Banking on People

Mr Sean O’Grady of the London Independent has twice this week explored the subject of bankers bonuses (see here and here). He invokes notions of equality and a fairer society, but his view of humanity leaves him precariously perched on the fence, describing the world from a bankers perspective.

He posits straw  men and asks questions such as: “do we want to be more equal like Sweden or have more billionaires and shanty towns like the USA?” or: ” Do we want to be regulated by envious journalists and bitter trade unionists?”. If not, he says, ” … the critics should leave it to Mervyn King to work out some fancy rules on capital adequacy that no-one understands outside the City but will do the job”.

Mr O’Grady gives the impression of somebody pacing back and forth within his mental cage, constrained by his beliefs, disappointed by his own values and frustrated with his conclusions. Let us look at some of his beliefs:

  • “greed is endemic, we are all out for what we can get”
  • “it is our nature to maximise income”
  • “the responsible corporate citizen idea is cobblers”
  • “human beings are economic actors”
  • “fair price is a medieval concept”

These statements demonstrate an impoverished view of human nature, Mr O’Grady should get out more and meet some real people. He clearly has no concept of the dominance of the gift economy, the nature of the open source community or the many kindnesses done by human beings every moment of every day.

Yesterday morning I heard Edward O’Mahoney, born in 1920, describe the time in 1946 when he returned from the war against Japan to find his home had been bombed. He and his family were rehoused in one of the new pre-fabs (made from Spitfire factory parts) and under severe rationing. He choked up as he described how within half an hour of being there, his new neighbour came round with a pot of precious tea! That neighbour was not out for what he could get.

More of Mr O’Grady’s beliefs:

  • “bank supervision can be left to bankers”
  • “bankers are doing lawful work”

As a journalist Mr O’Grady (like most of his colleagues) has failed abysmally to investigate the on-going fraud and corruption to be found at every level of the financial industry. From illegal national and international ponzi schemes to manipulation of the various financial markets through high-frequency trading, co-location, front-running and dark pools to massive mis-selling of financial products. The fraud is vast.

With a few honourable exceptions (such as Matt Taibbi – not even a financial journalist) the fourth estate has let us down badly.

And finally Mr O’Grady’s jaundiced view of human nature is topped off with incredible naivety when he says:

  • “I doubt Mr Diamond will be taking many reckless risks right now”.

Good grief! Why ever not? Mr Diamond continues to be extremely well rewarded for his behaviour, why should he change now? All his risk-taking contempt for politicians and regulators has been reinforced.

Journalists such as Mr O’Grady have not done their homework. They believe the financial terrorists who threaten us with Armageddon if we let a major bank fail. They believe that all those bankers and traders in the City of London are really necessary. They believe that financial derivatives have some intrinsic value. They believe that we should support the City in it’s gambling addiction.

When they see the price of bread go up they do not tell people that it is the value of their money going down – caused by the extra trillions created to bail out the banks – a double whammy. They do not seem to realise that we are facing an inevitable financial collapse. That the present system, whereby we measure the value we create in terms of an illusory fiat currency, is unsustainable.

We do not have to allow bankers to carry out fraud and then use political influence to cover up their corruption. It is better to recognise that the banking system has failed than to pretend it is working. By facing the reality we will be better placed to figure out what money is and what we need it for.

Mr O’Grady presumably knows how to count, but he doesn’t seem to know what counts. He appears to have lost sight of real human values. Values that are worth fighting for.

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