I’m back, as Arnold Schwarzenegger famously declared in Terminator 3: Rise of the Machines. In fact I haven’t really been away, just hovering in cyberspace to leave room for other contributors in our slimmed-down-for-the-beach summer Business section.
I’m back, as Arnold Schwarzenegger famously declared in Terminator 3: Rise of the Machines. In fact I haven’t really been away, just hovering in cyberspace to leave room for other contributors in our slimmed-down-for-the-beach summer Business section. While I’ve been up there, financial markets have begun to look like a Los Angeles freeway visited by an enemy android at the wheel of a runaway fire truck. But the idea of an Arnie-sized American superhero capable of defending the free world against the forces of chaos, in stock markets or anywhere else, now looks more tainted than ever. During and after most of the downturns and market falls of recent decades, it was conventional to praise the remarkable recovery powers of the US economy and its ability to drag the rest of the world out of trouble. This time, as the follies of US sub-prime mortgage lending unravel, knocking over the dominoes in many other markets around the world, such positive sentiments seem certain to be drowned by a clamour of anti-Americanism among financial experts to match the widespread anger over Iraq expressed by foreign-policy pundits. It is all very much as predicted by Bill Bonner — an American himself — in an article in our issue of 31 December 2005, in which he raged against the ‘star-spangled bumpkin’, his archetypal fellow countryman who ‘believes he can get richer by spending rather than saving …borrow without paying back [and] invade foreign countries and the natives will say thank you’.
This new surge of hostility towards America will of course contain a large element of hypocrisy, since British lenders have also been shovelling out credit despite faltering house prices and unprecedentedly high levels of consumer debt, and since many European banks have greedily jumped on the sub-prime bandwagon: some German regional banks have huge exposures to ‘collateralised debt obligations’, the bundles of repackaged US mortgages which until recently seemed to offer such attractive returns.
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