Denial, anger, bargaining, depression, action & the financial crisis
This time last year we were definitely in the first of the five stages of grief. Denial: we couldn’t quite believe that the bankers had blown a hole below our a waterline.
A year later, economists at least, have moved on.
The Governor of the Bank of England said
The sheer scale of support to the banking sector is breathtaking. In the UK, in the form of direct or guaranteed loans and equity investment, it is not far short of a trillion (that is, one thousand billion) pounds, close to two-thirds of the annual output of the entire economy.
To paraphrase a great wartime leader, never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform.” (Governor of the Bank of England, in a speech, 20 October, 2009. )
Yes. One trillion pounds sterling, 66% of the UK’s annual GDP of 1,4 trillion pounds has been put aside to mend the hole, lest it sinks the entire ship of state.
I don’t think the man and woman in the street quite grasps the size of the hole. If they did, they would have stormed thelife-boats.
Professional economist are beginning to look at alternatives
The economists are beginning to debate seriously though.
Do we cut back hard to pay down our national debt – for which you and I must read – government debt? Should the government stop spending like we might when we’ve just had an overseas holiday and put too much on the credit card? Cut out all the luxuries till we have paid off our excesses?
Or do we need Keynesian economics to get out of this? That is, should we spend money from the center to create a ripple effect? For example, should the government spends 100 pounds on a new school, who pays the builder who pays the suppliers and who pays their suppliers who pay the supermarkets and who ultimately pays me. All of us take part and we all pay tax and don’t claim benefits?
Ann Pettifor’s talk on Keynesian economics is 20 pages long. If you are not an economist, put aside a couple of hours to get through it. It is worth the time. First, it is clearly written. You will understand the issues. Second, it is well written. It is nice to know that someone in England can still write a great speech (though she appears to live and work out of the States now).
Where are economists on the grief cycle?
So the economists are beginning to look at the facts. What stage of grief are they in? We need to know this so that we have a sense of how long the dilly-dallying will go on.
- None are really proposing action. The actions of others, yes, but not their own. But they are along the track. I would say the independent economists are around the bargaining stage – if we do this, it will be alright!
- The Governor of the Bank of England, though admirably witty, seems to be further along around the depression stage. I do hate writing that. It feels like tempting fate. It’s relevance is this. It’s important to have a sense of when we will move collectively out of the state of shock and deliberation. And it is important for younger psychologists reading this to store away a sense of how long community’s take to recover psychologically from extreme shocks so they are better able to lead when shocks happen in the future as they surely will.
We are gathering ourselves for action
We are still waiting for the leaders whose plans are not contingent. We are still waiting for the leaders who say this is what I am going to do. This is what I am wholly committed to doing ~ so much so that I don’t have to say I am committed. You see it in my eyes. You see it in my focused attention. You see it in my invitation to join me.
We have a way to go.