MARKET ECONOMICS:Newsnight's economics editor Paul Mason was at the front line when the first economic bombs began to fall and, as he sees it, neo-liberalism fell apart
THE FRONTLINE club in London is where all journalists should hang out, preferably dressed in trench coats and trilbies, while lugging down a pre-lunch sharpener. Its walls are lined with iconic photojournalism from the world’s war zones and the old wooden bar looks like it’s been there since Boot was despatched to Abyssinia. The place is a paean to reporting and, more than anything in this age of Google journalism, it celebrates the importance of being there – seeing the look in people’s eyes when you ask them: ‘What happened?’
The venue was chosen by Paul Mason, who's a member and has his own tale to tell. Mason is the economics editor of Newsnight, the BBC current affairs programme, and he's written a book about the financial crisis, called Meltdown. It's stretching the war analogy to breaking point to suggest it's written from the perspective of someone who was on the front line, but you get the point.
His beat is global economics and the book is in part reportage taken directly from those extraordinary weeks last autumn when, as he puts it in his opening paragraph: “We lived through an event most of us thought we’d never see: global capitalism on the precipice of collapse, rescued by the state.”
Reporting in New York at the time of the Lehman Brothers collapse, Mason says he “quickly became aware that this was massive and it was a catastrophe and it was going to get worse”.
His television reporting was supported by extensive blogging on the BBC website (Mason’s blog, Idle Scrawl, was shortlisted for the Orwell Prize), a form he describes as a “great palliative” to TV journalists, who by definition take hours of work and squeeze it in to three-minute slots in front of camera.
The first half of the book reproduces the blog, which serves as a primer for those who weren’t concentrating at the time and introduces some of the big questions, which he attempts to answer in the latter half.
The use of his blog enabled him to get the book out quicker than most, and means the story is told at a lively pace. In the early hours of Monday, September 15th, 2008, Mason travels by train from Washington to New York, reaching the Seventh Avenue offices of Lehman Brothers minutes before the markets open, and as the news that the bank was going down breaks.
The world’s media have gathered to capture the moment, and satellite trucks vie for room with black limos waiting to take away the bank’s now unemployed executives.
"A few young guys from the trading floor pull stupid faces at the TV crews, their eyes bulging with adrenalin. . . people from other banks snap photographs with their Nokias and iPhones." Some Lehman employees emerge, their faces reminiscent of the scene in Close Encounters of the Third Kindwhen the spaceship lands: "The same stunned look as the long-lost Navy pilots. . . the world they're stumbling into has travelled decades in a single weekend. Everything they thought was certain has disintegrated."
The difference, he says, between this and previous recessions is the integration of high finance into “ordinary life”, which makes the impact of the financial dysfunction far greater.
“The impact of September 15th was being felt by the end of that week in the local pub and, on the high street, I’d bet that spending started to fall almost immediately. At the micro level it was true that people found it more difficult to get a mortgage,” he says.
“Money and finance are great transmitters of sentiment in a way that economics is not. If I think, tomorrow I won’t get any more on my credit card, I will stop spending immediately.”
The book progresses from “Meltdown Monday” through the major landmarks of the crisis: the AIG bailout, HBOS, the failed TARP vote in Congress and everything in between,
The global nature of the events revealed the local interests of the media he says: “While I was covering Bradford & Bingley, European journalists were covering Fortis. Fortis didn’t even get mentioned in London on the television news and you had to dig deep into the papers on that second Monday to even find any reference to it, but it raises issues about the transnational nature of banking and the role of the European regulator.”
History, he says, will judge harshly the slowness of the reaction of policy makers. “I was talking to policy makers and their advisers and they didn’t know what quantitative easing was,” he says.
“Three days after it started, I was talking to people in finance who were telling me they [the governments] had to nationalise the banks, write off the debts and print money like we’ve never seen. They told me, ‘it’s called quantitative easing and if I were you I would look it up’. So, being an obedient journalist, that’s what I did.”
He was struck by the “level of cognitive dissonance” at all levels of government, who knew no other solution than that offered by the free market, and he is equally scornful of the Third Way. “The great un-admitted truth about this crisis is that it proves that the Third Way doesn’t work. None of these governments, except those in eastern Europe, were rip roaring free-market capitalists. They had all accepted that limits needed to be put on the free market. But the form that those limits took meant that social objectives were imposed everywhere except finance. Finance was left alone. This was because they don’t understand it and not many politicians come from that world.
“Their approach was: ‘We don’t care what you talk about on your yachts in the Caribbean, but just keep providing the tax dollars.’ That was the deal and that has collapsed.”
Why did they not nationalise immediately? “Because they didn’t want to admit that the game was over.” The game, in this context, is the free market ideology of neo-liberalism.
The second half of the book slows the pace and attempts to analyse what has happened. By Mason’s own admission, the speed at which the book has come to market makes this job difficult. His main thrust is that the crisis signals the end of the era of neo-liberalism, the free-market dogma that has defined the last 20 years.
Neo-liberalism, he says, has brought five negative impacts: inequality in the developed world, the rise of personal debt in Anglo-Saxon economies, redistribution of profits from non-financial to financial sectors, growing personal and financial insecurity and what he calls the ‘relentless commoditisation of aspects of human life’.
Put more succinctly, he paints a bleak picture. “Borrow big time, negotiate your own salary, duck and dive, migrate if you have to. . . but lock your door at night. And let your hair down. They can treat you like shit at work, but they can’t tell you who to sleep with, or what time the pubs close any more.”
