You will find them in the leafier, tonier suburbs of London, Frankfurt, New York, San Francisco, Chicago. Well-groomed, satisfied-looking men and women sipping cappuccinos, enjoying the afternoon sun on a working day. The new investment banking unemployed are rediscovering the pleasures of family life and ample leisure.
Of pain and worry there is little sign yet. A generation is being laid off into considerable initial comfort – generous payoffs and substantial equity in expensive houses to fall back on.
Early middle age is a good time to reassess the fraught and hectic years of endless working nights and weekends. The wealth those years brought, and the escape from them, provides a feel-good factor that persists for now. Thoughts turn to new careers in teaching, charity work or setting up that little local business.
When the destruction of wealth in the equity markets finally feeds through to housing, things may look a little darker.
Governments in the developed world seem to be gripped by a similar mood: the boom years may be over but the feeling of abundance lingers and the temptation is to spend easily, in the expectation that it can’t be too much longer before the next boom begins. The intellect can comprehend that the 1990s were a one-off but viscerally investors, governments, corporations and bankers still yearn for the good times and feel in their bones that they must return.
In the US, the projected multi-trillion dollar 10-year budget surplus that George W Bush and Al Gore debated so eagerly how to spend in 2000 is now projected to be – a deficit. Nonetheless the Bush administration continues to increase spending, mainly on defence.
In the UK, finance minister Gordon Brown has ditched his trademark prudence and chosen to throw public money at black holes such as the health service, arguing that public finances won’t deteriorate thanks to strong economic growth. In euroland, it suddenly seems OK to ignore the Stability and Growth Pact.
Fundamental economic restructuring along free-market lines is on hold.
For wealthy developed economies to increase public spending during downturns is no bad thing. The danger is if governments get hooked on the drug – just as the danger of central banks being cheered for rate cuts that stave off crises is that the response becomes habitual, bubble-inflating and ultimately destabilizing.
And there is another ideological danger now. This is the moment when the excesses of capitalism stand revealed in all their ugliness. The sense of popular injustice is at its sharpest: among savers who had come to rely on the equity markets and then saw years of paper gains obliterated, among pensioners who find companies reneging on their promises to provide in old age because the costs may bankrupt them.
Those who should have spotted the crooks – analysts, regulators, governments, boards of directors, investors – stand ashamed, because they know they failed and also that they encouraged the villains.
A return to big government is seductive.
Clearly the doctrinaire imposition of full free-market orthodoxy on developing economies has been unwise. Surely government should do its job. Providing independent regulatory oversight is a part of that.
But government cannot and should not replace the markets. Compare the capacity of the free-market US to create jobs over the past 20 years with that of semi-socialist Europe. Then think about the bankrupt hulk that was Russia and large parts of its satellite economies in 1989. Think, too, about how over-regulated, over-protected Japan responded to the downturn at the end of the 1980s and how America did.
We stand at a dangerous moment, when new isolationism in trade talks and restrictions on the free movement of capital, people, goods and services are at hand. In part, they are the natural response to economic slowdown and to the revelation of excess. But let us not rush full tilt to abandon a system that has notched up far more successes than failures.
Red-blooded, competitive free-market capitalism may well be the worst possible economic system – with the exception of all the others.
