite, naked short selling. (And if you want to know what that means this link will take you to the BBC's The layman's finance crisis glossary. You'll be glad to know, or perhaps mildly disappointed, that it has nothing to do with being naked and short). Perhaps I was ever so slightly pulled in by the early late summer rumblings of what later turned out to be Gordon Brown discovering his leadership mojo which, if I remember correctly, began with him flying the idea that America's sub-prime mortgage crisis was a problem for us all but certainly not a creation of his. But this didn't last long. Two weeks in fact: from the collapse of the US investment bank Lehman Brothers on Saturday 13th September to the nationalisation plan of UK bank Bradford & Bingley on Saturday 27th September. That was it. Two weeks. Any sense that the crisis might be someone else's was quashed.
Perhaps we had been living in our own UK Bubble PLC ever since Northern Rock collapsed and it's planned nationalisation was announced in September 2007. One year of US economic turmoil and then BANG! Oh dear, we are involved right up to our necks too!
Readers, there is not much uncrunching here, I confess. Since William Hill gave away free money to the tune of £10,000 on Christmas Day (see my previous post), I have not discovered any rock solid, no-brainer bargains. It's the Christmas period after all. I'm busy trying to work out which retail outlet is going to go bust next!
Happy New Year! Meant without irony. Buck any trend you can and make it a prosperous one.
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