Chapter 13 LONDON

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.