Having seen the last blog entry of the inestimable Rob, and realising I've been a bit remiss in not updating for a whileIt's terrifying to think that such a large chunk of our economy is based on moving money around and guessing how much things that don't exist will be when they do exist. Betting is a way for an individual to make money (or more often loose money) but should not be the way a civilisation creates wealth in an abstract sense.
Everything is a bet in life. Will the crops grow? Will the film
be popular? Will we run out of water? However those are productive betting processes with aspects we can control. Will the crops grow? I'll tend them more? Will the film be popular? We'll put gunfire and titties in it. Will we run out of water? We'll conserve it. However, the Stock Exchange is a weird place. The idea that you can bet on production and make money from them whether or not they do well or badly seems such a strange concept. Essentially it seems like a farmer whose crops fail and goes, thank goodness. I had bet that they would so I've made lots of money. It produces nothing and benefits, directly at least, very few. It also, and this is very weird, it appears to underpin our entire financial system.
We are beholden to a collection of people who, when calm, bet that everything will get more valuable on the whole and then, when like oil and house prices rocket beyond the reach of most people, panic that the economy is in recession. This panic is insidious. If, on the day of the panic, the water of the Stock exchange was spiked with Valium and Prozac rather than the usual Cocaine and Caffeine then the crash wouldn't happen, or at least much slower and calmer. People panic and sell, which causes stock prices to crash, causing more people to panic and sell. I think you can see the problem here. Panic and hysteria are the motivating forces and they aren't the best ones.
Ultimately the problem affects shareholders rather than the general public – apart from in sideways effects like pension funds. The companies often stay in business. People still need umbrellas and track suits and t-shirts, but the shareholders who bought shares for £10 each and have sold for £5 have lost half their money. On the other hand, if they waited 5 years they'd probably have made money, but no-one wants to wait now.
More interestingly is that at each stage of this process the brokers tend to have made money. If we have to bail out banks and bankers to ensure economic stability we should be able to make some robust changes to the structure of the system to make it more equitable, transparent and based on something real.
Maybe the hollowed out skulls of bankers who wail that they need an income in the kind of bracket that makes most peoples knuckles itch. Really, it's probably why I'm not in that kind of business. I tend not to panic so would be useless in a system like that. Apart from wandering around telling people to calm down.
Much as I do now really. On the other hand. This might be a good time to invest in Prozac shares.
