Bullet Biting Time is Here.

I think it is time we all accepted that the structure and activities of financial markets have changed over the last 3 or 4 years and are unlikely to ever go back to the way we were during the glory days of the early 2000’s.

Come to that I have a certain degree of sympathy with the Occupy Wall Street protesters, in that some of the things happening then should not be repeated, even if we could. It would be good to see the corporate world rediscover social responsibility as one of its priorities, to go with increasing profits, personal reward and… ummm…. Well, that’s about the only two things the corporate world is currently focused on- it’s all been about personal gain.

Where I differ radically with OWS, nearly all politicians and most media comment is over the roots of the problems and abuses that sprung up.

Let’s face it- it was us. We all got carried away on a tide of cheap credit, property bubbles and dreams of ever increasing prosperity. We demanded more and more and wanted it NOW and as cheaply as possible. We never stopped to think about the future, the consequences of our actions or what we would do if it all went wrong somehow. In doing this we licensed the financial world to do whatever it liked, as long as the results included more cheap credit for any of us that wanted it, whether we could afford it or not.

Now the bubble has burst we are displaying another unpleasant human characteristic that has taken hold in recent years; that of blaming everybody else for our mistakes and refusing to admit we were at fault in any way. The concept of taking personal responsibility for our actions seems to have vanished from everyday life. I’m not saying greed wasn’t at the heart of many banks’ actions, or political decisions and I’m not proposing some sort of corporate whitewash of the culprits. I’m just pleading for a realisation that we got ourselves into this mess and we have to play our part in getting out of it.

Even more than Glass Steagall, the world is sadly missing “Caveat Emptor” as a principle for living and doing business.

We may have been rash in our personal financial strategy- but our governments have been even rasher, built of unaffordable debt mountains to a degree even the consumer hasn’t (generally_ managed. They did this to try and help economies recover; to take the load off the shoulders of the individual and, above all, with completely philanthropically based motives.

Ok… you got me… that was the waste product of male cattle. They did it to get re-elected. How’s that going for the US President I wonder? The one who still seems to believe the solution to debt is to borrow more? Currently about $1.5 trillion more every year.
Anyway, the result of these past government actions is that they can’t afford to buy us all out of the current crisis and they need a Plan B. Sadly, they haven’t even got a Plan A in Europe yet- but they do seem to be edging closer.
Biting the bullet time is well and truly upon us. Forget returning to the recent past, where communal lifestyles were largely based on paper prosperity and increases in property values- let’s return to believing that economic growth is possible based on sound principles, balanced budgets and reasonable expectations- it always used to be founded on that. Then accept it will take time to get there and there will be casualties along the way; almost certainly Greece and possibly the current EU structure (though probably not).

We will not get a solution to all European problems this weekend, but we may well get a fairly large step on the road towards one. Live with that, hope markets stop being quite so short term and emotional in their outlook (fat chance) and start to look beyond the G20 in early November , which also won’t provide final, detailed solutions. There is value out there if you believe in “too big to fail” and the fact that not every bank needs loads of extra capital to be secure. More of that little issue later this week… enjoy!