No one knows what will happen in the financial sector over the next month, it seems.
Heck, I’m writing this column on Monday morning. By the time this hits print on Thursday, anything could have happened! Maybe more banks will have failed! Maybe a major cryptocurrency exchange will have blown up! Maybe Elon Musk will only be the third or fourth richest person on earth!
I suppose I should go on some long rant here about how bankers should have seen this coming, how we’ve had months of high inflation and rapid interest rate increases, and all those people at Silicon Valley Bank and Credit Suisse who are paid to be very smart about managing market risk really screwed up, didn’t they?
But I just don’t have it in me.
In the course of my adult life, I’ve been through so many of these financial implosions that I am no longer surprised.
No one knows what they’re doing.
Consider that since I graduated from high school, I’ve lived through the Asian economic crisis, the dotcom bubble, the brief financial chaos after Sept. 11, 2001, the Great Recession, the rise (and fall and rise and fall and rise) of Bitcoin, the brief mass layoffs and turmoil caused by the COVID-19 pandemic, the NFT boom and collapse, wild swings in energy prices after the invasion of Ukraine, and now, high inflation and steep interest rate increases.
What I’ve learned from this is that the people running our financial systems are wild-eyed optimists with the long-term memory of a stunned goldfish.
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If you designed a car that worked like our economy (the wheels abruptly falling off every two to five years), it wouldn’t be allowed on the road.
But we actively reward the bankers, hedge fund managers, and various other rich people who keep blowing things up. They’ll get more bailouts and go on to other lucrative jobs, even the ones who just melted their own banks into slag.
Now, you might say that overall, the Canadian and world economies have grown over the last 25 years. Sure, there are recessions and dips, but GDP continues to rise!
Which I’m sure is great solace to the people who are ruined along the way – unemployed, bankrupt, evicted, homeless – because some clever finance dweeb got a little overenthusiastic with mortgage backed securities.
Are we going to “fix,” this latest problem?
Probably, in the sense that there will still be banks in a year. But a whole bunch of lower-level employees, particularly at technology companies, are going to have some tough times for a while. Their bosses will be okay, I’m sure.
It’s not that I don’t have any faith that we couldn’t build a better financial infrastructure, one that protected the poorest first, that allowed for growth with fewer sudden shocks and reversals.
I’m sure we could!
But none of the people in power are interested in doing that. It might mean slightly less staggering profits. Can’t have that, can we?
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