Our economy was doing quite well. Not amazingly, things were not swinging along with the degree of certainty that everyone would working inside six months, and that unemployment would not exist inside a year, and that we could all hope to be earning decent money and be able to have something to save for the future (well sadly they have McDonalds here too, and since when were their employees able to live off their earnings?).
But things were in fairly good shape and improving.
Then came July 2008. After months of rumour, the American financial system started to hit the wall. July 2008, I repeat, surname of the American President at the time, for those who have conveniently forgotten, was “Bush”. Within weeks financial companies all over the globe were running away with their faces covered. And they ought to have been ashamed.
The massive gambling (no other word to describe it, my friends) on the American property market had finally produced a whole series of losers.
If someone in the UK goes to a betting-shop, puts the value of all he owns on a horse, and the horse loses, he suffers, his family suffers, but nobody else suffers.
If banks (over whom we have next to no influence – let that never be forgotten, we are not talking democracy here!), on the other hand, do pretty much the same thing, it is not just the banks that suffer – we all go down with them!
And while we are here, let us remember that banks only survive in the first place because they get money from their investors. So, in other words, the investors’ money was being gambled away by the banks. Whether you like it or not, these are facts.
The extent of the gambling across the world can be seen by the extent of how many banks internationally would have crashed had various governments not intervened. Perhaps the most ridiculous situation of the lot arose in Iceland where all three of the country’s banks ran into impossible difficulties. A few idiots in the investment department of some banks take some extremely stupid decisions, a whole country is supposed to disappear into a hole in the Atlantic Ocean?
Yes, well ….
Let us repeat – this was not a crash in the value of property worldwide, this was a crash in property values in the United States. It was events in the United States that were affecting the rest of the globe. Their economy headed downwards sharply, ours, amidst all the others, was carried down with them.
European governments mainly stepped in to prop up their banks - mainly to protect investors from losing their money. It may not fit the monetarist playbook, but if thousands of small investors had lost their savings, then the governments involved would have had other concerns (check out events on the streets of Athens after the Greek financial crisis if you want an idea). More significantly they also took action to prevent the banks based in their countries from gambling the same way in the future. This was very much a case of locking the stable door after the horse had bolted, but anyway.
The point here though is this. Many Americans (particularly conservative Americans) will start telling us that their political system is their business (though when there is a war they need to fight somewhere, suddenly that is our business as well, for some obscure reason!). Fine! I will happily leave it like that – provided that failures in THEIR economy do NOT impact US! And for that matter I will remain indifferent to them having successes in their own economy while they are there. Everything starts to go well for them? Fine – good luck, get on with it! Jealousy and envy have never been part of my make-up.
They can do what they like with their health provision – not our problem! They end social security and suddenly they find large numbers of old people living out on the street in tents? Not our problem!
They can, as far as I am concerned, remain totally independent while we resolve, or fail to resolve, our own problems (and without help (?) from American credit agencies deciding what is the state of our economies – see Portugal recently!). Until that happens though I reserve the right to comment on their political system and the obvious failings like the ones that caused the 2008 crash. Sadly it is our business, whether we (or they) like it or not.
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