Keep calm and carry on as financial crisis looms
by Matthew Norman
Posted August 5, 2011
The ominous rumbling of an impending economic meltdown has echoes of the ‘phoney war’ of 1939-40.
As I settle down in my west London shed to write whatever arrant rot will ensue, the sun is out, the air is autumnally crisp and a lawnmower chugs away a few gardens along. This suburban languor reminds me of the opening scene of Hope And Glory, John Boorman’s enchanting filmic memoir of his Second World War childhood, in which the mowers fell silent for a few minutes one late summer Sunday morn in 1939 while Neville Chamberlain spoke to Britain through the old crystal set.
Those of you who were children then will, like my parents, remember it from life rather than cinema, and probably recall verbatim the Prime Minister’s words. “I have to tell you now that no such undertaking has been received,” said Chamberlain, “and that consequently this country is at war with Germany.” Then the dads returned to their mowers, mums to preparing the Sunday roast, little girls to their dolls, and small boys, who would soon enough be collecting hot shrapnel from bomb sites, to their cricket.
Life for the Boorman character went on, little changed, after the PM’s doleful address, as it would through the following months of misleading tranquillity until the bombs began to fall. But in the chasm between Chamberlain’s portentous speech and its surreal background of suburban normality lay such ominous dread that even a seven-year-old instinctively grasped that horror was approaching.
This is a little how the mounting economic turmoil feels to me now. That lawn is being mown, a neighbour is vacuuming her sitting room, and somewhere within earshot a toddler is squealing expectantly at the first notes of the ice-cream van. The urban symphony comes no more soothingly mellifluous than this. But even to someone like me, who might as well be seven for all he comprehends of macroeconomics, a distant air-raid siren pierces the serenity.
Exactly what manner of blitzkrieg is coming no one can confidently predict, but whatever it is now seems driven by an internal dynamic that renders it unstoppable. Terrible things are happening on money markets here and in far-away stock exchanges of which we know little.
A few weeks after smug European leaders grinned their “peace in our time” grins after supposedly rescuing Greece, the Panzer divisions of the eurozone sovereign debt crisis are closing in on Spain and Italy. Even brave little Belgium is threatened, and whatever passes for the European Central Bank’s version of a last line of defence proves a Maginot Line against the contagion. We cannot turn to America this time. America, which started it with a little help from us, is as broke as we are, and possibly about to double-dip her toes in the icy waters of recession.
Everyone agrees that none of this is good, but without agreeing on quite how hideous it is or will become. If it isn’t quite September 1, 1939, is it 1931, when a second banking crisis in the US began the great Depression that laid the ground for the global war to come? Is it pre-credit-crunch 1997, when the catastrophe threatened by insolvent banks was narrowly averted? Is it 1940, with Keynesians ousted by (Corporal) Jonesians, whose notion of preparing for the invasion of financial mayhem from across the Channel is to charge around cutting spending while yelling “Don’t panic”? Or is it, in fact, 2011 – a cataclysm without any precedents from the age before globalised markets rendered all forms of national self-protection useless against a financial tsunami?
Different economists have their different views, of course, and it is at moments such as these (not that there have been any quite like this in the lifetime of anyone under 80) that I wish I’d studied economics rather than classics… for precisely two seconds. Then I remember the only law of economics worth knowing: if 79 economists offer their opinions on anything, that equates to 340 wrong opinions.
Ignorance may not be bliss, but just look at the results of its polar opposite. Who knew more about economics than Alan Greenspan, that goliath of the US Federal Reserve, and our own beloved slayer of boom ’n’ bust, Gordon Brown? If Anthea Turner had run our Treasury, and Joey from Friends had been seconded to take control of the Fed, could things be any worse?
They could, of course – and barring a miracle, they will be. So I also remember the advice of Horace: “carpe diem, quam minimum credula postero”. Which translates, according to the Pseudo-Loeb edition of his Odes, as follows: “Seize the day, because with what minimum interest rates and surging inflation will do to your savings – not to mention where crashing stock markets will leave whatever remains of your pension pot – you won’t want to touch tomorrow with a 50ft titanium pole.”
The problem with hedonism, for all its diversionary appeal, is that it requires courage and commitment. While there is the faintest chance that the crisis will blow over, living quietly for tomorrow is easier than living riotously for today. So the lawnmower throbs away and the mother tells her toddler to stop nagging for an ice cream, while political leaders and the international money markets do their impression of the face in Munch’s The Scream.
We will, so it seems, be needing that old Blitz spirit again before long. For now, the phoney war endures.