The masters of the universe don’t know what they’re doing. Even after they poured out of their Brussels bunker at four am last Thursday shouting “Rejoice! Rejoice! The Eurozone is saved!” they still couldn’t explain what exactly it was that they’d agreed.
Half of the smart people who understand these things declared that the Brussels agreement was a positive development. It was reported on BBC next morning that the Markets, which had been “ailing”, were now “feeling considerably more comfortable”. Sitting up in bed taking light nourishment, as it were.
The other half of the smart people maintained that this was sheer illusion, that the Markets would see through the jiggery-pokery soon enough, that far from the future looking brighter, the prospects were gloomier than ever.
Among the questions which arise from all this is: Who are the Markets?
Every night on the news we hear that the Markets believe - or more often don’t believe - that the latest emergency measures will work. The Markets have either “rallied” or “remain unconvinced”. The BBC’s admirable Stephanie Flanders told us recently that the Markets had “decided to wait and see” how some decision by someone would work out. Early last week, one commentator told us that governments on both sides of the Atlantic were waiting “nervously” for the Markets’ “verdict” on the Brussels summit.
So the Markets can evidently make decisions, judgments, experience mood changes. But who are they? Where are they to be found? Why aren’t they on Newsnight being given the third degree by Jeremy Paxman? Perhaps asking the question that Mrs Merton once chickened out of putting to Jimmy Hill: “Why the long face?”
Or are the Markets a force of nature? Not gloomy or bright in a conscious way but in the way the weather can be gloomy or bright? Are the folk presented to us as “experts” just the equivalent of weather forecasters - or even the sort of fools who take astrology seriously? Are they just reading mysterious runes and making a stab at foretelling the future?
Hardly. Because the Markets have enormous power which they can decide for themselves how to wield. And their decisions, according to Will Hutton of the Observer, “can be brutal”. One result of the Brussels meeting was acceptance by Silvio Berlusconi that his government will have to raise the pension age to 67 and cut public sector pay. Both parties in the Italian coalition had promised the people they would do no such thing. But the Markets, in Paul Mason’s phrase, had apparently made it clear they would “punish” Italy if Berlusconi didn’t renege. And that was that.
Berlusconi may be a toxic clown who preys on women a third of his age. But he is the democratically-elected leader of the country - a circumstance which, obviously, doesn’t impress the Markets one bit. The Markets will brook no disobedience from uppity governments.
So, again, who are the Markets and where are they to be found? Strangely enough, they are not difficult to identify. But they are difficult to find. They are hiding behind distorted concepts, junk language and cloudy jargon deliberately designed to bamboozle the rest of us.
The phrase ‘the Markets’ refers to hedge-fund managers, the bosses of investment banks, holders of mortgage bonds, collateralised debt obligations, credit default swaps and so on.
Mortgage bonds are created when thousands of mortgages are bundled together and the aggregate then divided into chunks for sale. This is a risky business, since nobody can say for certain what bits of which mortgages are included in a particular set of bonds.
Collateralised debt obligations are riskier again. These are chunks of bundled-together mortgage bonds, the value of which has by now become near-enough impossible to determine.
Credit default swaps are insurance policies taken out as protection against the possibility of collateralised debt obligations turning out to be worth less than the holders had hoped. These policies, too, can then be bought and sold.
In addition to holders of these exotic entities, the Markets include straightforward currency speculators and the bosses of major insurance companies and pension funds who have leased out billions in shares in their own institutions for others to buy and sell bonds, obligations, swaps and so forth. And the banks, who are both players in the game and facilitators for the other players.”
Mad as it might seem if matters were not so serious, the supposedly objective ratings agencies have frequently allocated triple-A status to these slices of bundles of junk, thus to keep the merry-go-round whirling. As Will Hutton noted a few weeks back: “The financial system has become a madhouse.”
When the madhouse system begins to crash under the weight of its own contradictions, it is shored up by the tax-payers of the countries concerned and pensioners and the working class generally, particularly workers in the public sector.
This is grossly unjust, in that people who have never been players in the casino of financial capitalism are left to pick up the tab for the gamblers’ losses. It is also an insult to democracy. There is no way to vote for change in the way the Markets are operating. None of those running the system has ever been elected, and so cannot be unelected. But they can hand out orders to every section of society.
The choices before us are few. Do we do as we are told by governments which have been told what to do and bow our heads to the bad times about to engulf us? Or do we recognise that conventional democracy has become a dead letter and take to the streets and occupy everything?
The time to choose is drawing nigh.
Read more from Eamonn McCann in the Journal every Tuesday