x Abu Dhabi, UAEWednesday 26 July 2017

Recession stirs obsession with overinflated clichés

On the Money By now, you'd think we'd be on the mend, slowly recouping our losses; clawing back what we'd lost in our investments.

Gary Clement for The National
Gary Clement for The National

Time, some say, is precious. Time, others say, is money. And only time will tell, say the wise and, quite often, the patient. A rare combination of qualities in this day and age, but sometimes it pays to take the time to listen to them.

I know, I know. I'm speaking in clichés. And I know their use is banned in most newspapers around the world, including The National.

And as much as it pains me, I'm going to ignore our house style for a moment. Sadly, though, they are coming too easy.

Which cliché do you think is correct? I'm leaning towards the wise and patient.

Before you decide, I need to clue you in: GFC.

GFC? Sorry; I'm seriously rebelling against our in-house style today. Another rule is not to use an acronym until after it's been spelt out in full, unless, of course, we are talking the UN, Unesco, Opec or some other easily recognisable bunch of letters that are supposed to make sense to our readers.

No; GFC is not a subsidiary of KFC. It is what journalists and business commentators use when they are referring to the global financial crisis these days. Possibly because they are over spelling it out every time they refer to it. After three years, I know I am. GFC is so much easier to type than global financial crisis.

We are also calling it the Great Recession. Notice the caps? Just like the Great Depression (GD; sorry, it's calling out for an acronym). But we don't want to go down that road again. Or will we?

So here we are. Almost three years down the GFC road. And we are just as jittery as we were on that fateful day of September 15, 2008, when Lehman Brothers, that supposedly venerable Wall Street investment firm, declared Chapter 11 bankruptcy protection, the largest in US history, setting off a market landslide not seen since the GD 80 years earlier thanks to its unethical exposure to the toxic subprime mortgage market.

Those jitters quickly evolved into fear, spreading its tentacles around the world as the dominos from the subprime debacle spectacularly collapsed, causing millions of people to lose their life savings, their homes, their jobs and their carefully planned pensions that were meant to keep them financially sound until their dying days.

By now, you'd think we'd be on the mend, slowly recouping our losses; clawing back what we'd lost in our investments and bricks and mortar, getting back into the groove of working full time and having a regular paycheque again. Having the courage to move forward with some semblance of confidence in our financial futures.

But. And there's always a but. The US's second tranche of quantitative easing (QE2) to keep the world's largest economy afloat has failed to impress, although it did keep the markets clipping along for a while. QE2 ended on June 30 and the markets are on tenterhooks again, leaving investors wondering what they are facing. Bull or bear: hold your own or cash everything in and run for the hills (told you those clichés were coming too easy).

And now, we discover, the US will hit its US$14.2 trillion (Dh52.1tn) debt ceiling on August 2. Once again, the world is on edge as the threat of default becomes more real, with US legislators failing (at least so far) to agree on whether or not they should vote to lift the statutory limit of the government's debt.

Adding insult to injury, Moody's and Standard & Poor's, the ratings agencies, are also threatening to downgrade the world's biggest economy's prized AAA rating.

Add the PIIGS to the equation (that's Portugal, Italy, Ireland, Greece and Spain; who comes up with these acronyms, anyway?) and you can be assured that the age of uncertainty will continue for what seems like ad infinitum.

Italy, the seventh-largest economy in the world, has a sovereign debt of €1.8 trillion (Dh9.2tn). Having just voted on an austerity package worth about €47 billion, it is in a better position than the tragedy that is now playing out in Greece, which needs €110bn from the EU to bail it out a second time.

For the mum's and dad's of the world, who have been forced to tighten and retighten their belts, will there ever be a time when they can relax again, knowing they can retire comfortably, pay off the mortgage and put their children through school, as well as treat themselves to the well-deserved luxuries in life?

Unfortunately, only time will tell.

fglover@thenational.ae