March 1, 2009
Botox works, but not in the way it is intended. In fact, cosmetic surgery works in the sense that you can’t take your eyes off a woman who has had a lot of “work done”.
But you (or at least I) don’t look at her in the way that you find her attractive, but in the sense that you find her weird.
Last Friday, in New York, I had one of those moments. I was introduced to a young woman and I couldn’t take my eyes off her face.
Her brilliant, bleached-white teeth, her perfect button nose, her sensual bud-like lips and her blemish-free skin, all had the opposite of the desired effect. She was a freak, a classically beautiful woman, but a freak nonetheless.
What made her freaky was not just the lack of any expression in her face but behind that very lack of expression lay a profound absence of a scintilla of interest, curiosity and love of the things that make people interesting – the blemishes, the character faults, the glitches.
This statuesque product of human ingenuity was not beautiful, but repellent. She was playing tricks on herself and inviting the rest of us to share in her conceit. All the Botox and fillers were making her feel like someone she was not and in so doing threw the gauntlet to other women to do likewise.
Interestingly, the economy works in the same way as Botox, or at least credit in the economy does. Credit gives the economy a youthful sheen, which disguises the blemishes and makes the obvious limitations harder to uncover.
It also makes people do stupid things just to keep up and ultimately, like Botox, when credit wears off, it exposes an economy that is much weaker than anyone could possibly have imagined.
The reason both of these thoughts came together last Friday was that I was speaking at an investor conference in New York, appropriately at the Metropolitan Club on East 60th Street. The Metropolitan Club was built in 1894 by the great American banker JP Morgan.
Morgan was regarded as too common by the upper crust of New York back then and was excluded from its swankiest gentleman’s clubs. So he did what every rich man does when he is snubbed – he built his own club, with Italianate opulence that dwarfed all others.
Morgan wasn’t just a great banker, he was a great reader of the human condition and perfectly summed up our modern Irish dilemma with the brilliant quip about investing when he stated “that nothing so undermines your financial judgment as the sight of your neighbour getting rich”.
This observation more than any goes to the heart of the Irish problem and the vicious legacy we now have to deal with.
Another famous visitor to the Metropolitan Club was the brilliant British economist John Maynard Keynes, whose legacy and teachings were fully on display here with US president Barack Obama’s enormous budgetary expansion, announced last week.
Keynes did not just realise that, when a country is in deflation, there is nothing to be done except for the government to spend its way out of the depression. He also was an avid player of financial markets. Indeed, his wonderful remark about financial markets underscores the challenges ahead for us.
In 1931,when everyone was calling the bottom of the stock markets and pleading that, at such low levels, there must be value in fallen stocks, Keynes reflected that “these markets can remain irrational, longer than you can remain solvent”.
Again, this is the Irish dilemma summed up wonderfully – we may well be bankrupt before the markets realise that we were not delinquent enough to go bankrupt in the first place.
In recent days, there has been a lot of noise coming out of ratings agencies suggesting that things in Ireland are not that bad.
While this might be true, its veracity might only be appreciated after we experience our own fiscal crisis. I realise this sounds counter-intuitive, but this is what Keynes was talking about.
One of the reasons for market irrationality is fear, and fear is a function of confidence. Last Friday, I heard from investors what the revelations of the past few weeks in our banks has done to confidence in our country. (Bear in mind, I was the closing speaker at this conference and was asked to talk about Europe, not Ireland, so I had not mentioned the country.)
Scarily, some of the largest investment funds in the world spent a large chunk of the morning session talking about Ireland, our banks and our reputation. If you doubted the dreadful impact that bank cronyism and political mistakes have had on perception of our country, this conference would have confirmed to you the extent of the mess we are in.
Many of these fund managers had not invested in Ireland but those that had signalled “never again” without a moment’s equivocation. They spoke of the pathetic regulation and the appalling cronyism between bankers, developers and politicians.
Our story is now being discussed in the same way that Mexico was mentioned after the Tequila Crisis in 1994, or Thailand after the Asian crisis in 1997 or, indeed, Russia after its crisis in 1998.The problem for us is that our fall from grace is far from unique.
Last week, RBS and Citibank both flirted with nationalisation. But the crux of the problem for us is that these guys have seen what we are like when the financial Botox has worn off.
Without credit, we are back to being the gombeen – up to our elbows in stroke politics, in nods and winks, and doling out jobs for the boys.
There will be no recovery until this perception is changed and there will be no change until the entire top brass of the banks are given their marching orders.
One investor, who had been exposed to Ireland, pitched in that the Bank of Ireland had just promoted one of their own as the new chief executive.
I didn’t know where to look, and that’s when I focused on little Miss Filler and wondered what she’d look like when the Botox eventually wore off.