Yesterday’s Press Editorial welcomed the PM’s announcement on the beginning of National’s privitisation programme for our country’s assets with the words “John Key was able to demonstrate…the value of his background in the financial industry”. Excuse me? Did the Press miss the Global Financial Crisis, where “the over-paid heroes of Wall Street and the City worshipped the gods of globalisation, financialisation and speculation”? The quote is a teaser for the best of the five books I read over the summer break: “The Gods that Failed: How the Financial Elite Have Gambled Away our Futures” by Larry Elliott and Dan Atkinson. The first edition of the book was subtitled: “How Blind Faith in Markets Has Cost us our Future”. The second edition (published in 2009) has an extra chapter, which as one reviewer said could have been titled: We Told You So. The authors of this book are economics editors, Elliott with the Guardian and Atkinson, the Mail on Sunday.
The metaphor that drives the narrative is inspired by the twelve gods of ancient Greece that lived on Mount Olympus. Elliott & Atkinson have styled the super-financiers and the international organisations, (central banks, IMF, World Bank, WTO), the “New Olympians” and the twelve gods of the modern Mount Olympus: globalisation, communication, liberalisation, privatisation, competition, financialisation, speculation, recklessness, greed, arrogance, oligarchy & excess.
“Greek mythology provides plenty of raw material for a book about the failings of modern financial markets. There is the story of King Midas, who found the ability to turn all he touched into gold a curse. The tendency of markets to veer between the wild optimism of booms and the manic depression busts is akin to the life led by poor Persephone, condemned to live every six months of every year in Hades. But Pandora – a gift from the gods whose beauty belied her baleful influence on the lives of mortals – makes the best metaphor.”
As they said August 9 2007 was the moment the lid came off the modern version of Pandora’s box. And the rest is history, which is why I believe this book must be read, because unless we learn the lessons of history, we condemn ourselves to repeating it.
This book is well-researched and easy to read. It contains a chapter called ‘Last Tango on Wall Street” which has a very simple explanation of how the New Olympians (our Prime Minister’s background the Press values so highly) found ways to make money out of nothing – creating securitised financial products like “collateralised debt obligations” out of the subprime market and then hiding the risks behind AAA rated institutions. The New Olympians made personal fortunes with bonuses they never had to repay when it all turned to custard. And they were happy to see the taxpayers pick up the tab for their trillion dollar insanity.
I conclude with this quote: ‘Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation’. That was John Maynard Keynes in 1936. When will we ever learn?