Brave New World

Mad Max time, baby 19/05/2009

A journalistic and typically rambling but fantastic essay in this week’s New Yorker  on the financial crisis. It shares my scepticism about the recent rally, which I believe is a false dawn. The article, which relies heavily on interviews with senior market practitioners, focuses on the scale of the current crisis and changes that need to take place before the world economy returns to stability. This is a slow lingering cancer that marks the end of US economic hegemony, the end of the US dollar as the world’s reserve currency, the end of our modern day Western reliance on leverage, and a fundamental change in Western society- and that doesn’t touch on difficulties associated with that change.  This is seriously worth a read.

“Mad Max time, baby,” the financier said, before double-checking that the mute button was indeed on.
The voice went on, “If the long bond starts rising, we’re done. That’s the Armageddon scenario.” Someone mentioned a jobless rate of up to twenty per cent. “How awful is that going to be?” one voice said. There ensued talk of riots in China and Greece, and the relative merits of gold and canned food.
There was no anxiety or even amazement in their voices, just a kind of war-room self-satisfaction. A voice said, “Capitalism without bankruptcy is like Christianity without Hell.”
The financier had heard enough. He was eager for some air. Without signing off, he grabbed his coat and walked out. The streets were busy; nothing seemed amiss.