if the world's 6 billion people were to talk solidly on the telephone for the next year, their words could be transmitted over the potential capacity within a few hours . . . [only] 1 or 2 percent of the fibre optic cable buried under Europe and North America has even been turned on. 22
The telecoms boom inevitably collapsed, causing widespread disarray. By the beginning of September 2001 (before the 9/1 1 attack which is usually blamed for that year's recession) the "stock market value of all telecom operators and manufacturers" had "fallen by \$3,800 billion since its peak in March 2000" and "probably \$1,000 billion" had gone "up in smoke" .23
Faced with the collapse of this bubble into productive investment, it is perhaps not surprising that the next bubble would be around something that seemed to be . . . "as safe as houses" . During the recovery from the 2000-2 recessions those with money (old fashioned banks, newer financial groups such as hedge funds, and rich individuals with a few million in ready cash) found they could expand their wealth by borrowing at low interest rates in order to lend to those prepared for, or conned into, paying higher interest rates. Bits of various loans were then parcelled together into "financial instruments" to be sold at a profit to other financial institutions which in turn would sell them again. Those at one of end of the chain of lending and borrowing would not have the remotest idea where interest was coming from at the other end. In fact, many of those expected to pay it were poorer sections of the American population desperate to get somewhere to live but previously regarded as uncreditworthy. They were lured into taking out mortgages with "tickler" fixed term low rates of interest which could then suddenly be increased after two or three years. Rising house prices were supposed to make lending to them safe, since if they defaulted on their loans their homes could be repossessed and sold at a handsome profit. The fact that it was precisely the willingness of financial institutions to bid against each other to offer loans to buy houses that was raising the prices-and that prices would inevitably fall if they all began repossessing-was something that escaped the notice of the geniuses who ran these institutions.
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The New Age of Global Instability