Vital for a steady hand - and mind - in volatile times

Sep 17 2008 by Matt Johnson

AS WALL Street went into meltdownon Monday, an auction room in London witnessed amazing scenes of its own.

The collapse of Lehman Broth- ers, and the near-collapse of Mer- rill Lynch, created a cataclysmic impact, marking as they do another defin- ing moment in the credit crunch.

Events this week – and the chain of further events they set in train – suggest this is more than a mere crunch.

The reporting of these volatile markets is a critical aspect of the whole situation facing the world's mon- ey men and women. Their stain- less steel and smoked glass towers no longer look quite so dominant.

During Monday, the news chan- nels appeared to be full of breath- less correspondents stating thattelling view-ers and listeners that Lehman's demise and the Merrill rescue were huge stories.

These pieces to camera – often on noisy trading floors – were interspersed with reaction and comment from analysts. The maj- ority of the clips I saw on Mon- day and yesterday revealed what a common, shared theme, confidence, or rather lack of it, was doing for these banks.

To a large extent, this lack of confidence is fuelled by the type of "instant" news culture which per- vades. A few weeks ago, we saw the impact rumour and specula- tion (widely reported of course) has on financial markets and the institutions trading in them.

I am not for a moment suggest- ing reporting of the Lehman cris- is has been irresponsible. But there must surely be incidents where the drive to fill rolling news channels has actually given some poten- tially damaging rumour or specu- lation the legs to run amok, caus- ing further chaos, and that curs- ed lack of confidence. And in the maelstrom of collapsing banks, panic-hit markets and uncertain- ties, there are some who gain.

It was reported that some US networks had hiked their advertising rates to buy airtime during special reports from Wall Street. And it's not just the broadcasters who see opportunit- ies here.

Remember (could we forget?) it's Presidential election year in the US. And our own political landscape can hardly be described as stable, especially from where the Prime Minister is sitting.

There are those who think the market crises can actually benefit those in political power. The need for a steady hand is paramount, providing, of course, those in control can escape blame for the crisis in the first place.

And then there are those in that London auction room where art collectors instructed their representative to fork out a record of £70.5m for items created by Damien Hirst.

The auction took place on the day more than 5,000 Canary Wharf bankers packed bags and left their desks, unpaid it seems,- for the last time.

In the current financial climate, there may be those who believe investing in modern art is safer than more conventional markets.

But does that really explain the result of our own Big Auction last week. Are our Super Lamb Bananas really worth the £400,000-plus raised at St George's Hall last Wednesday? Or is that an example of Liverpool businesses demonstrating robust trading in the face of market turmoil? Time will tell.

MATT JOHNSON is chairman of Mando Group