Friday, 27 March 2009

Disrupting the City?

Two snippets from the Today programme this morning brought the craziness of the current impasse into sharp focus for me.

First, we had the 'anarchists-are-coming-to-get-us-better-dress-down-and-hide-under-bushes' story about City fears of violence next Wednesday on the G20 protest. Rick exhibits a healthy dose of skepticism about whether this will prove anything more than an opportunity for the corporate security staff and police to play soldiers. No doubt some folk in black ski masks may smash a few windows for the cameras though....and the cameras will then depart allowing the police to, ahem, robustly restore order. Cue shocked Daily Mail headlines. (Not about police brutality)

Secondly, we heard that Barclay's shares have soared on news that it won't have to seek financial aid from government. Cue 'green shoots of recovery' headlines in the press no doubt.

To fully understand the relationship here, I advise a careful reading of Willem Buiter's blisteringly angry article on moral hazard which touches on the Barclay's tax memo debacle amongst other issues. You may particularly wish to note his view that,

"Financial nonfeasance, misfeasance and malfeasance thrive on opaqueness, complexity and lack of transparency.....banks ... may be reluctant to accept the state as a major shareholder [because of] the more intense scrutiny of what the bank has on its balance sheet that this is likely to imply."

He goes further:

"What we have seen and continue to see in much of the border-crossing financial sector, however, is a ... literal form of moral hazard: a lack of morals in some key participants in the financial system dance causing major hazards to the financial well-being of millions of powerless victims. Corrupted morality putting at risk genuine, wealth-creating financial intermediation, innovation and risk-taking. This is moral hazard strong..... It makes me sick to see an entire branch of human endeavour brought into disrepute by the actions of a relatively small (but still far too large) number of masters of the universe. There will have to be a reckoning, and not just in the court of history."

Unlike Naomi Klein et al I have nothing against Starbucks per se. I've never really understood why they always get their windows stove in. I don't own a dog on a string and I've no idea how to make a petrol bomb. On the four or five occasions I've ever been in the middle of a demo which turned into a riot I've always beaten a hasty and cowardly retreat.

But I think I know who the real enemy is. & it's not the Class War Buffoons.

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