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.

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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

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“It was like a religious ceremony”: What happened at Big Ben’s final bong?

Both inside and outside Parliament, people gathered to hear the clock’s final midday chime before undergoing repairs.

“It’s just hacks everywhere,” a photographer sighs, jamming his lens through a gap in Parliament’s railings to try and get a closer look.

New Palace Yard, Parliament’s courtyard directly below Big Ben, is filling with amused-looking journalists, waiting for the MPs who have promised to hold a “silent vigil”, heads bowed, to mark Big Ben’s final chime before four years of silence while the tower’s repaired.

About four of them turn up. Two by accident.

It’s five minutes to twelve. Tourists are gathering outside Westminster Tube, as tourists do best. A bigger crowd fills Parliament Square. More people than expected congregate outside, even if it’s the opposite within the Palace. The world and his phone are gazing up at the sad, resigned clock face.


“It’s quite controversial, isn’t it?” one elderly woman in an anorak asks her friend. They shrug and walk off. “Do you know what is this?” an Italian tourist politely asks the tiny press pack, gesturing to the courtyard. No one replies. It’s a good question.

“This is the last time,” says another tourist, elated, Instagram-poised.

“DING DONG DING DONG,” the old bell begins.

Heads down, phones up.


It finishes the on-the-hour tune for the last time, and then gives its much-anticipated resignation statement:

“BONG. BONG. BONG. BONG. BONG. BONG. BONG. BONG. BONG. BONG. BONG. BONG.”

Applause, cheers, and even some tears.


But while the silly-seasoned journalists snigger, the crowd is enthusiastic.

“It’s quite emotional,” says David Lear, a 52-year-old carer from Essex, who came up to London today with his work and waited 45 minutes beneath Big Ben to hear it chime.

He feels “very, very sad” that the bell is falling silent, and finds the MPs’ vigil respectful. “I think lots of people feel quite strongly about it. I don’t know why they’re doing it. During the war it carries on, and then they turn it off for a health and safety reason.”

“I don’t know why they can’t have some speakers half way down it and just play the chime,” he adds. “So many tourists come especially to listen to the chime, they gather round here, getting ready for it to go – and they’re going to switch it off. It’s crazy.”

Indeed, most of the surrounding crowd appears to be made up of tourists. “I think that it was gorgeous, because I’ve never heard him,” smiles Cora, an 18-year-old German tourist. “It was a great experience.”

An Australian couple in their sixties called Jane and Gary are visiting London for a week. “It was like a religious ceremony, everybody went quiet,” laughs Gary. “I hope they don’t forget where they put the keys to start it again in four years’ time.”

“When we first got here, the first thing we did was come to see it,” adds Jane, who is also positive about the MPs who turned up to watch. “I think it’s good they showed a bit of respect. Because they don’t usually show much respect, do they?”

And, as MPs mouthing off about Big Ben are challenged on their contrasting reactions to Grenfell, that is precisely the problem with an otherwise innocent show of sentimentality.

Anoosh Chakelian is senior writer at the New Statesman.