At a somewhat spinal cord level, rather than using higher cortical function, George Osborne has tried ‘Project Moron’ in initiating a project to produce long-lasting repetitional and repetitional damage of Ed Balls specifically. This mudslinging, no doubt aided and abetted by the Tory-led BBC, does not address the problem, not least the fact that Ed Balls was Children’s Minister at the time and is quite disgusted about the allegations. The fact is whatever went wrong has the potential to be nasty and systemic.
However, there is a more crucial question about whether Governments, in our case Whitehall, put pressure on private banks in manipulation of the LIBOR rate. This is aside from the alleged fraudulent behaviour of bankers. It may be convenient to ringfence the corporate scandal at the feet of Bob Diamond and colleagues and Barclays, but this convenience ignores the speculation that other banks in other countries are involved.
What the Central Banks were doing in relation to LIBOR at the time of the first global financial crisis is uncertain, and to what extent they were influenced by the Government, but it is a perception that these Central Banks were acting desperately to maintain market confidence. Certain banks in particular wished to ‘appear strong’, and there are huge volumes devoted to the highly complex issue of ‘market signalling’.
Central Banks are not above the law. Governments are not above the law. These were unusual times, but a detailed inquiry, whether this is in the form of a parliamentary inquiry or a judicial inquiry, needs to look at the relationship between the Governments and central banks in the leading economies. The idea of a completely free market is obviously nonsense to anyone, when you think about how much the banks have been bailed out at taxpayers’ expense, and the relative ease with which banks perform quantitative easing.
This is not an Ed Balls problem. This is not even a Labour problem. Doing nothing at the time of the first financial crash was not an option, although George Osborne has never said whether he would have let Northern Rock go to the wall. This is an issue that a meticulous inquiry should look at. My first instinct was to approach the problem in a rather technical way in looking at the organisational structure and function involved, but ringfencing blame for political convenience will not get to the heart of how the political élite operated.
