I have a friend whose reaction to the economic crisis has been a touch eccentric. She sleeps with a large wad of banknotes stuffed in a sock under her mattress – not because she thinks this keeps her savings safer, but simply because stashing away a tangible chunk of real solid physical cash gives her an invaluable sense of security.
It’s this psychological element that formed the theme of What We Learnt (If Anything) From the Economic Crisis on 3 March. Money just seems so ethereal, somehow.
“Can anyone actually visualise a trillion dollars?” asked Gillian Tett, the newly-appointed US managing editor of the Financial Times and author of Fool’s Gold: How Unrestrained Greed Corrupted a Dream, Shattered Global Markets and Unleashed a Catastrophe. Not only crisply astute on fiscal matters, Tett also trained as an anthropologist, which gives her a particular insight on the weird effect economics has on us. Casting bankers as, in the public imagination, “aliens invading the earth”, she emphasised how separate the world of finance was from the rest of society, even in the boom years. “Bankers were living on a mental island, and a physical island – they were all on Canary Wharf,” she said. And the rest of society had to take responsibility, too. “There weren’t enough people asking tough questions.”
People are so easily lured into a false sense of financial security, a stunning example being Bernie Madoff, whose fraud was as psychological as it was devastatingly financial, said Adam LeBor, author of The Believers: How America fell for Bernard Madoff’s 65 Billion Investment Scam. One of the hardest interviews LeBor said he’d ever done was of a former Madoff investor. They sat in his Upper East Side apartment as it was being packed up around them – the interviewee had lost everything he had to the Ponzi scheme. Slumped in his chair, the man told LeBor how, once a twice a year for 30 years, he and his wife had gone out for dinner with Madoff and his wife. That was what he found so unbelievable.
How astonishing, LeBor agreed, to be able to know a man for three decades, to look into his eyes, to share dinner and conversation – and still to rob him of everything he had. Similarly hard to believe, he noted, was the blind and illogical trust investors had in Madoff.
Was the moral of the tale, asked chair James Harding, the editor of the Times, not to fear what you fear – but to fear what you want?
Cue Oliver James and a lengthy rant about the evils of Thatcherism, neo-Liberalism, consumer junkies, all delivered in a breathless acerbic rush, his voice occasionally squeaking in indignation. When economic growth ran out of control, it became a cancer, he warned, and a contagious one at that. Consumerism was making us miserable, said the author of Affluenza, coming close to predicting an emotional Armageddon. “There’s going to be mass unhappiness,” he declared.
“Sometimes life is profoundly uncertain; and most people in the West haven’t seen that in their lives.”
If anyone wanted a happy ending, they waited in vain. The best solution James could come up with was for our economy to become “Denmark-shaped” – although he acknowledged that might still leave us emotionally bereft.
Tett gave it to us straight – our troubles have only just begun. We’ve had the banking collapse and the economic crisis; yet to come is the true social impact. The critical question that society now faced, she said, was “how do we share the pain without all killing each other?” In the UK, she asked, “do we have a government able to deal with extreme social tensions?”
What we have experienced up to now, the panel all agreed, was akin to a phoney war. The calamity yet to come could be both as unexpected and as far-reaching as the collapse of the Soviet Union.
It all left me thinking that maybe my friend is right to hide a sockful of cash under her mattress. It might not put off financial ruin but in such times of uncertainty, a nice comfy lump of money might be just the thing for a sound night’s sleep.
Daniella Peled is a former foreign editor of the Jewish Chronicle and is editor of the Institute of War and Peace Reporting.