Creditcrunchy
A Cautionary Tale
~
Behold the Crunch of Credit!
That alliterative beast
Which skulks along Threadneedle Street
With violent caprice;
Which darkens every board room door,
And prowls about the trading floor,
Devouring Christmas bonuses;
Disturbing fiscal peace.
Beware the Crunch of Credit!
The debt that bites, the risks that catch!
Defaults of every size and sort
He’ll frumiously despatch!
Observe the Crunch of Credit
And his wicked weaponry.
The stocks have crashed, the LIBOR soars,
¡Negative equity!
Survey the Crunch of Credit:
How he slithers, how he writhes,
How he toppled with one subprime swipe
The fated Rock, the mighty Bear,
Brought low the Brothers Lehman,
Made the Scottish banks despair!
Perceive the Crunch of Credit,
And detect his subtle powers:
How he raised from rank obscurity
That mercurial Peston of ours.
Admire the bard’s concise adage
And prescience so stellar:
“The nature of bad news,” he wrote in truth,
“Infects the teller!”
And banks, in their lividity,
Sent copious liquidity
Careering through pecuniary pipelines.
Recapitalisation was on all the experts’ lips,
While the name of Keynes was whispered in the streets.
And so we took the plunge
And bailed them out, the bungling banks.
Each mortgage-backed security
We bought hold-to-maturity,
And now we must all hold on to our seats.
Eheu!
The Crunch of Credit
Hath another victim slain.
Just as we mourned the passing
Of the noble Woolworths chain
The news arrived of worse to come –
GM and Chrysler are undone!
Across that vast new continent
Exhausted cries of woe accrue;
Their answer is a distant, but distinct,
Bavarian “Juhu!”
And yet they have their problems too:
The market shrank, the Euro flew
As the glorious pound became less sound;
O what were we to do?
St Gordon took his sword in hand:
All boom and bust he’d soon disband.
Long time his manxome foe he sought –
So rested he by his brooding tree
And stood awhile in thought.
And as in dithering thought he stood,
The Credit Crunch, with eyes of flame,
Came whiffing through that tulgey wood,
And burbled as it came!
A spending spree, slashed V.A.T.
The fiscal blade went snicker-snack!
And though the sword was double-edged
It didn’t hold him back.
And at Westminster’s Palace
He arrived in prudent pomp,
And took to the despatch box
With a clunking-fisted thomp.
“Fear not,” said he (for mighty dread
Had seized their troubled minds);
“Glad tidings of great joy I bring
To you and all mankind.”
A silence grasped the chamber,
Every member was in thrall…
“For I have slain the Credit Crunch
And saved the world withal!”
And hast thou slain the Credit Crunch?
Come to my arms, my beamish boy!
O frabjous day! Callooh! Callay!
The Dow Jones shall be up today!
What forces dark could explicate
These grand felicitations?
A Faustian pact, no less,
Bought with our future generations.
It was now clear the Saint had been
Trained in the School of Madoff,
And all men of good sense agree
It’s time that he was laid off.
But Gordon is not all to blame;
Some people bear a greater shame.
The problem, if you care to see,
Was monetary policy.
Who spawned the Crunch of Credit?
That ‘twas bankers still persists.
All true, but don’t forget
The scholarly economists.
The money in supply, M4 –
as it’s known in the trade –
Approximately doubled over that
Debtors’ decade.
The learned persons thus assembled
Knew this and lamented;
And yet, instead of raising rates
Accordingly, relented.
And as night follows day
They had unwittingly consented
To preconditioning
This boom and bust unprecedented.
But how now learned friends?
What weaponry are you possessed of?
Alchemical de-squeezing
Such as “quantitative easing”?
The Crunch of Credit scoffs
And, Calibanically gleaming,
Jeers, “Who are these pretenders
With their gyring, gimbling scheming?”
And lo! so sudden from the sky
A voice was heard to prophesy,
“Hark, ye mimsy banks!
Hark ye, thou uffish Premier!
Hearken all who hear the call
Of downturns and despair!
The reckless beast cannot be maimed
With instruments of recklessness.
No victory can yet be claimed
While mired in such a fecklessness.”
And choirs celestial sang the strain
Which plumbed the very azure main:
The words of our absolving shrift,
The ancient liturgy of thrift:
“Sumptus censum ne superet!”
Repeat it, pray, lest we forget:
“Sumptus censum ne superet!”
The Hellenistic world agreed:
“????? ????” they decreed.
And in the plain vernacular,
Micawber took the lead.
Yet howsoever it may be said,
How loud, how slow, how clearly read,
Let each without exception
Brand its meaning on his head.
And then, just when
We can say Amen!
To being in the black,
We’ll go anew galumphing
To spend what we don’t lack.
~
(with grateful acknowledgements to Mr Lewis Carroll)
Very perceptive and, sadly, all too true. We’ll spend the next ten years loudly pledging never again, and then, to paraphrase Mr Toad – the very next time we see a credit boom… off we’ll go in it! There’s a depressing lesson about human behaviour in there somewhere, if one cares to look.