Boom and bust

Then there is Mr Wilson’s current folksiness of expression, for an example of which I go to his talk with Mr Crossman: ‘school meals, the rent, this is put behind the clock on the mantelpiece, as I always put it.’ (He presumably meant that this is how he chooses to express it, not that this is where he too puts the rent)

Alan Watkins, New Statesman 2 Feb 1973

This typically witty comment on Harold Wilson by Alan Watkins provided the basis for my own simple explanation of what funny-money financial derivatives do: they take the money which I used to keep behind the clock & use it to ease the temporary cash flow problems of a plastic bag manufacturer in China

And so on and so on, whizzing it round & round, sometimes lending it back to me, multiplying it up, until everybody is dizzy and we all fall down

It is an admirable system, much better than miserly & miserably keeping it under the mattress

It is not just a matter of dry economics or the mathematics of finance. It depends on trust & confidence. That brings in politics, society & culture.

Arrogance, boorishness & conspicuous consumption by bankers & financiers bring resentment & taunts, not least in films, books & plays

But when we – and they - get tired of their antics and decide to don hair shirts for a while, return to the careful days of old, then we get tired of the gloom and lack of growth & want a bit of pizzazz back in our lives – because we are worth it

We mean to be careful, prudent about it, of course we do. But once a boom or a bubble starts, even the most cautious begins to feel that, well, perhaps, all this disapproval of borrowing & spending, is really just cutting off ones nose to spite ones face. I should chase the highest rate for my savings, the lowest rate for my overdraft, the mortgage for that dream house and those shares in fast growing companies for my pension pot