BANKS on the RUN

It’s very hard for an unreconstructed old Socialist like me to watch the current “financial crisis” without roaring with laughter. The triumph of capitalism – the worst historical development of my lifetime and the one that ensures the relatively imminent end of all life on the planet, because capitalism has no interest (and I do mean interest) in the long term measures necessary to reverse climate change or disarm the fanatics – is not, I think, about to meet its nemesis, but the shine has certainly come off it. Nearly 40 years ago, the centrist Tory leader Edward Heath coined the phrase “the unacceptable face of capitalism”. Now everyone has seen that face.

Of course you will say that I cannot be a proper Socialist because I don’t wear sackcloth and live off nuts and berries. Far from it, I aver. I may well be one of those Champagne Socialists they speak of. For that I make no apology. “When in Rome” and other wise old sayings will cover the case. When capitalism has triumphed and no political movement with a realistic prospect of power subscribes to Socialism any longer – Labour having torn up Clause IV and embraced not only the free market but privatisation, franchising, non-state education and private pension and health schemes – there’s not much point in holding out for Utopia. But I don’t have to foreswear what I still think is a better philosophy. I can have a portfolio of shares (inherited from my father, save for some small holdings I took when my financial advisor insisted that I was wasting my capital, along with a modest investment I made in the building society that once gave us a mortgage) and yet feel just as strongly against the principle of unearned income as I did when I was 20. Divesting myself of my shares won’t bring the revolution a day closer. The implosion of capitalism is much more likely to achieve that.

What stops me cackling at the “panic” (so called) that daily grips the money markets is the possibility that people I know and care about may be embarrassed and even hurt. However fastidious or timid or incendiary we might be, we have all made our accommodations with triumphalist capitalism, whether it’s accepting a queue-jump from BUPA because it’s a loved one’s health or taking out an ISA or buying to let. We deal with the world as we find it. Believe me, I’d change it if I had the power to do so.

There is some consolation in that the current climate is proving deleterious to right-wing parties. The easy money culture that Reagan and Thatcher promoted in the 1980s has tarred their heirs with all of the feathers that fly when – to change the image – the shit hits the fan. Good.

Of course it doesn’t ensure that Obama will win the US presidency, any more than it necessarily prolongs Brown’s tenure at Downing Street. But it puts conservative forces on the back foot, at least for now. The rallying cry for deregulation, silencing every other voice for a quarter of a century, falls now on unsympathetic ears. It cannot be a coincidence that the most regulated banking systems – that in Sydney, for instance – have taken the smallest hits. Fragile and opportunist new money markets, such as that in Russia, are in free fall. And the Icelandic banks, which tried to steal a march on their rivals by waving giveaway deals at all and sundry, have proved the least robust of all. Had we all known that our local councils and police services and charities had put so much trust in the Icelandic snake-oil salesmen, we might have raised our voices. We were no doubt naïve to imagine that the Council Tax that they took off us was being invested in actual services. After all, that’s not how venture capitalism works and we are all venture capitalists now, even individual care homes and hospices.

As for the Serious Money types in the city, we can only hope that they start throwing themselves from high buildings in significant numbers. The quarter-century gravy train won’t actually come off the rails, even if the high street banks do start to fold, because all those sharks are hedging their own funds as hard as they can and praying that no new rules will in reality begin to deleverage them. None will, of course. There are too many loopholes to plug and there is too much street-smart for the authorities to outwit. When RBS finally accepts that it will have to part company with the indefensible Sir Fred Goodwin, you can be sure that he will walk away with a sum nearer eight figures than seven.

People are paid top dollar to protect the ill-gotten gains of the asset-strippers and speculators and arbitrageurs. There are people in the city called reward advisors, even as specific as employee-benefits-and-incentive advisors. These people’s function is to maximize bounty and to minimize exactions. They are clearly not serving the general good. The whole financial district is designed to produce one result, the enriching of itself. For a very long time, it has succeeded beyond its wildest dreams.

What has been most astonishing is the every-man-for-himself stance that kicks in as soon as the going gets tough. “Panic” only reigns if individuals are panicking. Each of them knows full well that the effect of “panic” is to exacerbate the climate because the panic spreads. The city seems to be chronically and pathetically short of individuals wise, experienced and authoritative enough to bang heads together and tell them to get a grip. Some money markets have been temporarily closed by their governments. Perhaps all the world’s stock exchanges should be shut down for a cooling off period. Liquidity will have to wait. Debts will go unpaid until the market settles again. There is no deal of any kind anywhere in the world, save for a medical emergency or natural disaster, that cannot be put on hold for a few days. The CEOs and market managers could use the time to gather their people together and tell them, upon pain of instant dismissal, that they are to behave like grown-ups instead of stampeding cattle.

For the rest of us, we marvel at how central government can put its hand in its pocket and pull out a wad of millions, at no notice. If they can do that to stop HBOS and co going into receivership, why can’t they do it to pay for the schools, hospitals, railways and arts organisations we need in order to remain a decent country? Come to think of it, they do that to fund foreign invasions and occupations too. They only ever “find the money” or run up the debt for exercises that the ordinary voters don’t care about. You could hardly ask for a more vivid demonstration of how political leaders, as a matter of course, lose touch with the needs of the people they serve. Now that they are faced with financial meltdown, they had better get back in touch with the people damn quick.