business, economics, nightlife

Creative Destruction in full effect

I have no idea if Joseph Schumpeter had a penchant for smugness but I’m sure that if he did, he would be standing loftily on his balcony, smoking a pipe whilst allowing himself a rye smile at the current goings-on in the World economy. One of the celebrated economist’s central and most quoted work was on the topic of ‘creative destruction’, a process which he envisaged would act as the very engine room for sustained long-term economic growth. As we sit back and watch as those that have followed flawed business plans and practices (and ultimately haven’t mitigated the risks faced by their businesses properly) go to the wall we can be assured that Schumpeter saw this process of high profile failure of incumbents as a key to long-term innovation and prosperity.

The hysteric and ‘expert’ laden media will have ensured that you know everything (that they know, which isn’t a great deal) about the unprecedented failures in the financial sector but I just wanted to put together a definitive list that would make Schumpeter get a bit of a rod on…here are the fallen, the bailed-out, the nationalised, the engulfed and the teetering, please drop me a line if I’ve missed any out…

• US Banks -Bear Sterns (bought by rival), Merril Lynch (bought by rival), Lehman Brothers (part bought/part administration), ING (government bail-out), Freddie Mac & Fannie Mae (government bail-out), Washington Mutual (bought by rival), Walcovia (bought by rival).
• UK Banks – Northern Rock (nationalised), HBOS (sale pending), Alliance & Leicester (sale pending), Bradford & Bingley (part nationalised/part sold), Derbyshire Building Society and Cheshire Building Society (sold to rival)
• UK Corporates – Joy, Rosebys, Hardy Aimes, XL Travel, Motor World and WorldSki (all administration) and MFI (MBO executed)
• Belgian Banks – Dexia, Fortis (both still being finalised, appear to be part govt bailout and part sale)
• German Banks – Dresdner (sale to rival) , SachsenLB, Hypo Real Estate and West LB (all govt or investor bail-out)
• Icelandic Banks – Glitnir (nationalised)
• Icelandic Corporates -Stodir (administration)
• Italian Corporates – Alitalia – bail out being discussed

On the related issue of economic pundits in the media, Robert Peston i.e the Horseman of Financial Apocalypse is popping up everywhere thesedays. I had the gross misfortune of reading a groveling, arse-probing of an article by one of his former underlings in the Independent this Sunday. The author only just stopped short of calling Peston the second coming, what an overt textual favour. My thing with Peston is that I just can’t decide if his on-edge demeanour is either a) him about to go Michael Douglas “Falling Down” or b) his cum face. Considering the pure delight he seems to get from the financial plight, I’m definitely going for a perpetual version of the latter. Here’s the cheeky chappy himself, see what I mean?:

have your say