I trust you’re keeping up with the various downs and downs on the current financial crisis? After Greece, it’s now Italy’s turn to come under the intense spotlight (and who’s next? Spain? Portugal? France?... perhaps then the UK?). There’s even talk of a two-tier eurozone. On Tuesday, Mr Berlusconi said that he planned to resign after failing to win an absolute majority in the lower house of parliament in a vote on the budget. On Wednesday, Italy's cost of borrowing touched a new record (if Italy now tried to borrow money, payable in 10 years, it would have to pay an interest rate of more than 7%). Robert Preston, BBC Economics Correspondent, commented: “When the implicit interest rate rises to that kind of level, investors know that a country with big debts can't afford to repay what it owes”. An Italian financier sadly acknowledged on the BBC’s Six O’Clock News that: “The markets go after the weakest”. Jon Snow, from Channel4 News, gloomily warned: “Make no mistake this is one of the biggest news stories of our generation, one of the most alarming and all-enveloping fogs of uncertainty since the build up of the second world war”.
I’ve just finished reading a book entitled “Middle Classes”. In it is a section about “The City” and the Stock Exchange in days gone by. These are some fascinating extracts:
George Verey (in the 1940s): “It was a gentler world; it was less grabbing. In my day no one picked up a million; five thousand a year was considered good money. The income mostly went on living – the upkeep of the family, holidays, school fees. There were virtually no “perks”. If you knew someone to be greedy, you saw as little as possible of them”.
…. and this (the book was published in 2002):
“The City remained curiously wedded to custom and tradition even by middle-class standards, so that when changes occurred they appeared especially striking. As with other sectors of the British economy, change began to be felt in the City in the early 1970s with the onset of recession. In 1972-3 the stock market crashed as a result of banks over-lending with insufficient liquidity to compensate. As deputy chairman of the Stock Exchange, James Dundas Hamilton recalled, ‘We used to go to visit the governor of the Bank of England every Wednesday and listen to the appalling news of one bank after another closing its doors. The Stock Exchange had a very tough time in that period’. Still more profound in the long term were the effects of the deregulation of the international money markets following the collapse in 1971 of the Bretton Woods agreement, which had underpinned and controlled the international monetary system since the Second World War. Exchange rates had previously been fixed internationally in relation to the US dollar, but from the early 1970s the system broke down and there was nothing to stop large flows of money going from one country to another. Boosted by petrodollars from the profits of the world’s oil-producing countries and by the exchange controls by national governments, new money flooded onto the financial markets over the next decade, largely independent of either world trade or government intervention. These developments had major and lasting effects…. But while these trends augmented the importance of the City of London within both the national and the international economy, they also rapidly destroyed the old-fashioned work practices and culture”.
So, we’ve seen it all before (well, almost)… except that the markets now seem to control everything in these times of GLOBAL economics, while governments appear powerless and are just left tinkering on the sidelines (or am I being terribly unfair?).
Photo: is the sun setting on the eurozone?
I’ve just finished reading a book entitled “Middle Classes”. In it is a section about “The City” and the Stock Exchange in days gone by. These are some fascinating extracts:
George Verey (in the 1940s): “It was a gentler world; it was less grabbing. In my day no one picked up a million; five thousand a year was considered good money. The income mostly went on living – the upkeep of the family, holidays, school fees. There were virtually no “perks”. If you knew someone to be greedy, you saw as little as possible of them”.
…. and this (the book was published in 2002):
“The City remained curiously wedded to custom and tradition even by middle-class standards, so that when changes occurred they appeared especially striking. As with other sectors of the British economy, change began to be felt in the City in the early 1970s with the onset of recession. In 1972-3 the stock market crashed as a result of banks over-lending with insufficient liquidity to compensate. As deputy chairman of the Stock Exchange, James Dundas Hamilton recalled, ‘We used to go to visit the governor of the Bank of England every Wednesday and listen to the appalling news of one bank after another closing its doors. The Stock Exchange had a very tough time in that period’. Still more profound in the long term were the effects of the deregulation of the international money markets following the collapse in 1971 of the Bretton Woods agreement, which had underpinned and controlled the international monetary system since the Second World War. Exchange rates had previously been fixed internationally in relation to the US dollar, but from the early 1970s the system broke down and there was nothing to stop large flows of money going from one country to another. Boosted by petrodollars from the profits of the world’s oil-producing countries and by the exchange controls by national governments, new money flooded onto the financial markets over the next decade, largely independent of either world trade or government intervention. These developments had major and lasting effects…. But while these trends augmented the importance of the City of London within both the national and the international economy, they also rapidly destroyed the old-fashioned work practices and culture”.
So, we’ve seen it all before (well, almost)… except that the markets now seem to control everything in these times of GLOBAL economics, while governments appear powerless and are just left tinkering on the sidelines (or am I being terribly unfair?).
Photo: is the sun setting on the eurozone?
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