This may shock regular readers, given the extraordinary breadth of my wisdom in almost all areas of life, but I really don’t get the world financial system. Generally, it seems to make a lot of fairly unpleasant, money-obsessed people even richer than they already are, and far richer than they could ever need to be. But then, occasionally, it goes utterly pear-shaped in a matter of days, and the very same people start tearing their hair out and donning sackcloth and ashes. Zegna sackcloth, of course, but sackcloth nevertheless.
The collapse of Lehman Brothers this week made me remember a slightly less high-profile fraternal financial failure, that of the Leyland Brothers. And more specifically, their World, a theme park up north of Newcastle. As with Lehman, it failed partly because of dodgy loans, or at least one dodgy loan – theirs. The one-time TV stars couldn’t make their repayments in that early 90s “recession we had to have”, so had to turn the place over to the Commonwealth Bank. Lehman Brothers lasted for 150 years, but Leyland Brothers World only lasted 18 months.
And yet its memory lives on to this day because of its major attraction, a one-fortieth scale model of Uluru made out of red-painted cement. All those who pass turn their heads to laugh briefly at it before continuing on towards Coffs Harbour, and those few of us who recall the Brothers and their World reflect with a little wry amusement, tinged with not inconsiderable pathos, on the enormous folly of sinking your life savings into a massive concrete model of Ayers Rock.
As the largest bankruptcy in US history, Lehman Brothers’ failure in similarly difficult times is more newsworthy than the collapse of Leyland Brothers World. But while their renenue may have been $59 billion in 2007, what do they have to show for their century and a half? Not so much as a giant concrete Ayers’ Rock. All they’ve done is shuffle money around. Generally they did this fairly well, and were compensated obscenely for it. This year, they did so very badly, and the firm went under.
Really, it’s hard to have much sympathy for anyone who works there, except for perhaps the cleaners. The bankers who were responsible will have fat savings to see them through, and perhaps use their enforced break for a round-the-world trip or something. But the maintenance staff, who are never responsible, are always the ones who suffer most when things go belly-up.
I don’t really know that many of us ever sat down and explicitly agreed to these terms of this deal, but capitalist economies are essentially casinos. Egomaniac businessmen such as the new Leader of the Opposition convince themselves that they’re brilliant, and their famous firms are unsinkable, but there is no profit without risk, and sometimes your number comes up. Look at the ancient Barings Bank, banker to the British monarchy, which was sunk by one young idiot in the Singapore office. And really, if you meet a few young bankers, you will know that in that profession, idiots are not exactly in short supply.
I’m glad that Lehman Brothers was allowed to founder, because those are the rules of the game. And if any of our local equivalents do the same, I won’t have much sympathy. Especially if Macquarie Bank fails, as predicted by one analyst last week. Because really, what did Macquarie ever do for any of us other than toll the living daylights out of us?
I don’t own a single share in a publicly listed company because I’m scared of days like last Thursday, when the market slumps unexpectedly as all the supposedly ice-cold, ultra-rational traders run around like headless chooks selling everything. Then in a day or two, everyone calms down, and it bounces back. What kind of way is that to run a world economy.
At least when you invest in property, you get a place that can keep the rain off your head. And a space in which you can actually have a modest chance at happiness. I don’t see anyone getting much joy out of their share certificates. Which are essentially scratchies, only without even a cheesy illustration of a cartoon cat on them.
So when I’m a poor ancient writer, and I’m joined in the soup kitchen queue by poor ancient bankers who’ve been reduced to my level by the unpredictability of the world economy, I’ll take pleasure in pointing out that at least I’ll be survived by a bunch of columns in The Glebe, my legacy to future generations. But I doubt that 150 years of shuffling funds at Lehman Brothers have left much behind them at all.