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 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 miss-appropriation 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.
Chapter 14 JACK REAGAN