A world crash. So, what next?
It was a momentous week which rocked global capitalism. As investors panicked, markets crashed and banks collapsed on both sides of the Atlantic, regulators and politicians mounted the most audacious financial rescues in living memory. This weekend an uneasy calm returned but as fears of turbulence continue can the economic wellbeing of Britain and the US ever be the same again?Heather Stewart, Tracy McVeigh, James Doran and Gaby Hinsliff
The Observer, Sunday September 21 2008
At the heart of London's Docklands, once a mouldering reminder of Britain's history as a great trading nation and now a gleaming glass and steel symbol of the might of global finance, the Canary Wharf offices of American investment bank Lehman Brothers - a name few people would have been aware of until a week ago - has suddenly become a stop on the tourist trail. A group of business people over from China on a training course have stopped to stare and have their photographs taken.
'It is very shocking. We are here and it is very dramatic,' says a young woman among them, but she is interrupted by a Lehman security guard who charges over. 'You can't take photographs here, bloody gawpers!' he says. The group race off immediately, heads down, and the guard turns back muttering about their lack of respect for other people's misery.
In New York, too, the 'gawpers' thronged to Lehman's headquarters in their hundreds to watch history unfold. On both sides of the Atlantic throughout the past tumultuous week, from Lehman's catastrophic collapse on Sunday night to US Treasury Secretary Hank Paulson's promise on Friday to spend 'hundreds of billions of dollars' of American taxpayers' money to ride to the rescue of the banks, there was a profound sense of world-changing events unfolding at breakneck speed.
Exuberant investors may have piled back into the stock markets on Friday, welcoming Paulson's mooted corporate aid package, but few believed anything would ever be the same again. Behind the anguished yells of disorientated City traders watching the markets oscillate from depression to mania and back again, and the macho insistence by Gordon Brown that he was in control of the crisis, something else was audible throughout - the sound of long-cherished truths being smashed to smithereens.
Financiers in New York and London's Square Mile have enjoyed an extraordinary decade of global dominance, blowing unthinkable sums on yachts, racehorses and fine wines. Not only did they convince themselves of their own invincibility, but their glamour and sheer wealth blinded politicians into believing the alluring myths of the unfettered market.
For Brown, who made it his mission from the early 1990s to woo London's money men, the reward for making sure regulators had a light touch and that taxes were low was a decade of turbo-charged growth, and the right to boast that the economic cycle of boom and bust was over. ......(more)
The complete piece is at:
http://www.guardian.co.uk/business/2008/sep/21/marketturmoil.banking2