The Upside of the Downturn

Ever since I was a financial journalist in the early eighties I have watched in wonder as, every few years, a new oligarchy is formed around the conviction that a novel win-win way has been found of beating the markets. From Jim Slater to Michael Milken and the Web 1.0 entrepreneurs, they have come, made and/or lost their money and gone. Any theory that claims to beat the markets over anything but the short term must be wrong, but, of course, the theorists, if they are smart, always get out before their particular delusion is exposed. Perhaps now is the time for the latest oligarchs - private equity, hedge fund, meta-market operators - to pack their tents and retire to the tax haven with the best beaches. Disapproval of their activities is mounting. In America Warren Buffett and in Britain Sir Ronald Cohen have broken ranks with the super-rich to say they should be properly taxed. And, meanwhile, the Bank of International Settlements has warned of a possible crash - each previous big downturn, says the bank 'was preceded by a period of non-inflationary growth exuberant enough to lead many commentators to suggest that a 'new era' had arrived.' As Chancellor Gordon Brown earned massive political capital from this present phase. But, if the BIS is even half right, as Prime Minister he will be mortgaged up to his alarming eyebrows. It will, of course, be very painful for the not-so-super-rich, but at least I should be able to eat at the Mirabelle again.