If the current crisis continues to rage on Wall Street, bankers could be wearing blue tunics like Chairman Mao's and carrying his little red book.
If the current crisis continues to rage on Wall Street, bankers could be wearing blue tunics like Chairman Mao's and carrying his little red book.

What if Marx and Mao were right after all?



When the Berlin Wall fell, American commentators were quick to point out the significance. "We flipping won," crowed PJ O'Rourke, a right-wing writer. Francis Fukuyama, an academic, was more measured, but perhaps even more extreme. In his book, The End of History, he declared that the event had ushered in a new era, that the Cold War struggle was over; the West had won. The message was clear: the Russian bear was beaten and capitalism was king.

Off we went on a financial money-go-around, fuelled by low interest rates. Globalisation was promised to bring us all to a better place, with free trade being the vehicle to do it. From Argentina to China, collective farming and industry were abandoned and markets opened up to outside investment. Privatisation was the dogma of choice, encouraged by the International Monetary Fund and advised by Wall Street.

A visit to government offices in eastern Europe in the 1990s was not complete without meeting their financial adviser - normally a fresh-faced American just out of graduate school. Even Russia fell in with this free-market thinking, privatising its major industries - even oil, gas and aluminium companies - until the rouble came under sustained attack and the markets crashed in 1998. Investment bankers, who had flocked to Moscow, packed their bags and left. Then president Boris Yeltsin resigned in disgrace, Vladimir Putin assumed power and was then voted in as president to restore order to the country. He was saved by a soaring oil price, started nationalising oil companies and had people wondering on Wall Street: could this ever happen here?

The notion was unthinkable, absurd. John Cassidy had written a piece in The New Yorker in 1997, outlining how some of his Wall Street banking chums had been using the writings of Karl Marx as a guide to Wall Street. How we laughed. But Marx, despite the failure of communism, had important and interesting things to say about globalisation, although few people were listening. His model economy made it clear that capitalism tended towards monopoly, which should lead to strong regulation. But Wall Street bankers resist regulation in the way that small children resist going to bed. Marx's "theory of immiseration", which stated that profits would increase faster than wages, so workers would become poorer in time, was proving correct. Inflation-adjusted wages in the late 1990s were lower than in the 1970s, with one exception - those working on Wall Street.

Capitalism went forward, unchecked and often without regulation; even the world's last major communist country, China, embraced it. But the Chinese were smarter than anybody had thought. Utilising their vast resources and workforce, they became the world's factory. Five years ago my then 10-year-old son asked me: "Is everything made in China?" His world view, though obviously skewed by looking at the bottom of too many toys and PlayStations, was prescient. On the back of all these exports, China suckered America into a dependence on cheap goods and in the meantime built up enormous cash reserves, which they lent to America so they could buy more cheap goods. A virtuous circle indeed.

Less than 20 years after the fall of the Berlin Wall and the comrades must be chuckling into their vodka and pickled gherkins. One of Marx's assertions was that "politicians carry water for their corporate paymasters". This has quietly held true for much of the past 20 years, but was definitely apparent in the past couple of weeks. At last the financial bosses are queuing up in Washington to make their case that their company is worth saving. This has led to unprecedented scenes: events on Wall Street in the past few weeks are nothing short of nationalisation. First, the US Treasury took over Freddie Mac and Fannie Mae; they were quasi-government backed, so the move was not altogether unexpected. However, the authorities refused to prop up the ailing investment bank Lehman Brothers.

The British used to execute its admirals, as Voltaire observed: "to encourage the others". This may not have encouraged the markets, but panicked them instead. It was supposed to send a signal to the so-called "Masters of the Universe" that they were on their own. But it spooked the markets into wondering who would collapse next. Nobody was too big to fall. This philosophy lasted a whole day, when it became clear that American International Group (AIG), America's biggest insurer, needed an urgent injection of funds or it, too, would seek bankruptcy protection. As it is a major player in the US$62 trillion (Dh227.7tn) credit default swaps market, it was deemed too big to fail. It used to be said that if you owed $100 to a bank, they owned you; if you owed them $1 million, you owned them.

So the American taxpayer now owns 80 per cent of AIG, has backed the fire-sale of Bear Stearns to JP Morgan with guaranteed loans, has rescued Fannie Mae and Freddie Mac and provided a further $300bn for the Federal Housing Authority. All in all, the sums are enormous, pushing up to $1tn and an exposure several times that. What next? The last two "bulge bracket" banks, Goldman Sachs and Morgan Stanley, have come under sustained selling pressure on the market.

The US Securities Exchange Commission (SEC) announced yesterday plans to limit short-selling. It may have come a day too late to save Morgan Stanley, and possibly Goldman Sachs from a merger of convenience. The market has decided that the business model of lending and leveraging is no longer feasible. Commercial banks are immune to this problem, because they rely on retail deposits for their capital. This begs the question: if banks won't lend to other banks, why should we?

Morgan Stanley is desperately looking around for somebody to bail it out - and looking beyond Washington. Its main focus is China, not unreasonably, as they have the money. Reports suggest that the country's wealth fund, China Investment Corporation, is interested. By the weekend one of America's grandest investment banks may be called Morgan Stanley Bank of China. Soon everything won't be just "made in China", but owned by China. Perhaps Savile Row suits one day will no longer be the clothing of choice on Wall Street, but instead blue tunics, just like Chairman Mao's. Bankers will be carrying little red books, reminding them of the importance of regulations, not to deal in financial instruments that they don't understand and not to lend to people who cannot pay them back.

Wall Street will be hoping it won't come to this, but will have to learn to live with more scrutiny. rwright@thenational.ae

The Brutalist

Director: Brady Corbet

Stars: Adrien Brody, Felicity Jones, Guy Pearce, Joe Alwyn

Rating: 3.5/5

The specs

Engine: 2.9-litre twin-turbo V6

Power: 540hp at 6,500rpm

Torque: 600Nm at 2,500rpm

Transmission: Eight-speed auto

Kerb weight: 1580kg

Price: From Dh750k

On sale: via special order

Opening Premier League fixtures, August 14
  • Brentford v Arsenal
  • Burnley v Brighton
  • Chelsea v Crystal Palace
  • Everton v Southampton
  • Leicester City v Wolves
  • Manchester United v Leeds United
  • Newcastle United v West Ham United
  • Norwich City v Liverpool
  • Tottenham v Manchester City
  • Watford v Aston Villa
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Revibe%20%0D%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202022%0D%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Hamza%20Iraqui%20and%20Abdessamad%20Ben%20Zakour%20%0D%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20UAE%20%0D%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Refurbished%20electronics%20%0D%3Cbr%3E%3Cstrong%3EFunds%20raised%20so%20far%3A%3C%2Fstrong%3E%20%2410m%20%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EFlat6Labs%2C%20Resonance%20and%20various%20others%0D%3C%2Fp%3E%0A

Miss Granny

Director: Joyce Bernal

Starring: Sarah Geronimo, James Reid, Xian Lim, Nova Villa

3/5

(Tagalog with Eng/Ar subtitles)

if you go

The flights
Emirates flies to Delhi with fares starting from around Dh760 return, while Etihad fares cost about Dh783 return. From Delhi, there are connecting flights to Lucknow. 
Where to stay
It is advisable to stay in Lucknow and make a day trip to Kannauj. A stay at the Lebua Lucknow hotel, a traditional Lucknowi mansion, is recommended. Prices start from Dh300 per night (excluding taxes). 

The specs: 2018 Ducati SuperSport S

Price, base / as tested: Dh74,900 / Dh85,900

Engine: 937cc

Transmission: Six-speed gearbox

Power: 110hp @ 9,000rpm

Torque: 93Nm @ 6,500rpm

Fuel economy, combined: 5.9L / 100km

THE SPECS

Engine: Four-cylinder 2.5-litre

Transmission: Seven-speed auto

Power: 165hp

Torque: 241Nm

Price: Dh99,900 to Dh134,000

On sale: now

UAE currency: the story behind the money in your pockets
Tips for job-seekers
  • Do not submit your application through the Easy Apply button on LinkedIn. Employers receive between 600 and 800 replies for each job advert on the platform. If you are the right fit for a job, connect to a relevant person in the company on LinkedIn and send them a direct message.
  • Make sure you are an exact fit for the job advertised. If you are an HR manager with five years’ experience in retail and the job requires a similar candidate with five years’ experience in consumer, you should apply. But if you have no experience in HR, do not apply for the job.

David Mackenzie, founder of recruitment agency Mackenzie Jones Middle East

Expert advice

“Join in with a group like Cycle Safe Dubai or TrainYAS, where you’ll meet like-minded people and always have support on hand.”

Stewart Howison, co-founder of Cycle Safe Dubai and owner of Revolution Cycles

“When you sweat a lot, you lose a lot of salt and other electrolytes from your body. If your electrolytes drop enough, you will be at risk of cramping. To prevent salt deficiency, simply add an electrolyte mix to your water.”

Cornelia Gloor, head of RAK Hospital’s Rehabilitation and Physiotherapy Centre 

“Don’t make the mistake of thinking you can ride as fast or as far during the summer as you do in cooler weather. The heat will make you expend more energy to maintain a speed that might normally be comfortable, so pace yourself when riding during the hotter parts of the day.”

Chandrashekar Nandi, physiotherapist at Burjeel Hospital in Dubai
 

Biography

Favourite Meal: Chicken Caesar salad

Hobbies: Travelling, going to the gym

Inspiration: Father, who was a captain in the UAE army

Favourite read: Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechter

Favourite film: The Founder, about the establishment of McDonald's

How to join and use Abu Dhabi’s public libraries

• There are six libraries in Abu Dhabi emirate run by the Department of Culture and Tourism, including one in Al Ain and Al Dhafra.

• Libraries are free to visit and visitors can consult books, use online resources and study there. Most are open from 8am to 8pm on weekdays, closed on Fridays and have variable hours on Saturdays, except for Qasr Al Watan which is open from 10am to 8pm every day.

• In order to borrow books, visitors must join the service by providing a passport photograph, Emirates ID and a refundable deposit of Dh400. Members can borrow five books for three weeks, all of which are renewable up to two times online.

• If users do not wish to pay the fee, they can still use the library’s electronic resources for free by simply registering on the website. Once registered, a username and password is provided, allowing remote access.

• For more information visit the library network's website.

Coming soon

Torno Subito by Massimo Bottura

When the W Dubai – The Palm hotel opens at the end of this year, one of the highlights will be Massimo Bottura’s new restaurant, Torno Subito, which promises “to take guests on a journey back to 1960s Italy”. It is the three Michelinstarred chef’s first venture in Dubai and should be every bit as ambitious as you would expect from the man whose restaurant in Italy, Osteria Francescana, was crowned number one in this year’s list of the World’s 50 Best Restaurants.

Akira Back Dubai

Another exciting opening at the W Dubai – The Palm hotel is South Korean chef Akira Back’s new restaurant, which will continue to showcase some of the finest Asian food in the world. Back, whose Seoul restaurant, Dosa, won a Michelin star last year, describes his menu as,  “an innovative Japanese cuisine prepared with a Korean accent”.

Dinner by Heston Blumenthal

The highly experimental chef, whose dishes are as much about spectacle as taste, opens his first restaurant in Dubai next year. Housed at The Royal Atlantis Resort & Residences, Dinner by Heston Blumenthal will feature contemporary twists on recipes that date back to the 1300s, including goats’ milk cheesecake. Always remember with a Blumenthal dish: nothing is quite as it seems. 

Fighting with My Family

Director: Stephen Merchant 

Stars: Dwayne Johnson, Nick Frost, Lena Headey, Florence Pugh, Thomas Whilley, Tori Ellen Ross, Jack Lowden, Olivia Bernstone, Elroy Powell        

Four stars

COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
How to protect yourself when air quality drops

Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.