Retracements and Racism

One of the buzzwords in finance circles right now is "reintermediation".

It’s the opposite of disintermediation, and it’s what happens when banks go

back to old-fashioned lending, carrying assets on their balance sheets, rather

than structuring deals between issuers and investors while taking relatively

little risk themselves. The interesting thing is that reintermediation is clearly

a backwards move, in terms of the broader secular trend: a retracement, if you

will. Once borrowers and lenders have worked out that they can deal with each

other directly and cut out the middleman, the course is generally set.

The move towards greater racial acceptance and integration is another long-term

secular trend, and one which is much more important than disintermediation.

But it, too, can suffer retracements, and I’m beginning to suspect that we’re

in one of those retracements right now.

In the past couple of days my colleagues Jeff Bercovici and Lauren Goldstein

Crowe have been covering the race issue in radio

and fashion,

respectively, where the latter is the more depressing: by all

accounts fashion runways are much whiter now than they were 30 years ago,

and for all that the industry has a handful of "power blacks", it’s

still overwhelmingly and depressingly white. (Journalists are just as bad, I

hasten to add, on the racial-integration front, and I think that bloggers are

even whiter than journalists more generally. Is there a single black


Most shocking of all, however, given that it’s Nobel Prize season, are Sunday’s


sentiments of James Watson, one of the scientific giants of the 20th Century.

He says that he is “inherently gloomy about the prospect of Africa”

because “all our social policies are based on the fact that their intelligence

is the same as ours – whereas all the testing says not really”,

and I know that this “hot potato” is going to be difficult to

address. His hope is that everyone is equal, but he counters that “people

who have to deal with black employees find this not true”. He says that

you should not discriminate on the basis of colour, because “there are

many people of colour who are very talented, but don’t promote them

when they haven’t succeeded at the lower level”. He writes that

“there is no firm reason to anticipate that the intellectual capacities

of peoples geographically separated in their evolution should prove to have

evolved identically. Our wanting to reserve equal powers of reason as some

universal heritage of humanity will not be enough to make it so”.

Watson’s comments have created

an uproar, of course, as they should. And the man is 79 years old, so it’s

maybe a bit unfair to hold him up as being symptomatic of anything particularly

contemporary. But I don’t feel that a world where a black Ivy League university

professor can find a noose

on her door can really be considered to have advanced much over the past decade

or so.

Investors are often concerned that even if they invest in a rock-solid long-term

trend, the market can still move against them in the short term. It’s a concern

which is not confined to the world of finance.

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