Irony

by John Quiggin on October 5, 2008

We’ve all been strictly enjoined to avoid schadenfreude in the current crisis, and indeed few are likely to escape unscathed. Still I’m struck by a couple of examples of historical irony

* Ten years ago, I was debating representatives of the Dutch bank ABN-AMRO, who were pushing for the privatisation of Australian Capital Territory Electricity and Water (ACTEW). A couple of days ago, the Dutch operations of ABN-AMRO were nationalised

* British Bank Northern Rock was nationalised following a run by customers seeking to withdraw their money. Now, seen as safer than its competitors, it is being forced to limit deposits.

{ 24 comments }

1

P O'Neill 10.05.08 at 1:58 pm

The first one is a mother lode. Not much than a year ago, senior EU policymakers were yelling at the Dutch government about being too nationalistic in discouraging the RBS-Fortis-Santander bid for ABN Amro. Now the government owns it without a squeak of protest.

2

engel 10.05.08 at 2:07 pm

According to Judith Warner it’s not just the super-rich financial types who are going down, it’s also people like Judith Warner who’d proudly decided, in our twenties, to pursue edifying or creative, or “helping” professions. Schadenfreude? You may feel that way but I couldn’t possibly comment…

3

a 10.05.08 at 2:15 pm

To everything there is a season,
a time for every purpose under the sun.
A time to be born and a time to die;
a time to plant and a time to pluck up that which is planted;
a time to kill and a time to heal …
a time to weep and a time to laugh;
a time to mourn and a time to dance …
a time to embrace and a time to refrain from embracing;
a time to lose and a time to seek;
a time to rend and a time to sew;
a time to keep silent and a time to speak;
a time to love and a time to hate;
a time for war and a time for peace.

And a time to privatize and a time to nationalize?

4

Zamfir 10.05.08 at 2:30 pm

Ah, but schadenfreude for ABN is OK, they are used to it. They used to be the most ‘banky’ bank in the country, with the thickest pin stripes, an obnoxious CEO and a lot of talk about financial innovation and privatisation. Then some hedge fund came knocking about their weak earnings, and they were forced to sell themselves.

The original plan was to merge with ING, another Dutch bank, but its CEO didn’t like their CEO, something about the color of their golf outfits or whatever. So they begged with the government to broker the deal, but the Cabinet pointed, laughing, to ABN-Amro’s previous wisdom about markets and government interference.

So they wanted to be taken over by Barclays, on almost equal footing so that the upper echelons could keep their positions. They even performed some dubious transactions to make this more likely, it was a daily soap in the newspapers, but in they end they were split up Gordon Gekko style. And sold to Belgians, for whom we Dutch have a completely unjustified disdain.

Now the Belgian bank couldn’t afford its share, that was clear from the start, and ABN is now bought by the Dutch government at a fire-sale price. I hope the country hasn’t lost too much money in all these dealings, but if it is less then a billion, I think it was a good price for the show.

5

a. y. mous 10.05.08 at 3:11 pm

Just how much of a hit will the world economy take should “capitalism” run its course? I am asking for numbers that are life changing. Not lifestyle changing.

6

engels 10.05.08 at 3:59 pm

To expand: there’s something about the Judith Warner article, which I find in 90% of commentary in American newspapers like the New York Times which I just find incredibly creepy. It’s as if she is genuinely unaware of the existence of people of people who are not middle class.

7

engels 10.05.08 at 4:02 pm

Comment from the NYT thread which I have to sympathise with somewhat:

Judith There is a class below you. Our parents lost their carefully planned retirements in the 90’s crash. Our siblings lost their homes and savings in the post-9/11 retrenchment. We are bankrupted by normal medical emergencies. We have never participated in the boom side of our country’s boom/bust cycles. As we welcome you all to what for some of you is evidently some fresh hell, let me assure you, schadenfreude is alive and well.

8

Mike Otsuka 10.05.08 at 5:08 pm

A Wall Street Journal reporter on the effect of all this on investment bankers: “It’s going to be very hard psychologically for these people. I talked to one guy who had to give up his private jet recently. And he said of all the trials in his life, giving that up was the hardest thing he’s ever done.”

I think it’s OK to feel schadenfreude about this guy’s suffering.

9

Zamfir 10.05.08 at 5:33 pm

Mike Otsuka, in a strange way I can imagine that that is a real blow to someone. Even for the people who I know in the financial world, and they are in very modest positions, the moeny and succes allure are really part of their job satisfaction. As far as I can tell, there is a significant number of people there who would really, really hate their job if it wasn’t for the feeling of importance that money can buy.

If that is taken away from you, you have lost years of your life, in which you could have been happy. That hurts a lot more than not having the jet itself. Think about athletes who slave away for years and then break their leg before the olympics. allthey have lost is a medal I will never ever get. Or people who see their self-built business fail.

Of course, this guy was probably also a jerk, but still.

10

Charlie Whitaker 10.05.08 at 5:47 pm

I don’t know about schadenfreude, but I think a bit of fear around the place might be good. I certainly think we should encourage legislators to allow bankers to believe both (1) that their businesses might be allowed to fail, and (2) that there might be some serious rewriting of tax codes. Something has gotten out of whack in terms of perceptions.

Fear can leak out all over the place, of course. The only antidote I can think of is to remember that if you’re good at something, there’ll continue to be a role for you. Most people are good at something. The threat to accumulated pension funds, etc. is much harder to deal with, and I suspect it’ll require political engagement the like of which hasn’t been seen in a while.

11

mpowell 10.05.08 at 5:56 pm

It’s true that worse than being middle class is expending your life attempting to become super wealthy and then failing completely. But losing your private jet does not rise to that level of failure.

It is clear that far greater regulation is needed in our financial sector. But I also believe that for the health of our society, we need to find a way to stop rewarding the ultimately socially useless skills of the typical Wall Street jackass. It is clear they don’t provide much of anything of value, and the cultural implications are also corrupting.

12

Roy Belmont 10.05.08 at 7:27 pm

“if you’re good at something, there’ll continue to be a role for you.”
Unless you’re retired, and old enough that things are starting to slow down, and you’re confronting the inevitable at the same time your financial nut turns into useless paper. Now you can just reconcile yourself to gruel and porridge three times a day at the refectory table down at the poor house, along with most of the rest of your contemporaries. Except there aren’t even poor houses anymore.
Possibly why cocaine and heroin use among the elderly is increasing.
There isn’t much qualitative difference between losing the private jet and losing the Escalade, is there? They’re both no more than status markers, both hanging like medallions around the necks of the ensorcelled, bling in a bad rap video.
Compassion for the despicable is a superior quality, it’s the active version of not thrilling with schadenfreude at the suffering of these wrong-living superdrones, as their card houses and Ponzi schemes come crashing back to earth.

13

Matt McIrvin 10.05.08 at 9:04 pm

The thing is, though, the people in the class below Judith Warner are going to be hit much harder, if it turns into a real depression or something worse. You can always go lower until the role for you is “corpse”.

I confess I’ve never felt that loser-feeling she got from being around the Masters of the Universe. I remember when my fellow physics grad students were all becoming Wall Street quants in the late 90s, thinking mostly that they were being played for chumps. But I don’t live in New York.

14

clew 10.06.08 at 2:35 am

if you’re good at something, there’ll continue to be a role for you.

Once I built a railroad, made it run… Brother, can you spare a dime?

15

Alex 10.06.08 at 9:20 am

I remember that, during the ABN-AMRO takeover soap opera, there were people who said that their shareholders would never be satisfied with stock in a bank as boring and staid as Fortis…

16

Charlie 10.06.08 at 9:43 am

Sorry, that was harsher than I might have wanted. But since I find it hard to imagine any form of society which doesn’t have instrumental knowledge as a fundamental – a way of life based on picking fruit from trees excepted, perhaps – I’m tending to believe that skills will always have value. And I think this is something people can take reassurance from; and also something useful to keep in mind when there’s other people out there saying that it’ll all go to shit unless we do exactly what they say.

I realise also that any talk along these lines will be coloured by the unpleasant political rhetoric of the last twenty years or so.

17

MarkUp 10.06.08 at 1:01 pm

“I’m tending to believe that skills will always have value. And I think this is something people can take reassurance from;”

Value is not bound to merit, nor is it’s worth always shared.

18

engels 10.06.08 at 1:08 pm

You can always go lower until the role for you is “corpse”.

But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

19

Walt 10.06.08 at 2:59 pm

That kind of talk is un-American, engels.

20

lolmart employee 10.06.08 at 3:09 pm

My set is largely composed of twenty somethings foot-draggin’ in a middling city with an enormous university, and the shitjobs we work and the shitbars we frequent will more than likely persist. Many of my peers are probably more concerned by the diminishing frequency of the affordability of an eightball than any notion of economic irony or karmic retribution.

We are willfully marginal, and we can survive so long as at least half of our friends can make rent. This is probably just the nail in the coffin of any thoughts of repayment on our student loans.

21

novakant 10.06.08 at 3:15 pm

The thing is, though, the people in the class below Judith Warner are going to be hit much harder, if it turns into a real depression or something worse. You can always go lower until the role for you is “corpse”.

And even those people will be fine compared to, say, AIDS orphans in South Africa, Palestinians living in the Gaza strip, slave workers in China, Brazil or wherever – so if somebody wrote an article about the problems facing blue collar workers in the US, should they be accused of having ignored the existence who are even worse off? I read Warner’s article as an account of her personal situation and that of her peers and find the implication that she is generally unaware of other people’s suffering to be unwarranted.

22

terence 10.07.08 at 1:49 am

…well there has been one positive spin off of the crisis, John: we got to hear you on New Zealand National Radio this morning.

23

poemless 10.07.08 at 4:22 pm

More historical irony:

Edward Lucas is urging small countries in Eastern Europe to write up legislation allowing them to nationalize their banks before they crash and Russia tries to buy them.

24

nnyhav 10.10.08 at 12:04 am

WSJ:
Wednesday op-ed:
“The GOP Peddles Economic Snake Oil” Thomas Frank, staff writer
Thurs op-eds:
1) “Good Financial Information Matters More Than Ever”, Robert Shiller (“From John Moody to Suze Orman, financial writers deserve our thanks”)
2) “News Flash: The Media Back Obama”, Dorothy Rabinowitz (WSJ ed board)

side note: dsquared from CT to FT: quoted in “Well-established banks best placed to reap rewards”: “daniel Davies, analyst at Credit Suisse, says: ‘[The winners are] those who have never needed capital or those who raised it early. There are going to be national champions.'”

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