Monday, 11 May 2009

"The international economic system didn't work - and it didn't work in very dangerous ways."

As The Observer's Will Hutton and the Financial Times's Martin Wolf took to the stage of the Old Theatre at the London School of Economics today, in order to revisit their discussion from last October on the 'Global Financial Crisis'the combination of a constant bed of ebbing, drifting mid-frequency feedback and the vocal science of Hutton's impression of Ronnie Barker in Open All Hours, leant the discussion as much musical interest as intellectual. What Wolf and Hutton both agreed on was that, though the governments of the 'core' economic nations seemed to have learnt something from previous recessions, and in acting quickly and co-operatively in a concerted international fashion, in stark contrast to the London conference of 1933, may have prevented a crisis on the scale of the great depression; they have nonetheless apparently failed to learn anything from this recession. "We have not" claimed Hutton, "taken the opportunity to restructure the banking system at all." They predicted a period ("maybe a few months..." chimed Wolf to much laughter) of greater regulation, but otherwise, thanks largely to the enormous lobbying power of the finance industry and the extraordinary ignorance of politicians with regard to financial systems, it remains business as usual. While politicians crow about the risk of losing City 'talent' if hedge funds were more tightly regulated, Hutton demands, "Why do we need them?" and pours scorn over speeches by Brown (but also, and even more enthusiastically, Cameron and Osborne) as little as two years ago, that held up the 'innovation' and 'creativity' (a delightful euphemism for fraudulence) of the financial sector as a model for all other industries. Now the banks, as they said on Bloomberg, are back, kept afloat by our money, but fundamentally unchanged, because the only people consulted on the future of the banking industry were bankers, the very people responsible for the collapse. 2007 levels of growth may well return by 2012 and we in the UK almost certainly will weather this storm a lot better than, say, the urban poor of India, nonetheless, all the while we are sewing the seeds of the next crisis. And so the trillion pounds of bail-out the banks have now received is really little more than that flurry of activity, diagnosed by Zizek, whose object is precisely to make sure that nothing happens.