Sometimes, even I have to feel sorry for some indecently rich people. And between chuckles this morning when reading this article, I am sure I could detect just a wee, tiny, infinitesimal twinge of sympathy... or maybe it was lumbago, who knows.
Fred Goodwin, Fred the Shred, and to Gordon Brown and his cronies ‘SIR’ Fred was, until a couple of years ago, a lucky man. Doubtless he had some talent and a lot of drive, having risen from relatively humble beginnings to be the chairman of Scotland’s biggest company, and one of the UK’s big banks (having taken over Williams and Glynn and National Westminster Banks, the latter of which was three times its size).
He was even knighted in 2004 for services to banking, despite, or perhaps because of his ruthless management style which saw him “shred” companies, paring them to minimum staffing levels and maximum profits. Oh, how little they knew!
Well, we all know what happened then. We all know, because the prime minister of the day told us. It all started in America, spread around the entire world, and landed here, in Britain, and North Britain.
Of course those of us with more than one working brain cell knew that that was the usual pile of rubbish that Brown was apt to blether*. What we knew was that in many parts of the world banking and bankers had been allowed to get out of hand; they believed that they had found magical ways of making gold, latter day alchemists if you will... but alchemy is a science that belongs in the 17th century world of “Captain Face”, “Subtle” and “Dol Common”** or maybe even today’s “Harry Potter”. And, as had happened before, it all came crashing down.
And because Freddy boy and his bank had been in the forefront of the alchemy, the seeming possessor of the philosopher’s stone that turned base metal into gold, he came crashing down the harder when the whole banking Ponzi scheme fell apart.
But in the way of these things, Fred picked himself up, dusted himself off, and despite, or maybe because of the intervention of the then Minister for the City, Paul Myners, he trotted off abroad and into the sunset with his knighthood, a pension of gigantic proportions and the prospect of another job in the offing, while the British taxpayer was left with a multi-billion pound bill to pay for the credulity or, stupidity perhaps, of its leaders...and bankers.
However, not all has been rosy for Goodwin, despite his fortune. The size of his pension was revealed as being £700,000, not a bad amount for steering a company downwards to be worth approximately 2% of what it had been worth a few years previously, causing outrage. Then someone used parliamentary privilege to reveal that Freddy was one of the super rich who had paid for a super-injunction. In this case to hide the fact that he had been having an affair with a Royal Bank colleague (supposedly promoted by him well above her level of competency), and as a result of which his wife booted him out of their house.
And now a new book about him, written by two Tory MPs (but politically neutral) promises to be a good read. Finally, and worse still, it will be serialised in a national newspaper... so we’ll all get to know all Freddie’s dirty secrets.
Now anyone feeling twinges?
*Scots word meaning “talk rubbish”
Pic: Fred Goodwin... smirking...
CRASH 2: Slog prediction comes true within hours as Greek banks request emergency liquidity
ReplyDeleteJust to brighten the day I believe Jackie Smith must of had some blue paint left and given some to Clegg and Rennie in Glasgow.
Oh dear, the world is falling down around us. Just as well that will never happen to the UK. The government would surely rather every man-jack of us died of starvation before it lost the prestige of a AAA** Gold embossed rating.
ReplyDeleteAnd yes I see that Rennie and Clegg got some paint over them, which judging by the comments on newspaper stories about it seems to have caused no great concern to the public.
Frankly I'm not a great one for paintballing politicians but I have to say that when they promise the Earth and then deliver a small patch of wasteland, and lie through their teeth when questioned about it, or worse still refuse to answer questions and reply in general terms, skirting the question, you really have to wonder what the hell else you can do to let them know what you think of them.
The message to Clegg... Go home and don't come back; you're not in the least welcome here. To Rennie...Erm, who the hell are you?
Gordon Brown blamed the US sub prime mortgage crisis for the banking collapse. It is worth remembering that this had its origins in heavy legal pressure from the Clinton administration on mortgage lenders (particularly the quasi-federal Fanny Mae and Freddie Mac) to extend mortgages to people who were not considered good risks in conventional banking terms. (Many of them happened to be black and that was part of Clinton's motivation - to extend property owning).
ReplyDeleteAs they dropped their credit score requirements and released mortgage funds to known bad payers, the banks found that the price of property rose. So quite a high level of defaults was acceptable as repossessed houses were almost certain to be worth more than the amount of the loan which had first been extended. At some point the music had to stop and it was amazing how long this tune played on. My wife and I saw this coming a good eight years before it happened but great Gordon's clunking brain was convinced he had abolished boom and bust. We were amazed how long it went on.
Of course, the really clever bit by the bankers was to bundle up all these dodgy mortgages into "diced and sliced" packages and to create a completely new market in selling them on. I suspect that nobody will ever really know the extent of the non-performing loans.
Don't just blame the bankers. In part, they were responding rationally to irrational stimuli, funny money and legal compulsion, enforced on them by politicians of nominally leftish bent.
Oh I don't JUST blame the bankers Mr S. No no no. As I said Mr Brown was inclined to "blether". Indeed I have nothing but contempt for the man, and even the suggestions that he is barking mad and more to be pitied, don't make me feel the least compassion for him.
ReplyDeleteKen Clarke, after years of madness from a succession of half witted chancellors and the daft old bat at number 10, was getting the economy back together again, and Brown came along and ruined it.
If there were any justice he'd be in the pokey. He was, as you say, convinced that he had beaten the boom and bust cycle. So much for letting a historian loose with the economy. You'd have thought he'd have known about the 1930s (Ooops, what is Gideon's degree? He does have a degree, I suppose?)
Yes, Clinton was to blame for demanding that the mortgage companies lend to people who hadn't a hope in hell of paying it back. Black and white alike. They couldn't pay the money back and it was cheaper for them to abandon their homes and leave the mortgage company to fiddle for their money. So to some extent it DID start in America, but it came here because greedy bankers bought bundles of mortgages without knowing what they had bought, and greedy directors of banks who didn’t know their arse from their elbow, (but knew a good port when it was passed) let them get away with it, because they were making pots of money in a Ponzy scheme.
Now who the hell would buy stuff without knowing what was in it? It could have been lethal... oh wait, it was.
The government’s FSA was far too busy lunching to bother with any of that work nonsense, and the person at the Bank of England who was supposed to be keeping an eye on the FSA was the deputy governor, and a stupider man you would need to go a long way to find. he had to be moved there from the Home Office. That tells you something.
In the UK housing prices were rising at 3 times the salary rises, and I said time and again that soon no one would be able to afford a house except the Queen and she already had several... Our, and social housing at that! Like you, I discussed that at home and we waited for the dénouement.
I note you blame the left, or I suppose the left in as much as Clinton (or Blair) were left wing....I’m wondering if had the Tories been in power here they would have told the bankers not to take these risks; would they have stopped the bankers making all that money and paying themselves silly mad money bonuses, because someone like Gideon, or... Cameron knew that eventually the bottom would fall out of it, and the poor would suffer.
I doubt that. Of course Cameron wouldn’t have foreseen it... he hasn’t the ability to foresee lunch time at breakfast time as his behaviour over News International has shown. And would Cameron have cared that the poor would suffer? Ha ha ha ha ha ha.... yeah right.
So no, I don’t JUST blame the bankers, I blame governments, regulators and of course people who were stupid enough to pay silly money for property that isn’t worth a spit. Paying half a million pounds for a house that was thrown up by poor quality labour, and with poor quality materials, in a hurry and that will need major repairs within 10 years, is sheer madness.
But blame the bankers too, you bet I do, for stupidity and greed. I wish I had that smirking git here just for 10 minutes.
Tris,
ReplyDeleteI think that, if the government had kept to its duty of providing sound money, the bankers would have had a great deal less incentive to go off the rails.
Of course, it was Gordon Brown who swapped the system which had kept British clearing banks from going bust for 150 years for his new, improved, "tripartite" system of regulators with enormously increased numbers of box tickers.
I picked up a remark from Greenspan which shows just how far off the leash the whole system has become and put it into a short letter which may amuse or horrify in equal quantity.
FUNNY MONEY
It is is difficult to believe that Greenspan said this on national TV but he did. "The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default".
One wonder whether Frau Merkel is beginning to see parallels between the euro and the Reichsmark.
In Tsarist Russia some anarchists produced really excellent forgeries of rouble notes. The only difference from the real ones was in the very fine print around some of the design. Instead of "In God we trust" (or whatever uplifting phrase the authorities used), they put "Our money is as good as yours, you bastards".
Incidentally, the first motto to appear on US dollars, designed by Benjamin Franklin, was "MIND YOUR BUSINESS". What a pity they didn't stick to that!
This whole situation reminds me of a saying which was common amongst cynical officials just before the collapse of the Austro-Hungarian empire: "The situation is hopeless but not serious"
A dairyman who waters the milk is rightly prosecuted. A central banker who does the same for everybody's money get's off.
That's serious.
Great post Mr S.
ReplyDeleteMr Greenspan was certainly central to the whole problem. Hailed as a genius and allowed to go on in his job for far too long...and no, I don't mean that in an ageist way, just far too long in the job. Appointed by Reagan, he went on to serve Bush the Elder, Clinton and Bush the Younger. In total he was in post for nearly 18 years. Far too long to be at the top of an organisation. he must have begun to believe that he was god.
I checked that length of time on Wikipedia, and glancing further down the page I saw this classic piece.
"In 1977, Greenspan obtained a Ph.D. degree in economics from New York University. His dissertation is not available from the university since it was removed at Greenspan's request in 1987, when he became Chairman of the Federal Reserve Board. However, a single copy has been found, and the introduction includes a discussion of soaring housing prices and their effect on consumer spending; it even anticipates a bursting housing bubble."
Hmmm, what he could see at 50, he had lost sight of at 80!
As I said, I think Brown was a madman who thought he was an alchemist. All he did was induce consumer spending on credit.
To be fair to Osborne, one of the biggest problems that he has to deal with is that instead of spending, keeping businesses open, Brits are having to pay off credit cards...vast rafts of them.
But Brown, or indeed Green[span] (colours?) didn't do these things along. The presidents have to take some of the "credit" as do prime ministers.
Mrs Thatcher encouraged people to own homes as opposed to renting them. Yes, she made it easy for them to do it and some people got rich. but people in unsteady work or low income, in multiple occupancy blocks, in old buildings had no idea what they were letting themselves in for.
The roof and the bill for £5,000, £10,000 or £40,000 is no longer someone else's problem, but theirs! And being paid off down at the factory or the building site, or the local Spar is suddenly looking at homelessness, instead of applying for a rent rebate.
And we both know about the housing bubble, and negative equity, not to mention the fact that ordinary people can no longer afford ordinary homes. We saw it coming.
I remember hearing that some hospital in Oxford I think, couldn't get nurses. The reason was that they couldn't afford anywhere to live. At the bottom of the wage scale there were people who were still in social housing, at the top the surgeons and doctors could afford to buy, in the middle nurses could not. Even a bedsit had a mortgage that their salaries could not support.
Likewise teachers wouldn't or couldn't work there.
It's completely mad.
I agree about the fact that the government having a duty to provide sound money. Surprisingly for a "trendy lefty" I don't care for government poking its nose into everything. Especially not the kind of rubbish governments that the UK has been cursed with. The less they make a mess of the better. But that is their job.
However, it was right to take interest rates out of the hands of chancellors who shamelessly used them to bribe electors.
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ReplyDeleteAs for the bankers. I have never understood why it is that there are so many constraints on the poor not to go off the rails but that people assume the rich or relatively rich will not.
It's been my experience that greed does not restrict itself to the poor, or as a matter of need. Very often the poor will steal to feed themselves; the rich, because they are downright, and disgustingly greedy.
The bankers seem to me to fall into that category.
And whilst we put a stupid girl in prison for 6 months for receiving a pair of shorts stolen during the English rioting (with encouragement from the government that these people must learn lessons), the bankers, who cost people far far dearer than any old riot, were encouraged to raise their salaries lest Mr Osborne feel inclined to cut their bonuses. And when they found that Mr Osborne had not (given the proportion of Tory Party funding which comes from the banks this was not in the least surprising) they took both the increased salaries AND the bonuses.
Nope, stringing up from lamp posts is too good for them, a mon avis.