Who should take the blame for the financial crisis?
Who should take the blame for the financial crisis?

The curious case of the dog that did not bark



Journalists love a cliché, few more so than "the dog that did not bark". It is a bit like the American newsman's desire to find the "smoking gun" - the damning evidence that identifies the guilty party. The non-barking dog refers to an incident in Silver Blaze, a Sherlock Holmes story, which contains the following exchange between the famous sleuth and a Scotland Yard detective: Gregory (Scotland Yard detective): "Is there any other point to which you would wish to draw my attention?"

Holmes: "To the curious incident of the dog in the night-time." Gregory: "The dog did nothing in the night-time." Holmes: "That was the curious incident." This observation is trotted out whenever there is a political or economic crisis to consider. Soon, respected commentators will be using it to try to determine why we were not warned there was about to be the largest economic downturn since the Great Depression. Who was the dog and why was he silent?

Let's examine the evidence, as Mr Holmes would have done, although we won't bother with a clay pipe and strong shag tobacco. Perhaps a shisha would do, instead. Who are the main suspects? Obviously we should blame the bankers themselves. They must have known, or at least suspected, that their pyramid schemes were not sustainable. Selling assets that are going to default on the second payment is not a business model, it's a recipe for disaster. However, we cannot blame the bankers. While we may curse and fume at their greed, we must also appreciate their ability to empty their banks' vaults and wait for the taxpayer to recapitalise them, before the process starts all over again. So. No silent barking dogs there.

What about the ratings agencies? Surely as guilty as the bankers? They were busy giving ratings to bonds that, rather than "triple-A" rated, were junk. Should they have made the odd growl, perhaps a little bark? Obviously not. The hard-working analysts were paid to give a good rating. Cut back on the triple-As and they would lose future business. It is no surprise that they, too, were silent. Some suggest that the lawyers might have piped up and howled like crazy, thus raising the alarm and preventing the nobbling of the famous racehorse. This is absurd. Lawyers are paid to be objective. "No objections, m'Lud," is their catchphrase. You may curse and blame them, but this is the nature of lawyers.

This is becoming a three-shisha problem. If we knew of a group of market gardeners that roared around in Ferraris rather than pick-up trucks, we would suspect that they were selling marijuana rather than magnolias. And we would probably be right. So why did everybody assume that every banker over 30 had the right to drive fast cars? Why did nobody bark? Perhaps we might have expected something from all the economists and academics. There were some lone voices constantly whining about excesses, but such types are best ignored. Who wants to be the one calling an end to a party?

It pains me to have to do this, but I fear I must now turn my attention to my own trade. You want journalists to inform and entertain you. But don't they also have a duty to warn you when somebody's fingers are in the till? Whatever happened to Thomas Carlyle's fourth estate, designed for keeping the king, lords and commoners in check? The American press was soundly condemned for acting as cheerleader when President George W Bush declared war on Iraq. With a few notable exceptions, they preferred "to embed" rather than question the motives for going to war in the first place. However, if they were lax in that instance, the last 10 or 15 years has seen them behaving like public relations consultants for Wall Street.

You might expect Vanity Fair to run its fair share of puff pieces on the marvellous folk in Armani suits. But what were The Wall Street Journal and Financial Times up to exactly? And what of Bloomberg and Reuters and Euromoney? If General Motors and BMW kept making defective cars that crashed after 10 minutes' driving, wouldn't you expect the motoring hacks to tell you? The British press is probably even more craven than its trans-Atlantic counterparts. Few understand finance. There was a time when each paper had at least one Marxist in a mackintosh covering the city because he secretly longed for its downfall. Now the hacks are all carrying Apple Macintoshes, hoping that some investment banker will notice their diligence or sycophantic articles and do them the supreme honour of giving them a job and the prospect of a juicy bonus. Their editors are no better. The Sunday Times' idea of investigative journalism nowadays is its Rich List, which celebrates every year how much richer the robber barons have become. It should be renamed the Greed List.

As the charcoal glows on my third shisha pipe, perhaps the reason why the dog didn't bark is because it was chewing on a juicy bone. We were all part of a conspiracy that we wanted to believe in. We wanted cheap credit and toys from China and we didn't want anybody to take them away. Nobody listened to warnings, just as nobody listens to the person who warns you to pack an umbrella for a picnic. You can hear the dogs howling now that the bones have been taken away and the sound of stable doors being bolted. The dogs will continue barking as unemployment rises, house prices fall and the dollar tanks, until everything stabilises. And then the journalists will be thrown another bone and everything will go quiet again.

rwright@thenational.ae

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