The blogs are buzzing and the papers burning: not since Diana has some many column inches been created by so many journalists and commentators. In fact (whisper it quietly) it may even surpass Diana’s death.
Of course, I’m talking about Lehman Brothers collapsing into bankruptcy, Merrill Lynch (where I once gave seminars on Desktop Publishing!) being sold to Bank of America and … who knows what about to happen to AIG.
Bad days, everyone one agrees. There’s no more ostrich-head sticking in the sand, no more “Nah .. it’s just a bad squall, it’ll pass.” No, this time it’s serious.
“A seismic event” which is “testing where the failure point lies”, according to commentators on Radio Four’s flagship “Today” programme. Note that word: FAILURE. Not often spoken even by financial pessimists.
The Crash is Upon Us
So now we can openly talk about the meltdown which is upon us. Northern Rock and Bear Stearns were something of a preamble, an appetiser for the main course of chewy, low quality beef now being served.
Will yesterday go down as “Black Monday” in homage to October 24th 1929, when the Great Wall Street Crash started? That’s up to the vanities of newspaper editors, who are a strange bunch of fish when it comes to these things.
What is for sure is that we are now in a crash which is just as great, just as spectacular and just as damaging. Nobody’s flung themselves out of a window (yet), but that’s simply because no one feels that they’ve let anyone down that badly.
What Will You Do?
Hang on a second … am I advocating that any banker or dealer who wishes to show their remorse should fling themselves off the top of Canary Wharf? No. I’m simply wondering why, in 1929, brokers felt that much responsibility and shame but they don’t appear to now?
The pay gap between people in the City and employees elsewhere in London is regularly described as being “ridiculous”. These huge amounts of money are usually justified by pointing to excessive hours or work and the stress of taking risks.
It is this enormous pay gap which draws people to work in the city, nothing else. They take the stress and long hours as part of the culture, what you need to suffer in order to earn that kind of money.
But do they take the responsibility? Are they there simply to earn stonking amounts of money so that they can, as Adam Smith put it, “walk about loaded with a multitude of baubles”?
Or are they there to invest other people’s money wisely?
Why Did You Do It?
I do not wish to offend, I simply observe. Every single worker who is leaving Lehman Brothers today, or any other institution in days to come, will be extremely worried about their own personal circumstances and rightly so.
It cannot be easy to be earning well over £100,000pa and then find your income for this month is zero. I know: I did it a few times at £50,000pa and it was very painful for both me and my family.
However, I heard yesterday of one lady whose entire pension is tied up in Lehman Brothers. Employees can go out and get another job: pensioners’ options are rather more limited.
How many of the departing Lehman Brothers employees are thinking of this lady, or the countless others who have lost their income for the rest of their lives?
Who Takes Responsibility?
As any good soldier knows, you always follow orders when they’re given. You can question, debate and discuss in the fullness of time, but in the heat of battle you just get on with what you’re commanded to do.
Business and finance work along the same lines. Your boss tells you to do something and you do it. So some, probably most, of this lack of responsibility cannot lie just with the employees.
For example, what responsibility did the CEOs of Fannie Mae and Freddie Mac take? That’s not known, but after their companies were nationalised they walked away with $9m and $14m respectively.
You cannot blame these CEOs for the turbulence on the stock markets which brought their companies low, any more than you can blame a ship’s captain for the storm which sank his vessel.
You could, however, question the captain’s judgement for putting out to sea in such bad weather (risk) or not ensuring his ship was properly maintained (liquidity).
Why?
So when corporate leaders start to talk about Corporate Social Responsibility they need to weigh those words very carefully and examine exactly what they mean.
Do they mean giving to charity, improving the working conditions of employees and communities in the developing world, engaging with NGOs and allowing their employees time out to work for good causes?
Do they mean taking responsibility for their company’s actions, promising to return salaries and bonuses should their actions end up damaging, not supporting, society as whole?
Or do they mean ticking boxes to keep the regulators and shareholders happy, an annoyance which has to be suffered in order to ensure the money continues to flow?
With a neat editorial flick of the wrist, this morning the Today Programme featured a story about various recordings of American poets which have been released. “Home To Roost”, by the new US poet laureate Kay Ryan, was one:
| The chickens are circling and blotting out the day. The sun is bright, but the chickens are in the way. Yes, the sky is dark with chickens, dense with them. |
They turn and then they turn again. These are the chickens you let loose one at a time and small— various breeds. |
Now they have come home to roost—all the same kind at the same speed. |
Picture Credit: “Sunset Road” by Tambako the Jaguar on Flickr under Creative Commons Attribution No Derivative Lisence.
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