It will come to be called Black Monday. For yesterday London╒s stock market broke all its records: never before has so much money been lost so quickly by so many.
But there have been stock market crashes ever since the concept of a market was developed. In London, Tokyo and New York the highest paid workers in the world sit amidst their banks of computerised dealing screens. You tend to assume that because they are so highly paid, because their technology is so highly developed, because they have been making so much money for their clients in recent months, that no one can lose. Yesterday gave the lie to this complacent assumption.
At one level, the events of yesterday around the world╒s securities markets were the working out on a modern stage of a play with an age-old plot. All the people who have been warning of the danger inherent in the stock market euphoria will take a bow, while the enthusiasts will be sent to the corner. Anyone who can remember the panic at the beginning of 1975, when the FT 30 share index went to 146 will appreciate that while yesterday breaks the records, all markets exaggerate and stock markets more than most. But there is another level to the collapse of markets around the world: the social and political dimension. The real fall-out will not occur for some weeks, even months, but it is possible to make a stab at the sort of consequences that may follow.
Here the collapse of the stock market has coincided with the largest privatisation ever: the sale of the Government╒s remaining holding in BP. The issue goes on, and it is a tribute to the robustness of the London system that the Government still gets its money. But what happened yesterday will kill the notion that stock market investment means paying out a fiver and getting a tenner in exchange.
It won╒t kill the concept of privatisation by any means. But it will put the whole policy into a much more healthy perspective. At its most basic level it will remind people that there is no such thing as a risk-free equity investment, that shares go down as well as up, and that there are other places, like building societies, for people with savings they cannot afford to lose.
More generally the collapse will surely act as a counterweight against some of the excesses of our society. We have seen those excesses in takeover tactics lead to grief, with a parade of people involved in the Guinness bid for Distillers now being charged. We are now seeing excess on the stock market also being punished ╤ though in a rather different way. The advertisements promising instant riches if only you buy this or that unit trust will be read with a new scepticism. The estate agents of the south east will learn to be a bit more cautious .
Some people will see this reaction as the Government reaping a whirlwind it has sown. That is perhaps unfair. But the reaction at least is healthy. And it is not before time.
But if stock market crashes mark turning points, does what we saw yesterday signal a serious economic reverse on a global scale? No one can possibly know, so distrust people who pretend they can. What you can say is that all share booms have to come to an end. Maybe it is better they should end with a bang than a whimper. Then people can get back to the serious business of running their regular lives and being rewarded for making goods and services, rather than money.
