In Madrid this morning, I helped two friends set up a stand for their hand-made products, as part of a craft market containing a dozen or more others. As well as a tribute to the talents and skills of the craftsmen and artists there, the market also demonstrated the way that the drive and entrepreneurial spirit Spain needs is still alive and well, despite the nation's difficulties.
|Young entrepreneurs waiting expectantly for their first clients|
|Rollcall of addresses: a tribute to café chain's success|
The real economy, in other words, remains alive and thriving. And yet I keep reading that Spain is lined up to be the next Greece, the next domino to fall in the slow and agonising unravelling of the Euro. There’s no sign of it on the streets, but it’s happening anyway. Why?
The august credit ratings agencies wouldn’t agree, but my feeling is that we’ve lost sight of what a banking sector is for. It’s there to support the real economy, not to supplant it. At the most basic level, it should help individuals by looking after their money until they need it. It should also provide credit to do the things that require funds up front. It can even help insure against risk.
But that’s all it should do: help the people who are making real things or delivering real services. On no account should it be allowed to take over from them and dictate the conditions in which they work.
That, sadly, is what happened back in the eighties, in the time of Reagan and Thatcher. We took all restraint off the financial sector. We said, ‘go ahead, knock yourselves out, make as much money as you want from making as much money as you can.’ And they did.
The leading lights of the finance world didn’t do that in a judicious or responsible way. If they saw some other banker making money, they piled in to try to make money the same way. In fact, they were always trying to guess how somebody else would try to maximise earnings so that they could get in there fast behind them – or even better, get in there first.
That’s why you got herd behaviour in finance, everyone scrambling into the same area of potential profit. Like eight-year olds playing football, all trying to get at the ball at the same time. Only we expect our financial ‘experts’ to be better than eight-year olds.
In fact, we have such high expectations of them, that we continue to support them in every way we can. Spain, with its 25% unemployment, is going to pump a load more money into the banks, because it can’t afford to let them fail. So bankers continue to pay themselves obscene bonuses, demand that the public finance their extravagance, and loudly proclaim the necessity for austerity which sacrifices everyone else’s life chances and keeps making things worse.
What I'm seeing in Spain is a picture which I'm sure is the same everywhere: people know what needs to be done and only need the opportunity to do it.
It’s time we started to provide the support that will make that possible. Because at the moment all we seem to be doing is working for the bankers.
Wouldn’t it be great if they started to work for us again?
Particularly now that we’ve paid to save their bacon for them?
And especially as their way of doing things seems to be working so badly?