At times of crisis, the world tends to retreat into cliche. The events we have seen on the financial...
At times of crisis, the world tends to retreat into cliche. The events we have seen on the financial stage in the past weeks are no exception. With some of the world's best-known banks and insurance companies facing either bankruptcy, nationalisation or the loss of their cherished independence, we have seen not just the usual old cliches but some 21st century specials.
There are so many 'black swans' about at the moment that it would be practically a '10 standard deviation event' (there's another one) to see a white one. And as for perfect storms, I for one would welcome a really rubbish one just to break the monotony.
Of course the cliches don't just come in the shape of hackneyed phrases, but also hackneyed opinions and reactions. The worry is when the knees doing the jerking belong to the political elite of some of the world's most powerful nations.
When things go expensively wrong, it is always easy to blame those who were seen or suspected to be profiting from it. Among these modern cliches we have seen the return of the spiv, a reviled creature almost unheard of since the second world war - only this time the spivs are not undermining the war effort with black-market steaks and dodgy nylons but somehow undermining the whole financial system with their short positions in certain companies.
But as Castlestone Management's Angus Murray argues on page 5, it is not short selling that has brought down the likes of Lehman and HBOS, but poor management, excessive leverage and a lack of risk controls (perhaps some judicious short positions would have come in handy on that front). Indeed, the ban on shorting will quite possibly hurt all the prudent savers who have moved their money into absolute return products in an attempt to ride out the recent waves of volatility.
Of course, what all the fat-cat bashers (including some of the UK's most venerable churchmen) are failing to realise is that while they might get a moralistic glow from consigning these institutions to the dustbin of capitalism, a fair chunk of their retirement fund might be going along with them.
To end with another cliche, these are certainly interesting times. Who knows where the markets will be by the end of the year. But let us hope the politicians and the 'moral majority' are not the only ones steering the ship.
Lasting power of attorney
Three risk profiles
Caused by falling oil price
Roger Marsden takes over on interim basis
Will face 'appropriate action'