Brian Monteith: Hubble, bubble banking trouble

If the lie is so big it cannot be gainsaid, for surely no serious politicians would talk such utter tripe. Or would they?

This week we have seen yet another of those big lies being perpetrated on the public and it is this – that bankers are the root of all evil for they have been fixing the interest rates. People, businesses, pensions and investments have lost money all because banks have diddled us and the government is here to protect us.

That there has been a scam that looks close to criminal fraud and should be subject to the full force of a police investigation is the uncontestable fact that can be used to construct the big lie.

The real truth that must forever be subverted is that the biggest bunch of fixers and blood-curdling twisters are those politicians lurking in Westminster dungeons that seek to bribe us by distorting the economy and suspending the mystical laws of economics.

I can just see those three heretical witches – Cameron, Clegg and Miliband – standing over the bubbling brew uttering the politicians’ favourite recipe to deceive the public:

“Round about the cauldron go,

In poor Diamond’s entrails throw.

A smidgeon of truth,

A bladder of lies,

We need to hear those bankers’ cries.

“Double, double, toil and trouble;

Bankers burn and cauldron bubble.

“Eye of newt, spleen of Merv King,

Puss of hypocrisy in government banking.

Fifty billion pounds,

To ease our woes,

But down the tubes your pension goes.

“Double, double, toil and trouble;

Bankers burn and cauldron bubble.

“Root of hemlock and traders’ liver,

Expose their e-mails an’ make them shiver.

Fix the interest rate,

And hide the blame.

We’re politicians without any shame.”

The reason this big lie can so easily work is that banks and bankers are an easy target. Repositories of squillions of pounds, trillions of dollars and a few thousands of what’s left of the euro, banks have more money than we can dream of. When we ask for just a little of it, promising to pay it back, we’re often told “no” by somebody far younger than us that thinks decimalisation was something bakers once did to coconuts.

So on this simmering general disenchantment that so many have with our banks, especially when money is tight, and even tighter if you want a loan, we have a scandal about bank traders fixing the London Interbank Offered Rate that will have cost some people money. Known as Libor, it is an average of interest rates that banks would use to loan to each other and if it was just a scam by a handful of people it would have been dealt with and we would return to Wimbledon, the Olympics or whatever other circus is currently distracting us.

The scandal is huge, however, for the money involved is enormous – but, worse still, the evidence is now surfacing like a rotting corpse in the Thames that Barclays, the first of many banks that will be shown to have fixed their rates, was encouraged to do so by the Labour government of the time to try and get the rate down.

One might be forgiven for thinking that this might suit David Cameron and Nick Clegg – and there’s no doubt that they will try hard to see that Labour takes any blame that’s coming to politicians – but the coalition government has its own rate-fixing scam going, too. Called quantitative easing, or QE, the Bank of England invents money, like only central banks can, to buy government debt held by the banks in the hope that the billions of pounds that go into their vaults will be used to provide the loans we all 
struggle to get.

This money feeds inflation and can have a highly damaging impact on pensions. It’s a fix, an attempt to distort the economy so that it might come to life, but even though the Bank of England cannot show any evidence that it works, it is pumping more and more conjured-up money into the 
system.

This is alright, though, for it’s a government approved fix, started under Labour and kept going by the coalition government. It was thought 
£75 billion would do, then £100bn – now the latest £50bn takes the total to £375bn. To put that into perspective, £50bn is more than the British defence budget.

Of course our politicians have been fixing interest rates themselves for years; our economy often lurched from boom to bust with the economic boom fed by low interest rates before a general election and then tighter interest rates causing the bust afterwards. The one thing Gordon Brown got right was taking the setting of the interest rate to away from 
politicians.

There are other ways to bribe us with our own money, though, and to cover the politicians’ tracks the bankers must be blamed. Hence “Double, double, toil and trouble, bankers burn and cauldron bubble.”