Remember the fable of the hard-working ant and the irresponsible fun-loving grasshopper? As generations of parents tell their children, both creatures get what they deserve. The grasshopper pays a terrible price for his summer of fun, while the ant survives the winter snug and smug.
Twelve months on from the collapse of Lehman Brothers and much about the event remains mysterious. It was the trigger that caused a deep recession, which began in the US but steadily crept across Europe and Asia, morphing into a global catastrophe worthy of a potboiler novel.
A notable phenomenon of this past year of living dangerously in financial markets has been the triumph of the ultra-bears. Deeply pessimistic commentators such as Nourel Roubini who were previously unknown or had only niche followings have been propelled to rock star status.
Shabu shabu is a simple but delicious Japanese dish in which transclucently thin slices of beef are dipped into a boiling broth of vegetables and tofu. A few seconds will do; just enough for the meat to turn pinky-grey.
It’s the end of a quarter of a century of Reaganomics. It’s the end of equities, of globalization, of capitalism itself. We need a new system, a new economics, a whole new set of values. The bull market in overheated rhetoric is in full swing, and as is so often the case when a bubble bursts, there is a strong reaction against the intellectual foundations of the era that spawned it, spiced with rage against the people who benefited so handsomely.
It’s déjà vu all over again. That’s what the rip-roaring bull market in Chinese stocks looks like to anyone who lived through the late 1980s Japanese bubble.
The performance of the Chinese market now comfortably exceeds that of other classic bubble markets – Japan in the late 1980s and TMT in the late 1990s. Bubble markets have much in common, including the inevitable denouement.