Money Men

All this fevered activity over Britain's banks and its bankers - has left my head in a bit of a spin.

It's as if the political classes have only just discovered that the money men in the city really do take a bit of watching because - some of them at least - are little better than spivs.

But here's a previous post from the blog site to prove this is simply not the case - the bad behaviour of some bankers has been with us for years - and no less a figure than  Denis Healey drew attention to the problem more than twenty years ago.

Yet far from regulating the banking more effectively - the last Labour government got far too close and cosy with the money men - and provided the worst possible example by encouraging a debt-fuelled spending boom - as if there were no tomorrow.

So to my mind some of the politicians involved should be in the dock as well - not just the money men and and bankers.    

Hitting Nails on the Head (23 September 2010)


I am currently reading a collection of essays written by Denis Healey - a true Labour warhorse - reckoned by many as the best Prime Minister Britain never had.


The essays were written between 1952 and 1991 - and cover Healey's long and distinguished career both in government and in party politics.


Call my reading habits a bit odd if you like - but I came across this little gem the other day - which was written in 1991.


"These markets were managed by young men who treated money simply as numbers on a computer screen - as a commodity, like rice or coffee beans. As a result interest rates and exchange rates began to fluctuate violently without reference to the flows of production and trade which they were supposed to reflect.


New financial instruments were invented to hedge against interest rate or exchange rate risks. Anything which could be given a monetary price was turned into a security which was traded on the global markets by anyone who had a computer.


So there was none of the prudential supervision which was traditionally exercised by central banks over commercial banks."


Seems like Denis Healey hit the nail on the head - all those years ago.


Because that's exactly what happened when banks across the world started buying up and selling on bad debt - like it was going out of fashion.


And while this was happening - governments, politicians and central bankers - all looked on from the sidelines - until, of course, it was too late to do anything - other than pick up the pieces.