Tag: financial crisis

Time for a haircut!

Rich WillLeave a comment

new-haircut-for-greeceMy Swiss banker buddy is in a grumpy mood this afternoon. He tells me with a certain malice that the UK economy has a deficit of 110% of its GDP, and asks me what should be done about it. Im a bit dubious about this statistic but don’t have my John Lanchester book to hand so can’t really contradict him. He argues forcefully that the only way out of this mess is to cut public spending. I’ve obviously heard this argument a great deal over the last few months but it’s the first opportunity I’ve had to discuss it face to face with a managing director of one of Europe’s leading investment banks, ie. a genuine full-on capitalist bastard.

When he lets me get a word in edgeways I pose him two questions: where did all this debt come from, and who is it owed to? Because as far as I can tell the answer to both questions is the same: the banks. It seems to me greatly unfair that public services should be cut in order to pay the banks so as to deal with the horrible mess that the banks themselves created. I ask him what happens if, as seems likely, one of the debtor countries can’t pay or refuses to do so? His answer is intriguing, and suggests a slogan other than ‘Can’t pay won’t pay!’: in that case, he says, the holders of goverment bonds have to take a haircut. This simply means that their bonds lose value, and their holders lose money. But it’s not just financial institutions and wealthy individuals, he points out, it’s also private pension funds, insurance companies, and all sorts of other interests. Their investments lose value, they reduce spending in other areas, people lose their jobs, the whole economy suffers.

Now I’m no expert and I’m not really in a position to dispute the scenario he’s just outlined. Nevertheless I’ve never quite sure if I even believe in this thing called ‘the economy’. Surely there are different economies, with conflicting interests, some more powerful than others. But even with leaving Naomi Klein aside for a brief moment, it seems to me preferable to force bond holders to take such a haircut, with the risk that this apparently implies of an economic downturn, than to close hospitals, schools and homes for the elderly, essentially privatise universities, starve the unemployed into non-existent jobs and generally abandon the poorest and most vulnerable to destitution and misery.

I’m not about to convince Herr GeldSäcke of any of this. But it’s been a useful session which seems to have cheered him up no end and which has taught me two important things: one, bond holders will need to take a haircut soon, and two: orange jeans and a black cardigan with little white skulls all down the arms combined with a shiny brand new pair of crocodile shoes is evidently a very popular look for forty something year old investment bankers in Zürich this year. Rather him than me.

David Miliband’s secret Swiss bank accounts

Rich Will2 Comments

So I’m teaching Switzerland’s second richest man, apparently a close personal friend of that Indian fella who owns all the world’s steel deposits. He tells me he used to be a farmer who did the decathlon for the Swiss national team but didn’t go to the Olympics because the piglets were in flower or something, and then one day he decided to set up Switzerland’s second largest credit card company, did so, became stupendously wealthy, bought a nice place in St. Moritz (or maybe that was a nice place called St. Moritz) and is now managing director of one of the world’s biggest (maybe even second biggest) investment banks. He’s a nice guy, personable at least, although I’m well aware that while I’m talking to him thousands of minions are running round bankrupting Ireland on his behalf, which means what I’m doing is actually technically wrong in all sorts of important ways, but he asks me what I think of David Cameron and laughs heartily when it very rapidly becomes clear that our worldviews are as diametrically opposed as our income brackets. I’m to be one of his servants for the next five days and my impotent rage seems to entertain him at least. Plus he says things like I used to live in a willage and so you’d like to live in Chapan, and I’m pretty sure I can help him with that.

At 1pm precisely we part for lunch, he presumably to the toppest notchest place open near Exmouth market on a bank holiday, me to Sainsbury’s to spend one pound sixty five on a ham sandwich and a small banana. At precisely 2pm he returns, nearly closes the door behind him and we go back up to the fourth floor so I can continue to assist him in his work looting wulnerable economies. I help him with his pron. of words such as limousine, Bentley and privileged, and spend a slightly frustrating ten minutes trying to explain that the past form of the word read is not spelt red, which is confusing because I have written the word read in blue and the pronunciation, /red/, in red. But apart from that he is entertaining company, especially, or maybe except, when he shows me some photos of some charming young women he met in Wietnam and tells me his new vife is CEO of Europe’s largest (or maybe second largest) chewellry company.

Every hour exactly on the hour we have a break, so he can get on the phone and immiserate Portugal while I make some tea. At four pm I pop downstairs to check messages on my phone, which I left downstairs in the teachers’ room, except that it’s not there, except oh no wait it is, but my wallet’s missing, it’s been stolen, because the door is, as the old joke says, a jar, except it’s not at all funny, because it had my brand new one month zones one to three Oystercard in it and £130.

Back upstairs I happen to casually mention that my wallet has been robbed, to which he saliently points out that maybe, too, his bags, which he brought from Heathrow that morning in a taxi about which he did not once complain about the price, have been nicked. Curious, we go down and look. In a darkened room for which I am, mortifyingly, unable to locate the light switch, we discover that the thief has somehow overlooked his basically chewel-encrusted briefcase, which is presumably packed chock full of the details of Vladimir Putin’s, at at least David Miliband’s, secret bank accounts, the door code for the CERN laboratory and highly confidential information regarding the Swiss nuclear programme. Had they got their hands on it it would have been like wikileaks all over again, which rules out Julian Assange as a culprit, especially since neither of us have been…oh never mind.

The bag that they did take apparently just had some sports equipment and a pair of shoes in it, but he still seems pretty agitated, which is understandable, very few people like to have things stolen, or their economies pillaged, but what the hey. He sympathises with me over the loss of effectively three hundred pounds or pennies or whatever you people call them, but it eventually transpires that what bothers him is not the loss of a sweaty sports singlet and some of those black pumps you used to get at school. It’s not even any emotional attachment to his Prada bag. It’s the theft of his treasured $5,000 pair of crocodile shoes. It seems churlish to point out that he can get the money back on insurance. I suppose we both find it upsetting in our own way that somewhere on earth another crocodile is being prepared for the slaughter.