Arguably it was Robert Peston’s breathless reporting of trouble at Northern Rock on the evening of 13 September 2007 that kicked off the crisis. The next morning, depositors were queuing round the block and the drama that would almost bring down the global banking system a year later had begun. Looking back after a decade, we can be grateful for the bailout interventions that shored it all up at the moment of cataclysm — but we can also observe the lingering and deep unfairnesses of the longer-term recovery.
Ultra-low interest rates that will not rise above inflation anytime soon mean blameless savers face continuing negative returns on cash deposits; yet the impact of quantitative easing on asset prices has made those who were rich in equities and real estate even richer than before. Bank shareholders have seen no rebound in their investments, while bank executives go on collecting fat packages. Low earners have been squeezed by ‘austerity’ while high earners have not. High-street bank customers are endlessly tied up in precautionary red tape while the banks themselves are revealed to have been up to their necks in scandal after scandal.
As to the men responsible, Adam Applegarth of Northern Rock is advising a US private equity firm, Dick Fuld of Lehmans still dabbles in corporate finance, Jimmy Cayne of Bear Stearns is playing bridge, Fred Goodwin of RBS is playing golf, and former US Fed chief Alan Greenspan, father of the easy-money era, is contemplating the ‘flaw’ he belatedly found in the free-market system. The lesson for next time is that there’s no such thing as natural economic justice.
This is an extract from Martin Vander Weyer’s ‘Any Other Business’, from this week’s Spectator