The Financial Times a-slipping and a-sliding: "it weren't our fault, guv" ...

Newspapers like to look back on the year and evaluate it. Usually this happens around the New Year itself but the Financial Times (dated December 16th) appears to bring forward its analysis of the ‘year of turmoil’ in the financial markets in a 'Special Report'.

In fact it is just a selection of past articles from George Soros’ gloomy assessment of January 22nd to Phillip Stephens’ closing and rather anodyne political analysis of November 27th that ends “ … things cannot be as they are”. Yeah, we could have told you that, mate!

The very method (with a nod to grabbing what little advertising is around at lowest origination cost) tells us that even the august Financial Times does not yet know where to turn, either in analyzing precisely what has happened or predicting what will happen next.

Our reading of this report is that it is a defensive one. The FT, especially in its reproduction of Chris Giles' November 25th report claiming (in effect) that no reasonable economist could have predicted the crisis, is really trying to make a plea of innocence. We should not accept it.

Let us get back to a key statement of Soros' in January: "The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves."

Well, at the risk of over-simplifying, this is a key failure before we get on to any others: the 'authorities' (i.e. the people we hire to do a job) failed to cry a halt and simply trusted people whose interests were not necessarily ours. So who did the 'authorities' answer to - us or special interests?

Where were the media in all this? Investigating the performance of our hirelings and those we hire (the politicians) to oversee the hirelings? Or acting as a claque to those special interests who clearly either did not know what they were doing ('fools') or did not care so long as the bonuses rolled in ('knaves').

As always in these cases, a certain narrative, no more than intellectual comfort food, is emerging. Blame is focused on primal emotions (in this case, ‘greed’), a revisiting of medieval sin, and it is assumed that governments will bail out the system at the expense and in protection of the wider public.

What no-one seems to want to say is that the premier European daily newspaper (nor its American equivalents) covering financial markets and public policy failed to do more than hint occasionally at a broken system.

Nor did it or they blow the whistle on what was becoming self-evident to a minority of dissident economists and public policy intellectuals.

Nor have they admitted that the media in general was as complicit in its ignorance, blind faith and greed (for circulation and advertising) as any other closed intellectual system in history.

Our information as citizens is still coming from the same sources that failed to analyse events adequately and warn us in the first place and which fail to this day to bring to account the regulators and politicians, let alone the senior economic and financial decision-makers, who still hold office.

This is a system that those who inform and advise us still imperfectly understand. Nicola Horlick may hit out at the Madoff alleged fraud but there seems to have been a willing suspension of belief and a refusal to inquire more deeply across the entire elite structure. No-one is free of guilt by association.

This would not matter if the elite only pauperized the elite but that is not how it works. Indeed, very few of the elite will actually be pauperized – they will simply have to settle for the unexciting life of middle class pensioners with a smaller house and no Bentley perhaps.

Out there, people struggling for jobs and homes could see themselves sink to levels where basic food and shelter become an issue and not only in the developing world. And still, this cosy elite of journalists, politician and financiers tries to hold things together as if they were the solution and not the problem.

Lionel Barber, Editor of the Financial Times, writes, in the first paragraph of this self-congratulatory Special Report that he regrets that there is no space for the FT’s ‘groundbreaking’ reports on the credit rating agencies and the failures of computer modeling.

Mr, Barber, your articles on these issues were in 2008! Your newspaper discovered these problems rather late when we all knew something had gone wrong. The time to report these problems would have been at any time before 2008 – this is merely closing doors after horses have long since bolted.

There are two issues here. The first is that investigative reporting and analysis is passive and waits for the elite to recognize they have a problem. Only then, do we get outraged exposure of failures in the system. Access to information is still in the hands of the tight networks on which the media is dependent.

Briefing comes entirely from insiders who probably could have blown the whistle long before if they were not 'jobsworths'. Analysis seems to happen only when one bit of the system turns on another and decides to provide the media with the relevant dossiers which may or may not be wholly reliable.

The second presents an even bigger issue. The media instead of being 'beyond ideology' in order to report the workings of the system as it actually exists soon becomes as sucked into the dominant ways of thinking in elite society as any Chinese or Russian mass-circulation daily.

For years, the Financial Times and the Economist (and most of the other mass circulation media in London and on Wall Street) have spouted a pure free market ideology as rigid as that of any Marxist newspaper in 1970s Moscow.

Academic independence and crusading journalism might once have challenged the group-think of the system but something seems to have happened to a pluralist culture of competing political parties, newspapers and thinkers, certainly in the UK in and around the 1990s.

One ideology, that of unrestrained free markets, has triumphed over all others. The liberal triumphalism of the Economist over the last decade is so embarrassing that it would be cruel now to go back through its editorials and pull out some of the more obvious daft statements of capitalist optimism.

This is not to say that the market model is ‘wrong’ – on the contrary, it is patently ‘right’ in so many ways – but it is to say that its overwhelming intellectual dominance swept away critical thought about how it was being regulated and administered.

Given our propensity to take the easy route and question as little as needs to be questioned, this resulted in an intellectual monoculture. Pollyanna was well and truly ensconced in the editorial chairs of London and Wall Street.

Critics, no not critics, just those who asked the right questions, were either sidelined to the margins or were 'tolerated', house dissidents such as Soros, tolerated perhaps for their wealth as living proof that, well, actually the system works because rich men can speak their mind (ho, hum!).

We have the illusion of free analytical thought and creativity because we permit total freedom at the margins – as in the semi-articulate world of internet bloggery – and sufficient freedom to house dissidents so that everyone else can follow the unquestioning party line with a clear conscience.

Lionel Barber says that the crisis was a ‘story tailor-made for the FT’. What is sad is that he is right in a way that he clearly does not appreciate himself.

The story is of how the capitalist system was over-reaching itself, how the ‘creative destruction’ implicit within it was not going to be written out of the script by the enthusiasm of Friedmanites and how politicians, bankers and regulators were failing to develop the correct balance of policy interest.

Yes, this should have been tailor-made for the FT, and indeed the Wall Street Journal, from as early as 2002. Now, at the tail end of 2008, can we trust the Financial Times or any other traditional newspaper to do any better in reporting precisely what is happening out there?

Can we trust the media to apportion appropriate blame and to critique and analyse policy decisions without recourse to hand-outs and dossiers from the very people who failed to predict this mess and were complicit in it? Why trust the regulators, politicians and central banks (pace Trichet) now?

The people who issue the dossiers are implicated in the collapse. They are just as intent on pulling the wool over our eyes for special interest reasons as they have been over the last seven or so years.

It is interesting to note that Robert Peston who has done most to expose the economic criminality of the current system from the BBC was Head of Investigations at the Financial Times in the 1990s. In September 2008, he placed the blame on greed and the 'jaw-dropping naivety of ministers and officials'.

In answer to Abraham Lincoln, it is probably true that you can fool some of the people all of the time, perhaps enough to ensure political re-election or survival as Chairman of the Board. You can fool all the people some of the time when you hold directly and indirectly control of all the means of communications.

But hard facts will out eventually. The credit collapse is our perestroika moment when an elite can no longer bargain itself out of responsibility for a false prospectus. The few who saw what was wrong will not stay silent and, eventually, the old ways will go.

But will it be a cataclysmic collapse as with the Soviets or simply the displacement of a failed generation who quite simply got it wrong and now need to be removed from the stage. We are optimistic about the world ("yes, we are") but deeply pessimistic about the United Kingdom.

Knowing us Brits, our decline will continue because our ‘old guard’ has had over three hundred years to refine the gentle art of bumbling survival and no doubt will continue along this path over the economic corpses of the rest of us.

No doubt, we will continue to vote in one or other set of buffoons, continue to prefer our analysis and information pre-packaged and trust in business leaders who operate as herd animals. We are much like Orwell’s cart horse in Animal Farm and his sadness is our sadness. Plus ca change ..

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