In between stacking away loungers and finding things that dropped behind sofas last May, I have today been glancing on and off at the continuing evidence – as this, the greatest, slowest global catastrophe in history draws inexorably towards something or other as yet unknown. I must say that I remain in awe of all those people working tirelessly every day to interpret every last scintilla of information: staying ahead of the curve, as Mr Geithner often says, so that we don’t have to. Without them where would be? Lying on a beach somewhere not worrying at all, I’d wager….and how silly of us that would be.
In the United States, for instance, the new payroll data came out to show that 103,000 new jobs had been created there. This is splendid news indeed, even if they represent only 0.007% of the working population. Every journey, as Mao Tse Tung or Moishe Dung or whatever he’s being called this year once remarked, starts with a first step.
Who knows, this might well be America’s First Step back on the road to recovery. Certainly, Wall Street thought so, and thus heads that had spent some time of late in hands were raised up to smile at the ticker-board showing gains right across it. It fell to one or two detectives paying attention to point out that half the gain came from workers who had been on strike, not unemployed; and the unemployment rate remained exactly the same – 9.1%. For those of you suffering from challenges in the left cranial hemisphere, what this means is that, net, the US lost 51,000 jobs over the month. That’s around 600,000 a year, and suprisingly enough, six million over a decade – should this trend continue.
Working on Poppins’ Law, however, the market decided this was good news, in that the news could have been so much worse. After all, had the San Andreas fault moved half a mile – and it is at least fifteen years overdue for such an excursion – San Francisco would now be halfway to Japan, and underwater. And anyway, the market must decide. As in, be decisive. The EU has demonstrated comprehensively in recent months that making a decision – any decision – can be better than doing nothing. Less clear is whether coming to the completely wrong decision based on the payroll data was that good an idea. But we’re getting into analysis paralysis here, so let’s move on
There are very few people who work harder than diplomats – a group of public servants dedicated to the selfless use of selective data in order to make the very best case they can for their fellow-citizens. It can at times be hard to tell precisely which set of citizens they represent (especially as at least 12%, it appears, are at any given time double agent spies)…..and even harder to tell in the European Union, due to the as yet ill-defined relationship between national and Union needs. But either way, you have to get up very early indeed to catch a diplomat out, and this was demonstrated yet again this morning when Franco-German diplomats – entirely off the record, of course – admitted modestly that they had ‘detected a split between German Chancellor Angela Merkel and French President Nicolas Sarkozy over how any strengthening of banks should take place’.
I think we should all step back at this point and just think for a minute about the number of reports, sources, lunches, signals and thinking caps these foreign service personnel will have had to go through in order to reach that conclusion. One can only admire the willpower required to eschew the lazy way out – reading newspapers and watching the TV news now and then – in favour of rigorously seeking out whatever real truth lies behind the obvious, if any.
The same is clearly true of credit rating agencies. Often accused by political leaders seeking the electorate’s confidence of having something of a hair trigger in matters of safety judgement, Standard and Poor’s today showed just how unfair a stereotype this is by downgrading the core banks of Franco-Belgian financial group Dexia. Some might argue that, in such a case, never might have been preferable to late; but you see, these people have to be sure they’re absolutely right. All it takes is one panicky decision by somebody like President Sarkozy to throw 150 billion euros at Dexia – after perhaps mistaking Carla Bruni’s Colombian brand talcum powder for his smelling salts – and before you know what’s happening, all the French banks are falling over. And we certainly don’t want that. Well, the French don’t anyway. ‘Better safe than sorry’ should be every credit agency’s motto. And in that light, I say “Good for S&P”: only when they were absolutely sure that every last Gallic bank was a complete Croque Monsieur did they declare Dexia a bit sick. That’s what I call having a sense of social responsibility.
As Mr Cameron said in his epoch-breaking speech of earlier this week, “we need to tell the truth about the overall economic situation”. So often in his career to date, the Prime Minister has hit the nail on the head in this manner. But in the same speech, he also noted that “The new economy we’re building must work for everyone”, and for me this was one occasion when, with clinical accuracy, he rammed a nail into his head.
In many ways, I feel the same way about Alan Greenspan, a man who was years ahead of anyone else…..in that he knew exactly where all this credit insanity would lead in the end. He knew it in 2004, when lesser mortals were still talking with commendable optimism about A New Paradigm. But being modest by nature, Mr Greenspan kept his counsel. This time around – to be precise, yesterday in the FT – he has decided to be both more open, and less late, in pointing out the various data ‘suggesting that the higher labour costs and prices have rendered “euro-south” less competitive and so more subject to credit risk’ than euro-north. Except that this time, Alan Greenspan’s forensic detection skills add up to not so much hitting the nail on the head, as putting the last nail in a coffin closer to being exhumed than buried.
We owe, all of us, a debt to every one of these groups, companies and seers for showing us the way forward. Indeed the debt we owe can never be repaid. Our children and great-great-great grandchildren will still be paying this debt at the end of the 21st Century. This – more perhaps than any other single thing – will be the legacy they leave behind them.