How Mumbo-Jumbo Conquered the World: A Short History of Modern Delusions. Francis Wheen

Чтение книги онлайн.

СКАЧАТЬ in the next twelve months. Others put their trust in the so-called Super Bowl Theory, which held that the stock market always rose when a team from the original National Football League won the championship. And why not? The theory had been vindicated in eighteen of the previous twenty years, a more impressive success rate than conventional forecasting methods.

      Against the madness of crowds, Friedrich von Schiller once wrote, the very gods themselves contend in vain. What hope was there for mere mortals wishing to understand the logic of a bull market that seemed unaffected by sluggish economic growth and a decline in business earnings? To quote Galbraith again:

      Ever since the Compagnie d’Occident of John Law (which was formed to search for the highly exiguous gold deposits of Louisiana); since the wonderful exfoliation of enterprises of the South Sea Bubble; since the outbreak of investment enthusiasm in Britain in the 1820s (a company ‘to drain the Red Sea with a view to recovering the treasure abandoned by the Egyptians after the crossing of the Jews’); and on down to the 1929 investment trusts, the offshore funds and Bernard Cornfeld, and yet on to Penn Square and the Latin American loans – nothing has been more remarkable than the susceptibility of the investing public to financial illusion and the like-mindedness of the most reputable of bankers, investment bankers, brokers, and free-lance financial geniuses. Nor is the reason far to seek. Nothing so gives the illusion of intelligence as personal association with large sums of money.

      It is, alas, an illusion.

      During the South Sea Bubble of 1720 investors hurled their money into any new venture, however weird its prospectus: ‘For extracting of Silver from Lead’; ‘For trading in Human Hair’; ‘For a Wheel of Perpetual Motion’; and, most gloriously, ‘a Company for carrying on an Undertaking of Great Advantage, but Nobody to know what it is’. Similarly, some of Wall Street’s best-performing stocks in 1987 were enterprises that had neither profits nor products – obscure drug firms which were rumoured to have a cure for AIDS, or AT&E Corp, which claimed to be developing a wristwatch-based paging system. ‘The thing could trade anywhere – up to 30 times earnings,’ a leading analyst, Evelyn Geller, said of AT&E. ‘So you’re talking about $1,000 a share. You can’t put a price on this – you can’t. You don’t know where it is going to go. You are buying a dream, a dream that is being realised.’ AT&E soon went out of business, its dream still unrealised, but Geller’s rapturous illusion shows how the market was kept afloat at a time when any rational passenger should have been racing for the lifeboats.

      By the second week in October, a few dents were appearing in the hitherto impregnable dreadnought. Some blamed a spate of investigations by the Securities and Exchange Commission into Wall Street’s biggest names – Drexel Burnham Lambert, Goldman Sachs, Kidder Peabody – following the arrest of Ivan Boesky. Others complained that the fall in the dollar (caused by a widening foreign trade deficit) was weighing on the market. An additional factor was ‘portfolio insurance’, the high-tech innovation which set off waves of computerised selling as soon as the market fell below a certain level, prompting a downward stampede and foiling any attempts to recover equilibrium. Meanwhile, the risk-free yield on thirty-year government bonds had risen to an unprecedented 10.22 per cent, only slightly below the risk-heavy 10.6 per cent return from the stock market. Some investors wondered why they bothered to buy shares at all.

      The economic tsunami of 19 October 1987 –‘Black Monday’ – began with panic selling on the Tokyo stock exchange and then surged through Asia and Europe, following the sun, before engulfing Wall Street. The Dow Jones plummeted by 508.32 points, losing 22.6 per cent of its total value – almost twice the 12.9 per cent plunge during the crash of October 1929 which precipitated the Great Depression. ‘Of all the mysteries of the Stock Exchange,’ J. K. Galbraith had written in his history of the 1929 disaster, ‘there is none so impenetrable as why there should be a buyer for everyone who wants to sell. 24 October 1929 showed that what is mysterious is not inevitable. Often there were no buyers.’ Sure enough, on the morning of 20 October 1987 (‘Terrible Tuesday’), with no one willing to purchase stocks at any price, there was a full hour in which trading ceased altogether: it appeared that the world’s dominant financial system had simply curled up and died. What saved it from extinction was not the ‘invisible hand’ but the new chairman of the Federal Reserve Board, Alan Greenspan, who flooded the market with cheap credit shortly after midday and strong-armed the big banks to do the same, thus preventing Wall Street from dragging the whole US economy into recession. Meanwhile, the regulators of the New York stock exchange also intervened to ‘preserve the integrity of the system’.

      Did chastened right-wing triumphalists notice that capitalism had been rescued only by swift action from the federal government and the regulators, precisely the kind of ‘interference’ they would usually deplore? Apparently not. Ronald Reagan signalled a return to business as usual by dismissing Black Monday as ‘some kind of correction’, and magazines such as Success continued to glamorise the casino culture. Neo-liberals applauded the ‘creative destruction’ of manufacturing industry, old work practices, public institutions and anything else that stood in their path. In Washington and London, right-wing institutes and foundations proliferated like bindweed, fertilised by the enthusiasm with which Thatcher and Reagan greeted their crackpot schemes. The bow-tied young men in these think-tanks prided themselves on ‘thinking the unthinkable’, coming up with ideas such as privatisation – which would later become an unchallengeable gospel, spread everywhere from Russia to Mexico. ‘We propose things which people regard as on the edge of lunacy,’ Dr Madsen Pirie of the Adam Smith Insitute boasted in 1987. ‘The next thing you know, they’re on the edge of policy.’ By a blissful irony, it was one such ‘unthinkable’ scheme – the poll-tax, dreamed up by the Adam Smith Institute and recklessly adopted by Thatcher against the advice of her colleagues – which helped to bring her down in November 1990.

      By then, however, her task was effectively accomplished anyway. The demise of the Marxist states in Eastern Europe seemed to vindicate all that she and Ronald Reagan had done: both socialism and Keynesianism had been pronounced dead, and unrestrained turbo-capitalism installed as the new orthodoxy. ‘What I want to see above all,’ Reagan said, ‘is that this remains a country where someone can always get rich.’ And there was no shortage of hucksters willing to explain, for a fee, just how this could be achieved.

       2 Old snake-oil, new bottles

      There is an universal tendency among mankind to conceive all beings like themselves, and to transfer to every object those qualities with which they are familiarly acquainted, and of which they are intimately conscious. We find human faces in the moon, armies in the clouds … In proportion as any man’s course of life is governed by accident, we always find that he increases in superstition, as may particularly be observed of gamesters and sailors, who, though of all mankind the least capable of serious reflection, abound most in frivolous and superstitious apprehensions … All human life, especially before the institution of order and good government, being subject to fortuitous accidents, it is natural that superstition should prevail everywhere in barbarous ages, and put men on the most earnest inquiry concerning those invisible powers who dispose of their happiness or misery.

      DAVID HUME, A Natural History of Religion (1757)

      Money is power, and power is the ultimate aphrodisiac. The logic is inescapable: rich people are sexy.

      Logic has seldom been applicable to the mysteries of desire, and five minutes in the company of a typical tycoon should be enough to deflate this particular syllogism. The sheen of narcissism, the indiscriminate smile, the fawning gaggle of sycophants – what could be less alluring? One of the most resonantly repulsive images from the 1980s is of Michael Douglas, in shirtsleeves and braces, playing the snake-eyed corporate raider Gordon Gekko in Wall Street. Yet the fact that Oliver Stone’s film was a moral fable with a message as old СКАЧАТЬ