michael Fitzwilliams’ good friend, Parliamentary Secretary to the
Treasury and Cabinet Member, Paul Hoppkins, was feeling the heat; he
had been one of the most active supporters of the City’s boom and a
leading advocate of the country’s large banks.
Parliament was in turmoil as a scandal related to members’ abuse of expense
claims broke out. In the hope of satiating the mob’s cries for blood and heads, the
Speaker of the House announced his resignation, the first in its kind in more than
three hundred years of parliamentary history. Rumours of fraud and corruption
circulated in the columns of the national press with Scotland Yard being called in
to investigate criminal charges.
Fingers were pointed at Hoppkins after the press discovered he had flipped two
second homes in Chelsea at the expense of the taxpayer whilst living rent free in a
comfortable government owned apartment. Of course it was entirely legal and
within the rules, but given the public outrage a sacrifice was needed to appease the
bloodthirsty rabble.
Whatever happened, Hoppkins could count of Fitzwilliams’ support, the question
was whether his political career would survive.
The real significance of the expenses scandal was that it exposed how the money
grabbing culture had penetrated into every nook and cranny of British society, even
sullying its most revered institutions. The politicians elected to one of the world’s
oldest democratic parliaments had seen no reason why they too should not get their
part of the cake. It was yet another depressing sign of how moral values had been
undermined by the get rich quick principles of New Labour. During Blair’s reign,
principles had sunk so low that it was considered normal that each and every one
grab off whatever they could. Parliamentarians, after having failed to prevent the
publication of their expenses details, found themselves tripping over each other in
their haste to justify the buying of horse manure, floating duck houses, and the
upkeep of second home swimming pools.
Clement Attlee, the socialist prime minister who had led Britain after WWII,
considered by many as one of the greatest socialist leader, died leaving an estate
worth a mere seven thousand pounds. Tony Blair, who abandoned ship after
leading Britain through the credit boom, became a multi-millionaire, almost
overnight, once he had handed the hot potato of leadership to Gordon Brown, his
ambitious Chancellor and comrade-in-arms.
It had become an accepted custom that certain classes filled their pockets at the
expense of the ordinary man: small shareholders of banks and large corporations,
pension fund members or simple tax paying citizens. The profiteers loudly and
defiantly declared it was their due, they deserved it, not only had they worked hard
for it, but they were irreplaceable. It was reminiscent of third world republic
bombast, dwarfs calling themselves leaders, a reminder of the rhetoric of Tunisia’s
M
first president, Habib Bourguiba, who boasted men of his intelligence were not to
be found on every street corner of Tunis. It was as if power bestowed leaders with
divine rights.
During the course of Blair’s reign, a small exclusive clique had seized power.
Politicians, elected or not, high level civil servants, bankers and businessmen, all
short-circuited democratic institutions, steamrollering their decisions through the
system with little or no public debate. The consequences of their missappropriation of power had brought Britain to its knees, leaving its people to face a
long period of austerity as they struggled to pay the sins of the usurpers.
It came at a bad time for Fitzwilliams, when Hoppkins, his influential first circle
friend, was hounded by the press at the very moment the bank needed his help. The
refinancing of the Irish Netherlands Bank had entered a critical phase and needed
all the support that could be mustered. The trouble was politicians were too
concerned with saving their own skins, and the coming European elections, to
worry about the banker’s problems.
In any other circumstances a European election would have been of little interest
to the British voting public, given their vague understanding of European politics,
but Labour was going to take a hammering and Gordon Brown needed to throw a
sop to what was left of his electorate. That sop would no doubt be Fitzwilliams’
soon to be ex-good friend.
After New Labour had won the 1997 general election, Gordon Brown was
appointed Chancellor of the Exchequer in Tony Blair’s government, where he
remained for ten years, responsible for running Britain’s economy.
During those ten years he supervised an orgy of consumer spending, proclaiming
the end of the country’s long standing boom and bust cycle. Amongst the notable
decisions he made was the sale of four hundred tons of Britain’s gold reserves at
between $256 and $296 an ounce, over the period of 1999 to 2002. On January 19,
when Brown announced his second plan to save Britain’s banks, the price of gold
stood at $980 an ounce.
What was worse he had announced the sale of Britain’s gold in advance, which
automatically forced down the market price to a twenty year low. It could have
been expected; a simple question of supply and demand, given the large quantities
of the precious metal that were to be offered by the British Treasury in their
auction. It was almost as though they were trying to force the price down.
In retrospective, many theories were developed as to why Brown took this
gamble, including manipulation to prop up the financial system: whatever the
reason the result went down as one of the worst economic decisions ever made by
a chancellor, which ended up costing the British tax payer billions.
Lessons that could have been learnt were ignored and when Britain’s alchemists
came up another magic potent: cheap credit, a remedy that was to provoke an
unprecedented boom in consumer spending, the British economy would end up
being hobbled for years to come.