The Phony Financial War

January 24, 2009

70 years ago, the black clouds that presaged the outbreak of World War II were massing ominously on the horizon. When the war started in September 1939 Hitler’s blitzkrieg, culminating in the Dunkirk evacuation, was followed by months of the Phony War before the Battle of Britain really brought the battle home to the beleaguered nation.

Midge Gillies’ 2006 book Waiting for Hitler uses letters and diaries to capture the authentic voices of a cross-section of mainly English people hoping for the best and preparing for the worst during a time of unbearable tension. Some of the tales are a cross between Dad’s Army, Hello Hello, and the Boys Own-with a bit of real life spying by Ian Fleming and his brother Peter thrown in. Other extracts are from brutally honest personal letters and private diaries which reveal the anguish and anxiety of people going about their military or civilian daily round.

The Germans had their invasion hit-list of more than 2000 British subversives-poets, playwrights, pro-communists, anti-Germans and, of course, high profile Jews. (Kiwi cartoonist David Low, who poked the borax at Hitler and co, was among the “undesirables”).

So did the British government, naturally with a different focus. As soon as the expected invasion started they were set to round up Nazi sympathisers and others who might aid the enemy either directly or by causing “alarm and despondency by public utterances” which would “weaken the will of their countrymen to resist the invader” (That may have included pro-German American ambassador Joseph Kennedy were he not protected by his ambassadorial status.)

Reactions to the expected invasion, with the Germans massing just over the Channel, varied from Churchill’s bulldog determination to Cockney insouciance in the face of daily bombing raids. Some of those who could not find a bolthole through which to escape when (“not if”) the Germans landed stocked the ingredients of suicide and prepared for the worst. Others, including author Virginia Woolf, couldn’t bear the pain of waiting and took their own lives because of the dreadful future they thought lay in store.

However, by mid 1941, with the advance on Russia, German attention had shifted from invading Britain. There was a lot more pain and suffering to come, but it fell well short of the Nazification of that Sceptred Isle.

70 years later on our Shaky Isles we wait with uncertainty and foreboding for the international financial crisis, fast morphing into an economic recession or worse, to play itself out.

What is happening in the world markets is not warfare by another name and certainly not the life and death struggle of seven decade ago. But for most of us it could be our biggest challenge, especially for those politicians, economists and business managers, who scarcely recall the recession of the late 1980s let alone the oil shock of the early 70s.

Human nature being what it is people will display the same repertoire of emotions and behaviours, from denial to despair, as those waiting for Hitler a lifetime ago. We need to shift our collective mindsetting to midway between Chicken Little and Pollyanna and look for the opportunities that some grim new realities will bring.

Social amnesia

January 23, 2009

“Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so.” Douglas Adams

As a species we’re for ever blowing bubbles, especially of the financial kind.

History is littered with the burst bubbles of inflated hopes. Tulip mania, the South Seas Bubble and a series of gold rushes real or metaphorical including Ponti schemes, as practised by the disgraced financier Madoff.

The dot-com bubble at the start of this century was quickly followed by an apparently sublime bricks and mortar property market based, as we now know, on sub-prime loans not worth the paper they were written on.

In the Era of Alzheimer’s, when more people are living long enough to develop dementia, there is a parallel premature loss of social memory when it comes to the next big get rich thing.

Henry Gustav Molaison, who died recently, lost his new memories every 20 seconds because of a 1953 operation to stop his seizures in the wake of a cycling accident. After the surgery, he manifested “profound amnesia,” which rendered him incapable of holding onto an experience. Social amnesia seems to work in the same way, particularly where financial greed is concerned.

In the big exam room of the universe, those who do not remember history are doomed to repeat it.

Thanks to Adams we know the answer to the Big Question of the Universe is 42. What was the question again?