Sunday, 23 January 2011

As banks stall on lending to businesses and refuse to rein in bonuses, calls grow for an end to food speculation

© Steve Bell

It seems unbelievable, that with public anger so palpable, the banking industry behaves as though nothing has changed.

Having announced huge bonuses, in many cases far out of proportion to their successes, the latest update from the negotiations between the Treasury and then biggest UK banks is that they are even trying to sit on their hands over a commitment to lending to small businesses.

Even if you leave aside the staggering sight of an industry that was saved by taxpayers now sticking two figures up at wider society, there is an even deeper irony to the situation we are now in. The same society that has underwritten the system and whose wishes are now ignored suffer in a number of other ways, beyond cuts in public services and tax rises. For example, property prices in central London and elsewhere continue to defy gravity, making it ever more difficult for people on relatively reasonable salaries to buy or rent, due in no small part to the spending ability of the recipients of vast annual bonuses.

But it's not just in property where the side-effects of largesse and excess are felt. In worldwide food prices, both in the west and (more damagingly) in the developing world, there is an even more worrying trend - excessive speculation in food commodities.

The World Development Movement has led the charge against food speculation - a trend that picked up in the deregulation of the 1990s - and now is estimated to have been at least partly responsible for numerous rises in the cost of basic stable foods. Nevertheless, this damaging trend is accelerating, as major banks undertake the same kind of behaviour that preceded the sum-prime mortgage crash of 2007, willfully oblivious to the concerns of others.


This apparent detachment from society, in many cases the lack of understanding of its concerns or even the recognition of its existence at all, was fittingly marked last week by the opening of One Hyde Park: what one columnist described as "a '21st-century monument' to the ever-growing gap between rich and poor".

The jarring chasm between the opulence of the building and the rising austerity of the society in which it was built raised the heckles of even columnists to the right of the political centre.

Alexander Chancellor described a project that "reached its triumphant moment of fulfilment on the very day that the government announced a youth unemployment rate of more than 20%, its highest level since records began, and a sudden surge in inflation that threatened to make the poor, but especially pensioners, even poorer than they were already.... while these gloomy facts were being reported, some of the richest people in the world were gathered next door in the Mandarin Oriental Hotel... to mark the completion of the four glass and steel towers now known as One Hyde Park, in which four penthouses have already been sold for up to £135m each and the price of floor space exceeds all records at £6,000 a square foot".

Chris Blakhurst, writing in the Standard, described the opening as part of what could best be described as a lament for the kind of capitalism (and country) that even many one-national Conservatives want to see. For this is not not - as some on the libertarian Right would argue- envy, but rather part of a genuine fear from many across the political spectrum of the consequences for a society that becomes too unequal, too separated:

"There I was, sitting in a bubble of wealth and excess. The food was from Heston Blumenthal and Daniel Boulud, just about the two most starry chefs on the planet; the wine was superb... And all was well.

Meanwhile, at Westminster, schoolchildren marched against the scrapping of the £30-a-week Education Maintenance Allowance paid by the Government to enable them to afford to go on to the sixth form. And the Office for National Statistics produced figures showing that almost one million young people are now out of work and the dole queue is growing by 540 a day. As if to compound that message, three county councils announced the shedding of 2,500 jobs".

He then went on to describe the decision by Goldman Sachs to fund vast bonuses, at the same time as slashing it's own charity programme by more than a third. He ends the article with this, which sums up eloquently what very many people feel:

"It's hard to know what's in their heads any more. The only conclusion that can be drawn is that they simply, really, do not get it.

In the same way that those assembled at the Mandarin Oriental lapped up Rogers waxing lyrical about his "iconic" block of luxury flats - when elsewhere in the same city, as the Evening Standard reported this week, 50 homeless men regularly bed down under a flyover - you have to wonder if Goldman bankers ever look out of their limousine windows and step on to pavements. Do they experience what we experience? Do they share the same concerns about a divided society, rising unemployment and beleaguered public services? Or do they exist in a separate space, behind their gated drives, ring-fenced from the rest of us and convince themselves that everything is fine?

Next week, captains of industry and their adoring, unquestioning advisers and supporters will decamp to Davos for their annual get-together. They will preen and kid themselves that they are making a difference, that they are trying to make the world a better place. While they chat and party, back at their head offices, their accountants will be planning new ways of avoiding paying taxes.

What's depressing about the past 24 hours is the sense that nothing has changed. Despite everything we've been through, with borrowers being encouraged to take too much, with banks going cap in hand to governments, with the financial system teetering on the brink of collapse, we seem to be back where we began. We're supposed to glory in Knightsbridge apartments with Brecca Paradiso marble surfaces and European Oak woods. We're expected to applaud Goldman Sachs for having done so marvellously.

What was it Barclays' CEO Bob Diamond said last week? That the time for "remorse" from bankers is over and we must move on. Certainly, I did not detect any sorrow at the Mandarin and there was none to be gleaned from Goldman's results declaration. What I now find myself asking is, was there ever any at all?".

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