Yep, the blog's about the economy again - and as you would expect, looking at it from a slightly different angle from the regular commentator...
In her 1969 book 'On Death and Dying'. Elisabeth Kubler-Ross suggested there are 5 stages through which people pass when dealing with grief and terminal illness. This assessment came after years of studying the cases of terminally ill people and their relatives. It is a model which is now commonly accepted as having great validity in any 'dying' process and can be helpful for plotting where a process is 'at'.
It is my assessment that our current economic model is indeed in a state of terminal illness - and that government and financial institutions are responding in a classical and time-honoured way as indicated by Kubler-Ross's model.
With that in mind, I decided to consider the financial model as one that is indeed in a state of terminal decline as it gives birth to a new system. Here's how it could be viewed in relation to Kubler-Ross's model.
I do not mean to make light of terminal illness in any way, shape or form in this blog. Having worked with various people through the last stages of their lives it is territory I am familiar with and I value the process immensely and have some understanding of the great sense of loss and pain that is often involved.
Stage 1 - Denial.
EG 'There's nothing wrong - everything is fine'.
Sound familiar? Yep, we've had years of it. Spend, spend, spend. And yet the warning signs have been there for years.
We've all been inundated for years with loan offers, credit card swaps, cheap mortgages, easy mortgages for people who can't really afford them. We've been in denial since the 80s - we have created a debit society (which has suited the banks whilst they were able to keep cash flowing into the market); a society where spending what you haven't got is the norm, and therefore the fear of never being able to repay becomes a dominant force.
It's a simple law of the Universe - you can't go on giving out what you don't have, and you can't go on taking what you can't give back. Somewhere along the line, the books always need to be balanced. At some point that thing has got to come from somewhere - and that is what is now coming home to roost. That 'thing' (IOUs in the billions) is being called in; trouble is, those IOUs can't be serviced.
So, Stage 1 - Denial - yep we've definitely been experiencing that one for quite some time.
Stage 2 - Anger
EG- 'That's not fair!' 'Why is this happening to me/us?'
Well, we've got so angry we've been throwing all the toys out of the pram. Rather than listen to what this is really telling us about our business model, we've just got all tantrumy, blamed it on US sub-prime mortgages and George Bush and Gordon Brown and Northern Rock. Or we've gone shopping or hurled some more money at the system. When did you ever hear a top Bank official say in the last year "I can take responsibility for my part in this problem - and it is a problem, and I must stop my staff from lending money so easily". Nope. We've been so heavily into denial and blame/anger that we've refused to look at the very way in which we operate our economy.
Stage 3 - Bargaining
EG - 'If I promise to do this, just let me live to see my grandchildren grow up...' etc
When people begin to take on board that they are terminally ill, they will invariably go through a stage of bargaining with God. We are currently doing the same in the economy. 'God, if we promise to put another £500 billion into the system, please just let it be alright'.
As a general rule, it seems that God doesn't generally stop all things from dying; death is not wrong (or, there is no death, depending on your spiritual beliefs of course), it just is. And just as there is death, so there is new life. If this model is right, then this bargaining will not produce the results so desperately sought, in the same way as chemotherapy will do nothing, other than cause further suffering, at a very advanced stage of cancer.
Stage 4 - Depression
EG - 'This is terrible, it's all wrong, I'm so upset...'
The IMF today predicted that the UK economy would plunge into deep recession over the next year. Other analysts have been warning of this for a while. A recession is a depression - although of course hopefully nothing like the great depression many moons ago. Again it seems, an inevitable stage of the dying process that our economy is currently experiencing.
Stage 5 - Acceptance
'It's ok that this is happening - I'm going to be alright. Don't worry about me'.
Kubler-Ross's last stage. The magical stage of acceptance - the stage that if we could just allow our economies to experience, might just throw up some amazing and unexpected answers. This stage of acceptance is invariably reached by people in the very last stages of their lives - I have witnessed it myself many times. It is a time when we know there is nothing left that needs fighting - we just need to surrender to the inevitable death of a body.
In their last few days of life, individuals often experience a sense of serenity -- as if they know something better is coming. Suddenly everything becomes alright in the world.
I find this model very interesting when observing the current events. It is my view that, the quicker we surrender to the truth that our current global economic model is indeed in the latter stages of the dying process and beyond the reach of any drugs or surgery, the less painful and drawn out our depression and the faster the new model can be born. For a new model there is, but it cannot show itself until the old has moved on...