Any other business

Wednesday

Stephen Vines

Twelve steps to market meltdown

At times of financial crisis there is often a feeling that all the old certainties have been blown away. But what is striking about the entire history of stock-market crises is that they fall into a pattern — and this pattern makes it possible to make broad predictions about the panic cycles that have been remarkably consistent for more than a century. American experts have dominated the sub-genre of identifying panic cycles, notably the market historian Charles Kindleberger and the economist Hyman Minsky. Based on their work, it is possible to identify the stages of the cycle — but not, to pre-empt the obvious question, to know exactly when it will end. So, here’s a 12-point guide.

Judi Bevan

‘These clouds will have a silver lining’

Judi Bevan meets Sir John Parker, who chairs National Grid and the Court of the Bank of England — and takes an optimistic view of the deepening recession Few people would have dared to walk out of lunch at the Savoy Grill leaving behind the irascible Lord King. Sir John Parker, the softly spoken Irish charmer who now chairs National Grid, did just that. When he took over as chief executive at the ailing engineering firm Babcock & Wilcox in 1993, he first had to deal with the late John King, then chairman, who believed he should still call the shots despite the decline of the company under his command. ‘We had a real dust-up and I left the lunch early,’ explains Parker.

Paul Johnson

And Another Thing | 19 November 2008

Now that I am in my 81st year I have been wondering what to do about my art library, which has more or less taken over my country house in Over Stowey and occupies all the available space there. I originally began collecting it seriously 30 years ago, to help me write a general history of art. That has long been completed and published. But the books, most of them huge, remain, and make the white-painted, floor-to-ceiling shelves, all made by a local carpenter, groan in patient submission. Books are such heavy things, especially art books printed on glazed paper. My house is full now, so I have scaled down my purchases, buying chiefly the big catalogues of important exhibitions held in London, Paris or New York. But there are exceptions.

Saturday

Richard Northedge

Boom and bust

So many ways to say we’re in trouble Without an Inuit thesaurus I have no way of checking how many words the Eskimos really have for snow, but each day’s newspapers reveal just how large a lexicon we have for an economy going into reverse. Recession, depression, downturn, decline, disinflation, slump, slowdown, squeeze, freeze, meltdown, bust, crash, crunch, collapse, for starters. But when the economy was booming the only word we heard was, well, boom. I could add in all those euphemisms beloved by ministers such as ‘testing times’ and ‘difficult conditions’, but why are there so many terms for a shrinking economy but such little choice when it grows?

Paul Johnson

And Another Thing | 15 November 2008

Not long before he died, Simon Gray and I discussed the extraordinary paradox: why was it that New Labour does everything in its power to discourage smoking and everything in its power (notably longer licensing hours) to encourage drinking? After all, we agreed, drink caused infinitely more human misery, both to drinkers themselves and to their families, than cigarettes. Smoking does not produce suicides, whereas drinking does, every day. Any doctor or hospital consultant will tell you that booze kills many more people than lung cancer, and that’s not even counting road deaths caused by drunken drivers. Above all, smoking does not lead to crime, whereas over 50 per cent of violent crimes are caused by alcohol.

Theodore Dalrymple

Global Warning | 15 November 2008

Anyone who doubts that, at least from the cultural point of view, the Soviet Union won the Cold War in Britain hands down should attend a conference organised for doctors about impending organisational changes in the National Health Service (and organisational changes are always impending in the NHS). There he will be convinced that every doctor will soon have a political commissar working alongside him to remind him of his wider responsibilities to government and party. Doctors in Britain are now roughly in the position of Tsarist generals, scientists and ‘specialists’ in the first phase of the Russian Revolution: necessary but distrusted, hated and feared, and to be eliminated altogether as soon as possible.

Wednesday

James Doran

What the US Treasury needs: magician and economic genius

James Doran assesses the qualities needed to be Obama’s Treasury secretary at a time of unprecedented crisis, and wonders whether the front-runners measure up As situations vacant go, the position of Secretary of the United States Treasury is unique. The job requires a politician of presidential fortitude, a world-class economist and a magician capable of making a $1 trillion national deficit disappear. Short of genetically engineering the unholy product of Nobel laureate Paul Krugman and conjuror David Copperfield, such a singularly qualified individual is almost impossible to find: no small wonder that Barack Obama was in no rush to make this crucial Cabinet appointment.

Saturday

Paul Johnson

And Another Thing | 8 November 2008

There’s plenty of goodies yet in the English word-factory The most overused word this autumn has been ‘crunch’ in the sense of ‘crisis’, as in the phrase ‘credit crunch’. Not many know that it was first used thus by Winston Churchill, so adding to his many other claims to fame that of being a neologist. The OED credits him with inventing the usage but says it was in the Daily Telegraph on 23 February 1939, whereas I think it was a decade earlier in his book on the first world war. I think I can fairly be called a neologist by virtue of using triumphalist in its current sense, in my History of Christianity (1976), having picked it up from the late mediaeval usage.

Theodore Dalrymple

Global Warning | 8 November 2008

Staying recently on the Herengracht in Amsterdam, I found myself trying to solve a psychological puzzle. How could anyone have thought for a moment, how could any mind have entertained even for an infinitesimal fraction of an instant, that 17th- and 18th-century Dutch domestic architecture — as elegant as any in the whole history of the world — should be pulled down to make room for buildings in the Novosibirsk style? But that, at one time, was the idea of Joop den Uyl, former prime minister of the Netherlands, whose bust is still to be seen in the city hall of Amsterdam.

Wednesday

Lucy Beresford

Scapegoats, hate figures and superheroes

Psychotherapist and former banker Lucy Beresford says we’re all in denial about our guilt for the debt crisis During the recent economic nervous breakdown, pundits everywhere put forward every possible financial cause. But they only told part of the story. Economics is also governed partly by human behaviour. So a fuller understanding of the crisis, and our reactions to it, requires psychological interpretation. Trouble is, it makes for such uncomfortable reading: like alcoholics refusing to admit our addiction, we are in acute denial about our collective guilt. It’s easy to see why people reacted to the financial meltdown by panicking. We are group creatures after all, and historically our very survival depended on being able to detect correctly the signals within the tribe.

Ross Clark

Why I’ll never be Warren Buffett

I ought to be a natural Warren Buffett. I’ve never had any difficulty doing the opposite of what everyone else is doing. If there ever was anyone capable of being ‘fearful when everyone else is greedy and greedy when everyone else is fearful’, it’s me. Why, then, is Warren Buffett worth tens of billions and I’m scratching to break even after years of investing? It isn’t that I haven’t been on the lookout for what Buffett calls ‘moments of maximum pessimism’. I have. I’ve been buying into them strongly. It’s just that there have been so many moments of maximum pessimism that I’ve used up all the cash I put aside for investing this year.

Dominic Midgley

He’s the voice of the crash, but the words are all his own

Financial crisis has transformed Robert Peston from egghead to celebrity, says Dominic Midgley, but the BBC business editor indignantly denies he’s a government mouthpiece The cover of the hardback version of Who Runs Britain?, Robert Peston’s masterly dissection of how the global economy got into the mess it’s in today, features an abstract version of the Union Jack. On the front of the paperback version published last week, however, we are treated to a portrait of the man himself. And we all know why the publishers made that change. In the past six months or so Robert Peston has gone from being the highly respected but faintly obscure business editor of the BBC to something of a celebrity.

Saturday

Johnny Reed

City Life | 1 November 2008

Moderation has never been popular in Shanghai. Over the years the city has been home to many types of excess, from opium and sing-song girls to Red Guards. At the moment the favourite is construction, and its partner, destruction. One of the newest and boldest examples of the immoderate is the Shanghai World Financial Center. After a false start at the time of the Asian financial crisis, this megalith has shot up quite suddenly across the river from the Bund. Billed as the world’s tallest building for roof height, but second to Taiwan’s Taipei 101 if you count pointy bits, this one is big by any standards.

Elliot Wilson

Chasing dragons: the Chinese army takes up art collecting | 1 November 2008

In 2003, during a long night of swilling fine French wines in Beijing, talk turned to China’s rising economic fortunes. Old China hands at the table reminisced about camel trains clattering through the capital’s dim 1970s streets. Then a mysterious American chipped in with an extraordinary tale. Back in 1983, he said, China’s coffers were so low that starving officers in the People’s Liberation Army (PLA) were reduced to selling off the country’s heirlooms. One chilly winter evening he had backed a truck into the Forbidden City and quietly loaded it with priceless antiques. Ten minutes later he was on Chang’an Avenue, weighed down with art worth more than the average bank bail-out.

Johnny Reed

In a city of extremes, skyscrapers and teenagers grow taller as shares plunge

Moderation has never been popular in Shanghai. Over the years the city has been home to many types of excess, from opium and sing-song girls to Red Guards. At the moment the favourite is construction, and its partner, destruction. One of the newest and boldest examples of the immoderate is the Shanghai World Financial Center. After a false start at the time of the Asian financial crisis, this megalith has shot up quite suddenly across the river from the Bund. Billed as the world’s tallest building for roof height, but second to Taiwan’s Taipei 101 if you count pointy bits, this one is big by any standards.

Richard Northedge

Is that a new boom on the far horizon?

The real economy has taken only the first step towards recession but the housing market has already clocked up four successive quarters of negative growth. Indeed, house prices have now fallen further in 13 months, according to the Halifax, than they plunged in the whole three years of the 1989-91 crash. And like the rest of the economy, the housing scene is still deteriorating. But for those who see the glass half full rather than half empty, from now on a series of signs will justify a degree of optimism in the housing market. We’re probably not halfway into the property slump yet, but we should be very soon — and from then on, the market will be coming out of recession rather than going in.

Allister Heath

The great downhill bicycle ride

A little over a year ago, when it was already obvious to virtually everybody that the boom was over, the City’s Panglossian crowd came up with one last, seemingly profound, argument to allow them to continue to deny reality. Going by the ugly name of ‘decoupling’, the theory was that the emerging economies were no longer reliant on exports to the West. America and Europe could plunge into recession, the argument went, but Indian and especially Chinese consumers would take over, allowing their economies to shrug off the West’s downturn. Like assumptions underpinning the boom years, this one has since been found wanting.

Paul Johnson

Here’s the secret of humour. But don’t tell the Germans.

V.S. Naipaul, that clever and often wise man, once laid down: ‘One always writes comedy at the moment of deepest hysteria.’ Well, where’s the comedy now? There is certainly plenty of hysteria. Old Theodore Roosevelt used to say: ‘Men are seldom more unreasonable than when they lose their money. They do not seek to apportion blame by any rational process but, like a wounded snake, strike out against what is most prominent in their line of vision.’ I notice that the OED, as a rule politically correct, thinks hysteria is chiefly female: ‘Women being much more liable than men to this disorder, it was originally thought to be due to a disturbance of the uterus... Former names for the disease were vapours and hysteric passion.

Saturday

Paul Johnson

And another thing | 25 October 2008

In times of anxiety, I always turn to Jane Austen’s novels for tranquil distraction. Not that Jane was unfamiliar with financial crises and banking failures. On the contrary: she knew all about them from personal experience. As a young girl she seems to have regarded bankers as rather glamorous figures. In Lady Susan, written when she was 22, she observed: ‘When a man has once got his name in a banking house, he rolls in money.’ So when her favourite brother, Henry, decided to become a banker, and set up his own bank, she was delighted. Henry was four years older than Jane. He was clever and self-assured, with beautiful manners, and a man of the world. His outstanding characteristic was optimism, and he could be relied on to spread cheer when others were sad.

Wednesday

Scott Payton

Shares that go up as banks go down

‘Whenever there’s a catastrophe on Wall Street, our business just gets better — because our products become more collectable.’ So says Bob Kerstein, founder of Virginia-based Scripophily.com, the world’s largest buyer and seller of historic bonds and share certificates. The recent blizzard of insurance and investment banking failures has brought Kerstein particularly brisk business. ‘Our Merrill Lynch certificates are selling very well, and we’re almost completely out of Bear Sterns certificates,’ he says. ‘A few months ago you could buy a Merrill Lynch certificate for about $20 or $30. Now they’re worth upwards of $100.