Thinking about the financial crisis

I am taking this opportunity to think out loud. I don't know much about finance: what I know I learnt mostly in the past month. Beyond the prospects of a recession or even depression, there are questions of history and politics that I am thinking about.

In the last fifteen years' debates on globalisation and its discontents, I can't remember anyone mentioning finance as a serious issue. The evils of multinational corporations, the harsh realities of migration, imperial wars and neo-colonialism, the spreading epidemic of neo-liberalism: all these are well familiar by now. Certainly the transfer of wealth and dispossession were discussed. But not the implications of an unregulated global financial system. We all have been looking at the real effects: the degradation of our environment, the exploitation of people, resource depletion. But the greatest Ginnie of them all, the global credit bubble and its financial weapons of mass destruction, seemed to have escaped us.

In retrospect, it comes as no surprise that financial systems were among the most daring in this brave new world. Unlike goods or workers, capital weighs nothing and does not need passports to cross borders. It's transparent, fluid, and always eagerly received. There are fewer and fewer limits on its circulation, and the limits that are still in place have been circumvented by the new forms of non-state money - the whole array of innovative financial products that very few seem to understand, and whose total value is now more than ten times the size of the global economy.

Speed is a key factor, and one of the things that make this crisis different from previous ones. Today all it takes is a laptop and a wireless broadband connection to trade in the world's stock exchanges. With so many people online, and very few out of reach of a mobile phone, the effects of information and news are almost immediate. Crises unfold in hours, rather than in weeks. Stampedes become deadlier.

Deregulation enabled the financial sector to consolidate its grip on capital. Money always passed through bankers' hands, and was very much created by them. But in the last twenty years their aspirations grew and grew. If you wanted to become filthy rich, the best way was to be a banker, a solicitor, or a real estate developer. My guess - I do not have the numbers to back it up - is that more and more, bankers and their associates, not industrialists or retail magnates, are the alpha males of the capitalist class.

This is important at a moment of crisis. Governments say they are bailing out the banks because without them, this economic system would collapse. And it is no doubt true that the capitalist economy cannot function without the financial sector. But the bankers' main point is different: it is to ensure that they don't lose out. There is an obvious contradiction there, and the issue is far bigger than yearly bonuses. The crisis is still unfolding and could get much worse. To expect governments in liberal states to protect the large public, or even the middle class, is to expect them to turn against the bankers - an unlikely scenario. At times of crisis the state does not turn against the most powerful class; it follows its orders. Certainly not in our day and age - when the demise of trade unions left no real opponent in the ring.

But even if governments wanted to do something about it, it is questionable if they could, because of the global nature of the Ginnie: no one government could put it into the bottle. There were indications of this in the last few weeks, when capital outflows brought states to their knees within days (Iceland, Hungary, Ukraine, Pakistan). The frightening weakness of global frameworks is exposed, they are slow and ineffective, with endless discussions and concerns over loss of national sovereignty. At the same time, the strongest global players - the world's banks, insurance companies and co. - are making the notion of sovereignty a sad joke.

Two days ago I saw a couple shoplifting. I used to have this somewhat-glorified image of the professional shoplifter as cool and nonchalant, like magicians, with a sleight of hand, expensive merchandise ending up in their bags. Poof! Now you see it, now you don't. But whenever I saw shoplifters in shops they didn't look anything like that. They were nervous and hysterical, their movements obvious and hasty.

First I saw this guy, looking almost elegant with his faded jacket, walking around in circles in front of the shop. His eyes were full of fear and agitation. Then I noticed the woman who was going in and out of the shop, bringing goodies in her coat. He was on the verge of losing it, but she kept going inside, bringing more and more. I think it was expensive perfume they were after. No sleight of hand involved, just take and take, grab and grab , before it's too late. They were just taking advantage of the toilet break of the security guard who I believe could not care less.

For the past week, the British mainstream media has been busy discussing a story of foul-language prank played by two BBC radio broadcasters. I don't buy the newspapers but I see them lying on the streets, and read the headlines as I cycle passed shop fronts. So these are the front pages: Will the broadcasters they be suspended? will they resign? will they... whatever? I don't even know what the whole fuss is about (I guess the use of words like fuck and cunt before 8pm).

I cannot express my amazement at this trivial pursuit while on the edge of a precipice. Here we are on the verge of a deep recession, possibly a depression, the collapse of an economic paradigm, and this is what they talk about? Here we are, with a new report backed by Virgin and other companies saying we are five years away from peak oil - but let's talk about foul language, and BBC policies, and celebrity bad boys.

Is this burying heads in the sand? A symptom of denial? Or a truly provincial navel-gazing attitude? I'm not sure.