It was a time of optimism, and belief in the ultimate power of the financial markets. Many of us in Britain were taking advantage of the privatisation of companies like British Telecom and British Gas, including one of my teenage friends. Key figures like Ronald Reagan, Margaret Thatcher and Alan Greenspan were proud advocates for the “Greed is Good” reality of unfettered market economics.

I can’t help thinking that many of the leading lights in the recent Credit Crunch learned their trade in the ’80s, and subsequently built the prevalent culture of the City, for better and worse.

“Wall Street” was interpreted in a couple of different ways, I don’t know which was intended by Oliver Stone.

There’s no disputing that Gordon Gekko was rich and powerful, and that made him an attractive character to many. Equally though, he comes to a sticky end, losing it all because of his greed. To the same minds that succumb to the lure of Gekko that’s easily ignored, they’d have seen the setup coming a mile off, they’re too smart.

To another mindset, this ending is confirmation of deep seated beliefs in the dominance of good over evil. Gekko had it coming, and Bud Fox was vindicated in his betrayal because he was defending the poor and helpless, or was he just saving his own skin? He was tempted by the dark side, but eventually he was drawn back to the right path.

I know I’ve painted a very black and white version of the movie, but things are never that clear cut.

Many of the people in the firm Gekko was targeting would have pensions based on the performance of the markets, including Gekko’s own contribution. Many of them, like the majority of the post-war baby boomers, would now be retired with a handsome pension the like of which is unlikely to be seen again, all thanks to the “Greed is Good” 1980s markets.

Oh don’t get me wrong, I’m not free from sin. I invest in a range of financial vehicles, hoping that I’ll get enough growth to support me in my dotage. And whenever I hear claims about the evils of our financial sector I find it difficult not to remember that fact.

I can’t pretend that I’m making money without harming anyone, the markets and the world don’t work that way. I try to lead an environmentally friendly life, but I invest in petroleum and mining stocks; I make contributions to help alleviate the poverty of the majority of the population, but some of my money is inevitably invested in companies taking advantage of sweatshops.

But what’s the alternative? I could rely on the State to provide for me in old age, but I don’t trust our society to manage its own currency or its finances, now even less than before the Credit Crunch.

Britain’s public debt is too high to be sustainable, so our infrastructure is likely to decay over the coming decades, and our social support…

Private indebtedness is even more concerning. The housing market has outstripped the means of the average Briton, and generated a great deal of outstanding debt in the process. Even more debt has been amassed by excessive consumerism, a good times frenzy reminiscent of the ’80s, and much of this is leveraged against housing that’s still due for correction.

The Bank of England is going to have to buy more debt in order to keep the economy ticking over, an inevitable devaluation in the Pound Sterling, so my cash is going to drop in value relative to the developing economies where most things are made.

Another issue will be the resulting inflation, that’ll lead to a rise in interest rates, which is bad news for mortgage holders that are struggling now; you did realise that the current low rates were supposed to give you a breather to rebalance your finances. At least the resulting housing glut will give first time buyers and investors with cash a chance to enter the housing market at saner valuations.

As you’ve probably guessed, my views don’t readily reflect the prevailing attitudes of our Society. I just don’t trust its consensus judgement; maybe this explains my preference for value investment.

And for me that’s what drives investment and savings, this lack of trust in Society. Money in my pocket, or investments, or pension, means independence. That’s what I need because I can’t believe that the State wouldn’t let me down, and to have to rely on it is frightening.

And this leads me to ask an obvious question. What does State or Society actually mean if everyone in it feels a driving need to be independent?

Right

Something that you are morally, legally, or officially allowed to do or have.

There may be lots of things that we want, varied things, based on our personal motivations, but to what we have a right is decided in a distinctly impersonal manner. Our rights are awarded by group consensus: you can’t have a personal right to something unless the others around you agree with your claim, or they’ll take it away, an action that we may see as unfair.

I often hear talk about human rights on the news in respect to property ownership and access to services. Answers.com defines human rights as follows:

Human Rights

The basic rights and freedoms to which all humans are entitled, often held to include the right to life and liberty, freedom of thought and expression, and equality before the law.

I can’t see anything in that definition that entitles a person to any of the things I mentioned before, or any physical possession at all, it’s the law that does that, and these laws are the embodiment of group consensus.

Rights or Desires?

We confuse these two, and actually have a right to surprisingly little; except relative freedom to express ourselves, and have a say in the behavioural boundaries that are set by the law.

Just because we want something doesn’t give us the right to get it, and we’re going to have to face this fact in the coming years as we adapt to climate change and the impact of the financial crisis.

We in the UK won’t have the same financial freedom, and our public and private consumerism of the past decade will have to stop; people don’t have the right to own their home, and buy anything on a whim; and when combined with global population control, we have to reassess the right to have children, the acceptable scope of medical care, the cost of travel, and the price we pay for our food.

This might sound grim, but revisiting our attitudes could more evenly distribute genuine rights amongst those that value them, leading to a reduction in global poverty and conflict that would benefit us all.

Housing has seen a correction from the exuberant borrowing on mortgages in the UK and USA, but an over leveraged sector still exists: government and consumer debt.

The fact is that UK and American consumers have borrowed heavily from their futures to spend on the high life of the past ten years, and the time is approaching for the debt to be repaid.

National economies will start to grow again, possibly as soon as next year, and the extra money that has been injected via quantative easing, to stimulate this recovery, will need to be removed.

Unfortunately I doubt our fiscally weakened Government can buy back all the issued debt quickly enough, and interest rates will have to rise sharply to control increasing inflation as growth accelerates.

It’s at this moment that the general public will realise how broke they really are, as loans start to be harder to maintain. As a consequence the housing market will take another downturn as people try to realise some badly needed capital.

Our currency will devalue relative to newly emerging economies, and we’re going to have to learn to live in a poorer nation than we’d like to believe, but then maybe it’ll be a fairer world.

Whilst re-evaluating my investment portfolio in the wake of the Credit Crisis, this rule popped into my mind. I wondered if the finance industry will need to start applying it to their future activities.

The over-use of complex derivative products contributed significantly to the carnage, after all, if you can’t work out the value of an asset it seems obvious that that asset is too complicated. It’s also questionable whether some of these derivative products could ever have ‘worked’.

The complicated nature of these products allowed firms with an expertise in them to generate large profits. However, derivatives and securitized products are also difficult to value; these difficulties would eventually result in many firms having much higher levels of risk exposure than they had intended.

How does this apply to my personal investments? I’m carefully considering whether any aspects of my asset allocation strike me as too clever and what exactly my definition of ‘work’ represents.