There has been vanishingly little personal accountability for the financial crisisby Ben Chu / July 17, 2017 / Leave a comment
Published in August 2017 issue of Prospect Magazine
“We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it.”
Gordon Gekko, the cigar-chomping anti-hero of Oliver Stone’s Wall Street (1987), understood that the dominant element of the art of speculative finance is the bamboozle; the draping of a blanket of complexity over all the acres of dirty linen.
When the first gusts of the global financial storm began to be felt exactly a decade ago, it began with a babble of mind-numbing jargon. The business sections of newspapers spoke of something called a “credit crunch” and ran long features on troublesome “subprime mortgages” and “special investment vehicles.” Before too long though, as Adam Tooze has described, ordinary savers were forming queues outside branches of Northern Rock in Britain’s first bank run in 150 years. It was plainly serious, but what had happened? Something to do with the Rock’s reliance on “securitisation,” we were told. Bankers playing some sort of complicated games with money, pulling rabbits out of hats.
Then, a year later, the tsunami hit land and Lehman Brothers tumbled, triggering the biggest financial crisis in history. The financial system’s heart attack caused a sudden stop in world trade. Investments everywhere were cancelled. Stock markets plunged. And households ceased spending. Still, even as we slammed shut our own wallets, most of us were baffled by the cause. We have been…