As the cuts bite and growth stagnates, who will challenge our reckless bankers?

In the absence of major re-regulation our financial system remains dangerously dysfunctional.

Source: Getty Images

The humiliation of Fred Goodwin may have appeased a public baying for vengeance, but has done little to fix the broken global banking system or reverse the Second Great Depression. But then the public have been given very little leadership as to how to address the causes of this crisis. Politicians, economists, central bankers and think-tanks have both created an almighty mess, but also sown confusion as to the true reasons for catastrophic economic failure. Instead the public have deliberately been blind-sided, distracted into focussing on a) the public sector and b) a consequence of the crisis: the public finances.

Fred Goodwin's hounding shows that while you can fool the people some of the time, you can't do so all of the time. Nevertheless, stripping Goodwin of his knighthood does not fix the banking system, or help the economy recover.

Last week Jonathan Portes of the NIESR helped subvert some of the propaganda by boldly speaking truth to power. To the consternation of many he showed that the ongoing slump is now longer and deeper than the slump of the 1930s. While the players in stock markets remain unmoved by this truth, it unnerved the establishment and all those who insist on a disastrous form of economic bloodletting: austerity. These economic 'quacks' include MPs in all three major political parties; their friends in the City, the press and economics profession - and not forgetting those at the Institute for Fiscal Studies. Only a year ago the IFS followed the herd and urged the Coalition not to soften its stance on austerity. Now as contraction crushes the life out of the economy, hurts the poor and families with children, the IFS makes a mealy-mouthed appeal for "a significant short-term fiscal stimulus". That IFS economists are not embarrassed by the contradictions and absurdity of their analysis is disturbing. That they remain unchallenged can only be explained by the sustained ideological drum-beat that drowns out sound economic analysis.

The Bank of England helped silence some of this propaganda when it issued figures last week which show, unsurprisingly, that neither austerity nor massive taxpayer bailouts have restored the British banking system to solvency. In the absence of major re-regulation, it remains dangerously dysfunctional.

Banking systems exist to lend money into the economy. Not so today's. British banks are so over-leveraged (i.e. insolvent) that they cannot fulfil their role as lenders. Instead of acting as a lending machine, the British banking system, bizarrely, is now a borrowing machine. Like giant vacuum cleaners, banks are hoovering up the nation's public and private resources, while refusing to lend, except at high rates.

The BoE data shows that banks siphoned up £11bn more from the real economy than they lent to firms last year. And to compound the damage, bankers borrowed from the nationalised Bank of England at rock-bottom rates, and then lent to firms at high and rising, real rates of interest. This helps explain the ongoing slump that characterises the Second Great Depression. Banks are charging a whopping 20% for authorised overdrafts - and rates are set to rise higher. Despite this massive spread, they are still not raking in enough to clean up their balance sheets, render banks solvent, and start lending again.

And still government and the official opposition turn a blind eye. Neither proposes to radically re-structure and re-regulate Britain's broken financial system - to subordinate arrogant bankers to their proper role in the economy, and to restore stability.

Until they do, expect many more Fred Goodwins to be bundled into media tumbrils, and hauled up on to the scaffold of public humiliation.

Ann Pettifor is director of Advocacy International

Getty
Show Hide image

A new German law wants to force mothers to reveal their child’s biological father

The so-called “milkmen’s kids law” would seek protection for men who feel they have been duped into raising children they believe are not biologically theirs – at the expense of women’s rights.

The German press call them “Kuckuckskinder”, which translates literally as “cuckoo children” – parasite offspring being raised by an unsuspecting innocent, alien creatures growing fat at the expense of the host species’ own kind. The British press have opted for the more Benny Hill-esque “milkmen’s kids”, prompting images of bored Seventies housewives answering the door in negligées before inviting Robin Asquith lookalikes up to their suburban boudoirs. Nine months later their henpecked husbands are presented with bawling brats and the poor sods remain none the wiser.

Neither image is particularly flattering to the children involved, but then who cares about them? This is a story about men, women and the redressing of a legal – or is it biological? – injustice. The children are incidental.

This week German Justice Minister Heiko Maas introduced a proposal aimed at to providing greater legal protection for “Scheinväter” – men who are duped into raising children whom they falsely believe to be biologically theirs. This is in response to a 2015 case in which Germany’s highest court ruled that a woman who had told her ex-husband that her child may have been conceived with another man could not be compelled to name the latter. This would, the court decided, be an infringement of the woman’s right to privacy. Nonetheless, the decision was seen to highlight the need for further legislation to clarify and strengthen the position of the Scheinvater.

Maas’ proposal, announced on Monday, examines the problem carefully and sensitively before merrily throwing a woman’s right to privacy out of the window. It would compel a woman to name every man she had sexual intercourse with during the time when her child may have been conceived. She would only have the right to remain silent in cases should there be serious reasons for her not to name the biological father (it would be for the court to decide whether a woman’s reasons were serious enough). It is not yet clear what form of punishment a woman would face were she not to name names (I’m thinking a scarlet letter would be in keeping with the classy, retro “man who was present at the moment of conception” wording). In cases where it did transpire that another man was a child’s biological father, he would be obliged to pay compensation to the man “duped” into supporting the child for up to two years.

It is not clear what happens thereafter. Perhaps the two men shake hands, pat each other on the back, maybe even share a beer or two. It is, after all, a kind of gentlemen’s agreement, a transaction which takes place over the heads of both mother and child once the latter’s paternity has been established. The “true” father compensates the “false” one for having maintained his property in his absence. In some cases there may be bitterness and resentment but perhaps in others one will witness a kind of honourable partnership. You can’t trust women, but DNA tests, money and your fellow man won’t let you down.

Even if it achieves nothing else, this proposal brings us right back to the heart of what patriarchy is all about: paternity and ownership. In April this year a German court ruled that men cannot be forced to take paternity tests by children who suspect them of being their fathers. It has to be their decision. Women, meanwhile, can only access abortion on demand in the first trimester of pregnancy, and even then counselling is mandatory (thereafter the approval of two doctors is required, similar to in the UK). One class of people can be forced to gestate and give birth; another can’t even be forced to take a DNA test. One class of people can be compelled to name any man whose sperm may have ventured beyond their cervix; another is allowed to have a body whose business is entirely its own. And yes, one can argue that forcing men to pay money for the raising of children evens up the score. Men have always argued that, but they’re wrong.

Individual men (sometimes) pay for the raising of individual children because the system we call patriarchy has chosen to make fatherhood about individual ownership. Women have little choice but to go along with this as long as men exploit our labour, restrict our access to material resources and threaten us with violence. We live in a world in which it is almost universally assumed that women “owe” individual men the reassurance that it was their precious sperm that impregnated us, lest we put ourselves and our offspring at risk of poverty and isolation. Rarely do any of us dare to protest. We pretend it is a fair deal, even that reproductive differences barely affect our lives at all. But the sex binary – the fact that sperm is not egg and egg is not sperm – affects all of us.

The original 2015 ruling got it right. The male demand for reassurance regarding paternity is an infringement of a woman’s right to privacy. Moreover, it is important to see this in the context of all the other ways in which men have sought to limit women’s sexual activity, freedom of movement and financial independence in order to ensure that children are truly “theirs”.  Anxiety over paternity is fundamentally linked to anxiety over female sexuality and women’s access to public space. Yet unless all women are kept under lock and key at all times, men will never, ever have the reassurance they crave. Even then, the abstract knowledge that you are the only person to have had the opportunity to impregnate a particular woman cannot rival the physical knowledge of gestation.

We have had millennia of pandering to men’s existential anxieties and treating all matters related to human reproduction, from sex to childbirth, as exceptional cases meaning women cannot have full human rights. Isn’t it about time we tried something new? How about understanding fatherhood not as winning gold in an Olympic sperm race, but as a contract endlessly renewed?

What each of us receives when a child is born is not a biological entity to do with as we choose. It is a relationship, with all of its complexities and risks. It is something worth contributing to and fighting for. Truly, if a man cannot understand that, then any money wasted on a Kuckuckskind – a living, breathing child he could get to know – has got to be the least of his worries. 

Glosswitch is a feminist mother of three who works in publishing.