George Pitcher: Which way forward now for a world in disarray?

Attacking the bastions of global business has politicised world markets, making it unlikely President Bush will countenance a run on US stocks, says George Pitcher

I was only ever in the Windows on the World restaurant at the top of the World Trade Centre once and it was about 15 years ago.

Being an overcast day, there was nothing much to see through the plate-glass, and I joked with financial and media colleagues about aircraft navigational systems and fears that the janitor “might leave the landing lights on at night”. I remember that I was struck that it wasn’t fog outside the windows – the clouds rolled by as they would past aeroplane windows. The memory makes me cringe now.

I don’t know why it should – we couldn’t even have dreamt of the events of last week – but I suspect part of the reason is the pious condemnation in some quarters of the journalistic phlegm that invariably meets great human tragedies. Those who complain of a lack of taste among media folk who greeted the scenes from New York with remarks about “great pictures”, or observed that it saved our Prime Minister from a difficult speech to the Trades Union Congress, surely miss the point.

This isn’t humour that we are meant to find funny. It is a sang-froid in the face of evil that is, in its way, as defiant of the terrorist perpetrators of that evil as were the snatched assertions of love and faith by mobile phone and voice mail of those who were about to die. Far from insulting the victims, it is in a strange way an expression of solidarity with them.

I remember checking into the Grand Hotel in Brighton shortly after it was rebuilt due to the IRA bombing of the Conservative Party Conference in 1984 and, admiring the sea view, asking what floor we were on. “Third floor, sir,” replied the bell-hop. “Used to be the fifth.”

I dare say he’d have been fired if he’d said it on the record, but the fact is that such hard wit mocked the terrorists, rather than their victims, through its very survival.

There is a dislocation in this between formal government responses and what is happening at street level. And the wider point is that it extends much, much further than black humour. This dislocation between attitudes at a formal, governmental level and what is actually happening in commercial life and in the markets is profound. Commercial attention at the start of this week focused intently on whether this unprecedented terrorist attack would trigger a collapse in equity prices that would tip America and, consequently, the world into recession. But, whatever the added volatility to the processes of Western capitalism delivered by last week’s atrocities, these free market expectations are misplaced.

The US equities markets – as well as the dollar – have just been politicised. It is unthinkable that the US administration will countenance a victory for its enemies in the shape of a protracted run on US stocks. It is said that the Federal Reserve, under chairman Alan Greenspan, intervened in the futures markets during the Clinton years to prevent knocks to US investors’ confidence in the economy. That was for internal political reasons. How much more important is it for President Bush to underpin the markets for such monumental external political reasons?

In a perverse way, US equity prices in the longer term are more secure as a result of last week than if they had simply been left to market, rather than political, forces. Over here, there are similar dislocations between what is happening at the formal, governmental level and what is happening on the ground. Tony Blair has announced that we stand by America and that “we are at war with terrorism”. That’s not quite true, is it?

Blair’s government has spent the last couple of years trying to negotiate a peace with terrorists in Northern Ireland. His Government may perceive a tactical opportunity for enjoining US assistance in that endeavour through declarations of solidarity in its new terrorist era, but there’s no reason to suppose that he can take the British people with him in his own abstract jihad. The sceptical and downright anti-American sentiment expressed on BBC’s Question Time last week may prove more accurate of the British public mood which, while horrified, seems wary about alienating large parts of the globe by a disproportionate vengeful response. This scepticism will be fuelled by commercial fears that unnecessary military action could separate us from predominantly Muslim markets, such as those of South-east Asia. These markets view the attack on America with the same sympathy as the rest of us, but they may still be unsure whether we see them as part of the “civilised” or “uncivilised” world.

Other than this, what will really happen to world business now? My guess is that the idea of the “global village” will take a knock, as markets hunker down domestically – “abroad” is suddenly a much scarier place. The airlines will suffer badly – Continental has already indicated a possible 20 per cent cut in capacity.

And telecoms and IT will see a resurgence of activity, as the West turns away from office conurbations to remote, discrete working practices offering greater security. While this may be driven sociologically, as much as industrially, such developments are likely to be hidden for a while yet behind a bloodbath of revenge. And that really isn’t funny.

George Pitcher is a partner of issues management consultancy Luther Pendragon

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