A welcome for bankrupt banks: the idiocy of market fundamentalism
The billionaire investor, Jim Rogers, has been in the news today telling anyone who’ll listen that they should sell sterling. Leaving that aside, if you wanted an indication of how out of touch market fundamentalism has become, you could do no worse than listen to the interview Rogers gave to Radio 4’s PM programme today. This brilliant investor’s solution to the current crisis is to let all the banks go to the wall. But fear not, he reassures us, things will be rough for a couple of years but then private capital will rush in and we’ll all be tickety-boo. Essentially, leave it to the market to flush out the bad debt and start from scratch again.
Maybe I’m naive but I just don’t understand how an American who must be reasonably intelligent and knows a bit about finance hasn’t heard of the Great Depression and the rather serious events that flowed from it. Certain economists and investors might think that the world works in neat compartments and that the market always provides an efficient solution when left to its own devices but the key lesson of the Depression (which the New Right forgot) was that economics is intimately bound up with politics, psychology, international relations and a whole host of other human phenomena. The massive human cost of letting the big banks collapse would have intense and unpredictable consequences for all these spheres which would, in turn, have intense and unpredictable influences on the economic outcome itself. Life isn’t an equation, Mr. Rogers.