For the economist and anthropologist Paul Jorion, the financial system needs regulating.
The LIBOR scandal took place in 2008 against a backdrop of almost total indifference. This time there has been a huge outcry. Why?
It is a situation specific to Great-Britain. It is in this country that a context has appeared which has given the public the impression of being able to identify the real causes of the crisis. And suddenly, at the time when it was made known that a British bank, Barclays, had cheated and that it was going to have to pay a considerable fine, it was no longer possible for those who had set up the conviction in a rather bland, staged manner to control the public reaction. The performers, regulators and governments, thought that a conviction in principal would be enough and that the settling/liquidation of the scandal would be easily accepted. Their efforts were in vain: disgust won the day. The Governor of the Bank of England, Mervyn King and the chief regulator, Lord Adair Turner, were forced to admit that the reaction of the man on the street had entirely exceeded their expectations.
Why was there such a strong reaction?
Because, for a year now, the environment in England has been extremely difficult. In July 2001, the British found out that Rupert Murdoch’s company News Corporation was exercising an extraordinarily powerful grip on the way affairs were run in the country. It was not simply a question of a press group having an excessive influence on government policies, but of the implausible manner in which the company had perverted the smooth running of democracy. News of the World, mouthpiece of the gutter press, belonging to the Murdoch Empire, had hacked into the telephones of more than 4000 people in the country. And when complaints were made, they never came to anything because Murdoch was corrupting police services so that they smothered the affairs.
Is the population still in a state of shock?
Absolutely. So, when it has just been explained to them that the great banks of the country have been communicating falsified figures with regard to the interest rates prevailing in the interbank market, and all this just to fiddle a few paltry financial benefits here and there, the disillusionment rose to the surface. It was the straw that broke the camel’s back, or as they say in French, which is just as appropriate, the ‘last drop which made the vase overflow”.
But doesn’t this disillusionment also stem from the way in which the subprime crisis was handled, which was nearly four years ago?
Of course. We were told that “the subprime crisis is just the result of a malfunction in the normal operations of finance which will be quickly repaired!” But new scandals, in England or elsewhere, have demonstrated that the entire financial system is characterized by a web of short-sighted dealings. The world of finance cheats everywhere and on everything, but not even with panache – just blandly. And all this under the nonchalant gaze of an arrogant managing class which takes it for granted that those who dispose of the power can arrange their affairs however they see fit.
And yet, there has been no attempt to regulate it……
Who could believe that a financial regulation has been adopted and is about to be implemented? Fine words indeed! In the United States, the attempt to regulate with the Dodd-Frank Act is dead in the water, its adversaries having made sure that the funds destined for the recruitment of teams responsible for its implementation were never raised. On the contrary, the steam roller of deregulation continues to make inexorable progress, especially in Europe.
What do you mean by that?
What is the Troïka, made up of the ECB, the IMF, and the EU, proposing when it imposes its diktats in Greece? It is proposing nothing more than the pursuit of this movement towards financial deregulation. Finance has been ruling the world for more than thirty years. It is the explosion of credit, required for the concentration of wealth, which has allowed it to take everybody hostage, since wage-earners have lost all their purchasing power. The only way of force them to give back their ill-gotten gains is to punish plundering and looting: reduce to a decent level the payment of advances that dividends constitute, and the salaries of managers of large firms, whose behavior is often as shameful as their level of competence is low – a level very far removed from their personal opinion of it.
Translated from the French by Tim Gupwell