An anonymous banker, writing in the Telegraph yesterday, told about how he and his colleagues were helping manipulate the UK’s bank borrowing rate.
The surprise is to find out how openly it was discussed.
The discussion was so open the behaviour seemed above board. In no sense was this a clandestine gathering.
But the anonymous banker’s own naivety (which they admit themselves) was on the realisation that
even though Libor [London Interbank Offered Rate] may have been, for example 2pc, the real Libor rate the bank was paying was more like 5pc or 6pc. So in fact, we needed to be lending money at Libor plus 3pc or 4pc just to break even. That is what we were telling clients.
Capitalism against itself
For Harry Wallop of the Telelgraph the resignation of Marcus Agius – widely seen, now, as the fall guy for Bob Diamond – is the final nail in the coffin for so-called “Gentlemanly Capitalism”.
After all, Agius had made his reputation before the Big Bang of the financial system and, according to Wallop, “had a reputation for being charming, impeccably dressed and lacking stuffiness.”
Before Barclays, Agius worked for Lazard for more than 30 years, ending up as chairman, and forging a career as far away from the brash Wall Street culture as was possible. His hobbies are shooting and gardening; he is a trustee of the Royal Botanic Gardens, Kew.
So reliant he was on the helping hands of staffers, when he was starting at Barclays he had to be shown how to use a cash machine, or so it was reported in Private Eye.
This is typical Telegraph stuff, with a general distaste of the new-moneyed kids in the financial sector, undermining traditional social hierarchies, practices and institutions.
Consider the implications in this line for example
His background is blue-chip and formal. His father was chairman of Schroders, while his cousin, Nicholas, was a senior figure at SG Warburg. His wife, Kate, is the daughter of Edmund de Rothschild, of the great European banking house.
This is why it’s called Gentlemanly capitalism, I gather. But the wider implications are what it does to Conservatism.
Conservatism against capitalism
Wallop explicitly blames the Big Bang for the fall of the likes of Agius.
His ilk has seen a decline ever since the City was opened up to Wall Street 25 years ago.
Inherent to this particular view is a traditional, albeit rarely seen anymore, conservative protectionist opposition to certain types of capitalism. It was the fault of Wall Street, that’s where the blame is.
that one needed to condemn not only the feral youth of Tottenham, but also the “feral rich of Chelsea and Kensington”, their noses stuck in “the repellent Financial Times magazine How to Spend It”, who had played their own part in “the moral disintegration in the highest ranks of modern British society”.
What’s the crisis?
Splits are commonplace on the left; the left is good at them. But the right are going through something of a split themselves at the moment.
The Libor scandal shows that there have been a number of examples in the city of control and manipulation of what free market purists would once have called the invisible hand.
But some conservatives knew this all the time. Those like Harry Wallop are distrustful of what has come out of the big bang, under Thatcher’s watch, because it undermines traditional power divides.
These views will no doubt take root soon enough – but what will it mean for capitalism and conservatism today? Will it make their relationship ever-more awkward?