How the City got it right

The fact that there are clear signs of the end of the recession is, naturally, excellent news in itself. The anxieties of the last few months may be beginning to fade and some of the people who suffered most, particularly those who lost their jobs, may have reason to start hoping again. Personally, however, I take particular satisfaction from the first indications of recovery because of a conversation I had a couple of months ago. Not that it really was a conversation: it was more of a one-sided rant in which all I could say was the occasional ‘Oh, I hardly think…’ or ‘it’s surely not as bad as that’.

The guy doing the talking was someone who ‘does something in the City’. I used to think that we used this kind of phrase because what happens in the City of London, or the financial sector anywhere, is so arcane that no ordinary mortal can understand it. It’s mysterious because we don’t know what they’re doing. Since the financial collapse, however, I’ve realised that it’s mysterious because they don’t know what they’re doing either. That doesn’t stop them posing as experts in anything to do with economics, so you think they’re talking knowledgeably when actually they’re just talking.

The one I met turned out to be a fund manager. That sounds like a job for people who handle money carefully. It turns out that they actually handle money with extreme carelessness and, unfortunately, it’s not just their money.

He painted me a picture of complete gloom. The country had been indebted to an impossible extent. An incompetent government had driven it to the brink of destruction. As a result it was now in a lamentable state. He didn’t actually say ‘lamentable state’. He used a fine old English term suggesting previous involvement in sexual activity, but that was what he meant.

It now turns out that actually our indebtedness isn’t quite as bad as all that. The housing market has stabilised and prices may even have begun to rise. Factory activity is picking up and workers are being taken on. The doom sayers have been gainsaid.

Of course, he’d never admit he was wrong. He would no doubt claim that he saw it all coming, but that underneath the apparent recovery there lie the seeds of the next and far more destructive catastrophe.

All this reminds me of a saying of Winston Churchill’s: ‘Politics is the ability to foretell what is going to happen tomorrow, next week, next month and next year. And to have the ability afterwards to explain why it didn't happen.’

Just as apposite a comment on City experts as on any politician, I’m sure.