Sunday, March 22, 2009

Piggies on the fiddle

Clouds suddenly appear in the bank by Pants

Barings trader Nick Leeson got six years in Changi Prison for gambling with and losing his bank’s solvency and ‘retired’ Royal Bank of Scotland CEO ‘Sir’ Fred Goodwin got £16m for doing the same to his. What’s the difference? The British Government didn’t bail out Barings.

The interminable retro-outrage about obscene levels of executive pay and perks in the private sector is turning my head into horseradish. We’ve known about it and have moaned about it for the last decade or more and suddenly there's a screeching demand for stout stocks and rotting cabbages? So wage inequality is now somehow a whole different derby simply because the wheels have fallen off the money-go-round is it? I'm guffawing into my gruel at the thought of governments across the western block overtly bristling at the hackles after years of sanctioning tax scams that ensured precisely zero of those colossal bonuses made its way into national exchequers. Somehow they deluded themselves into believing that fat controllers' contributions to ‘economic growth’ made up for their erstwhile tax revenue holidaying permanently in the Caymans instead of building schools and hospitals.

It’s all going to end up being a pointless, vitriolic aside anyway because £16m, although a handy wad for an individual, will amount to about forty-five minutes worth of interest when it comes to servicing the debt resulting from this mercantile belly-flop. Sure I think ‘Sir’ Fred and all his reprobate cronies should be tossed off their own motor yachts into shark-infested waters but I thought that before they did a KLF on our savings. It’s a bit late to be securing the vault doors now, innit?

Sadly no one knows quite where else to go with this, ideologically speaking. For a few years in the late nineties, then British Prime Minister Tony Blair made occasional tentative forays into exploring an alternative world order which he liked to call ‘The Third Way’. Like most Blairomes, it was a fag packet assemblage of vaguely cobbled together notions that sounded sort of holistic and a bit sexy and kind of caring without inferring that anything would have to change very much for it to be achieved. It contained nothing new – another cornerstone of Blairomes. Roosevelt had a crack and even old Harold Macmillan made a stab at articulating a centrist position way back. The inclination of Blair to lose interest in a thought before he managed to finish a sentence probably had something to do with this project’s failure to develop into anything other than a set of annoying imperatives for people to be nicer to each other and rather a lot of CCTV cameras to enforce the new niceness. Pity because the embedding of some equitable principles prior to the mega-boom years might have been quite handy as it goes.

A very obvious flaw in seeking a third way between the two now completely discredited systems is that the chances of ending up with something incorporating the worst excesses of both are quite high - hence the enthusiasm for world leaders to busy themselves with reconfiguring deckchairs rather than tending the iceberg wound. But isn’t excess itself the main event? The dominant component of capitalism is greed (for money) and the dominant component of communism is greed (for power). Shouldn’t we stop stressing about which system we use to barter food, shelter and i-pod downloads and just concentrate on curbing our cuntishness? Did communism have to end in Kim Jong-il and capitalism in GW Bush?

Somewhere in this warped mix of human desires is a telling propensity. Dictators, whether they be corporate or political feel a compulsion to pass their gross accumulations of money and power to a relative – usually a son – at the onset of incontrovertible dotage or the termination of a fixed term in office. At the very apex of the power pyramid exists the basest of caveman instincts. It seems to me that at some point on the long march to ideological sophistication, progress flips into reverse. Maybe top dog gazes into the mirror and, in the throes of delirious self-lust, forgets that everything is spelt backwards when you do that. Perhaps an economist or, even better, a four-year-old could harness one of the copious forecast models available to predict at what point in the cycle alpha man’s knuckles start to scrape the floor.

Now we know that the people running all things financial were not only breathtakingly avaricious but also gobsmackingly incompetent. (I feel slightly less bad about not having made terribly much of myself, I don’t mind telling you.) It’s curious but I suppose just about comprehensible in the context of the huge structural void, that governments still perceive these scheming lowlifes who are rubbish at their jobs to be pivotal in the economic recovery strategy. I guess a house with no roof is marginally better than no house at all. It won’t stop the rain from getting in but it might just be useful if a herd of stampeding rhino is in the area. Even Nick Leeson got a job advising merchant banks on how to avoid rogues like him.

In a treasury of risible riches the glistening gem is that governments, even when they own an overwhelming majority share in a failed corporation (as the British Government does in RBS), remain in awe of disgraced executives and visibly afraid to withhold or claw back their insanely undeserved exit bonuses. In a sector where food-chain inferiors are given a cardboard box and twenty minutes to clear their desks for no greater crime than being superfluous to requirements, what exactly is the procedural protocol in action here? What’s there to fear? These are the bad guys, yeah? What are they going to do – whistle-blow on themselves? ‘They may take legal action,’ terrified officials quiver. So? Haven’t these brainboxes heard the one about civil cases and the deepest pockets?

The most incredulous thing is their willingness to take seriously the ludicrous huff-puff threat from the private sector that the removal of bonus payments will result in tougher negotiations over base pay. The following combination of words seems highly appropriate to that scenario – bring it on. It seems reasonable to expect the scarcity of proven performance successes accompanying future batches of executive CVs might turn out to be beneficial even in the most bungling of banking boardrooms where any audacious remuneration demands should surely be met with the retort, ‘eat my shorts’. And piggy banks might fly. I suspect the formula for a 'better world' is still quite a long way from transforming itself into a lightbulb moment in any current politician's imagination...

Postscript - I've just heard that Jade Goody has died. I'll write something about Jade next week.