Thursday, 11 August 2011

Wall Street meets Main Street

The past few days have been very unsettling. The financial markets the world over have taken a nosedive. Fears of a double dip recession have returned and looks like investors and those of us in the financial sector have no where to hide. Of course, the markets are usually a leading indicator and things may turn out to become worse for the "main street" as well.

What is more unsettling however, is the sudden and inexplicable violence in London. I woke up on Sunday to see images of burning buildings and people trashing stores. At first, I thought this was a one-off thing, although pretty scary and not something that you would expect to see in a city like London. When people started calling me, and had sent emails overnight to check I was ok on Tuesday morning, things really hit home. I quickly turned on my computer to see what was going on. Some of the images were horrific to say the least. The sounds of sirens, ambulances and helicopters have continued over the last few days and parts of England do look like war zones.

What struck me the most is that people are not really protesting about anything at all! They are just taking advantage of the situation in a very organised way and looting items like plasma TVs, iPads, shoes, clothes..How were they so organised, they used blackberry messenger, of course! Only in the UK will you find people in £100 trainers robbing shops because they feel that they have been wronged by society..

Who are these people? What do they want? They say they are angry, but what for? For having council housing? for having the chance to get an education? to get unemployment benefits? How about they tried to go to a real poor country and saw what poverty is all about. What it means to have no food, no home and no education. What it means to be living off the streets and have no real prospects.

These riots also brought home the fact that the UK authorities are unable to deal with widespread disturbances like these. They are still debating whether it is actually "legal" to use batons and wondering if the use of water cannons is "appropriate". In fact, on the very first day of rioting, the police simply watched as rioting went on, much preferring to look at CCTV rather than actually trying to stop the events as they unfolded.

Reminds me of the free market regulatory policy that most of the western world has followed. The theory that markets are always right and that the market will correct itself and weed out the outliers is completely wrong and has been proven wrong many times in the past. As for the current sell-off, seems to have been triggered by the US govt downgrade by S&P, but no-one has a put a finger on the real issue - over leveraged consumers and governments. The response of the western world to shore up the economy for the last few years has been to print, print and print more money ergo leading to further increase in government debts! Very few have pointed out that credit fueled culture will need to be reversed and it will be painful.

On the social side, there has been talk about "bad parenting" here and how parents need to keep a tab on their out-of-hand kids. Is that the real issue here? Why did these kids or certain sections of society get out of hand in the first place?

Maybe all this is because the rich and the poor both felt entitled to have things that they could not afford in the first place. The educated used their credit cards, while the un-educated used their knives and the power of the mob.

I almost feel that police and regulators have been too soft here. Increasingly in the west, you get the feeling that Big Brother is watching. Phones are being tapped, emails are monitored, there is CCTV everywhere you go. But where is the Big Brother when you actually need him?

I hope that the fires are put out quickly and the sirens go quiet again. I hope the rampant sell-off in the markets stops and firms start generating business and start hiring again. But the reality is that all measures are stop-gap and temporary and no one has a real long-term solution yet. And so we will go along our business, till we get shocked to the core again..


  1. this culture of living on credit, blindly desiring material luxuries, nonacceptance to live within ones means is in essence what has brought the economy down, and possibly the cause for riots in London too. At this point, as you pointed out, its not an act of protest. Its just opportunistic loot in the name of protest. Its not like they are looting from Harrods or Selfridges, they are looting from the very middle class survivors that they rub shoulders with. Its senseless and plain inhuman. The rioters are hoodlums at best. As someone said on twitter, in the Middle East they riot for freedom, in London for free iPads and 3D TVs

  2. The riots should serve as an eye opener to all the policy makers and others who call themselves as Social Reformers to understand the psyche of the people who are doing this.Putting the blame on Poor Parenting,System of Education,Economic Divide in the society etc will not be enough.Similar incidents are happening more frequently in other developing countries but people are spending more time and energy in fixing blames and responsibilities rather than understanding the real cause of such problems.
    Time has come when we have to put the age old Indian philosophy VASUDHAIV KUTUMBKAM into a reality.Equal opportunities for growth and development for all people across the Globe will provide the answer.

  3. Rightly said Priya - "The educated used their credit cards, while the un-educated used their knives and the power of the mob."
    Culture of feeling one has a right to the "good life" which in itself is against the principle of meritocracy, while all one has is the right to "Equal Opportunity" and not "Equal Living"

  4. Well written article Priya. Could not agree more with your view on over leverage. I do feel that as a society we are increasingly taking less responsibility as individuals.

    Only point where I disagree is the point about "relative" poverty. People are used to a certain level of structure in society not necessarily relative. If that changes they will hurt. As an example, if we find it intolerable to go hungry for more than a day whilst children in East Africa are starving for weeks, does that make our hunger or demand for food less important? However, I agree with you that the actions the rioters took as a result were totally unjustified but the feelings brimming perhaps not.

  5. Thank you all for your comments! I'm glad that you read my blog and provided such insightful comments and feedback.

    Vipul - I see your point about "relative" poverty. I agree that its always about the "haves" and the "have nots" and what they have and dont have depends from country to country. But still, does not give the "have nots" the right to resort to rioting - although unfortunately, that has been the case throughout human history. Its just that seeing such things happen in 21st century Britain is definitely depressing..