Gene Kerrigan: Ruling-class rioters don't wear masks
Gamblers on the stock market wreck people's lives just as the looters of Tottenham did, writes Gene Kerrigan
DAVID Cameron abandoned his holiday in Tuscany and rushed home because rioters were trashing his country. Less notice was taken of the fact that Nicolas Sarkozy abandoned his holiday on the French Riviera and rushed home because rioters were trashing his country.
You can photograph the kind of riot that upset the English. The other kind of riot, the kind that last week upset the governments of France, Italy, Spain and Belgium, takes place so far under the radar that to most of us it seems like business as usual.
The British seem to have been so taken aback by the ugliness of the rioting that they're ready to accept anything that might kill it off. So when David Cameron demanded instant justice, the courts sat through the night. When he demanded harsh sentences, the magistrates obediently bumped the cases up to the crown court, where the punishments are greater.
The independence of the judiciary -- a notion long beloved of the people who believe that sort of thing exists -- was treated by the establishment with the kind of respect the average looter might show for the window of an electronics store.
For several scary days, the establishment lost control and the outlaws had a free run. The rioters were varied -- the career criminals, the opportunistic criminals, the disaffected, the racists, the odd psycho, and people who normally wouldn't break the law but who found themselves in cities without restraint and acted accordingly.
It would be foolish to see the riots in isolation from the Britain revealed in recent scandals. What insiders have long known became plain to everyone -- the politicians and the police were seen to be in the pocket of extremely wealthy media interests -- the Murdochs. Ed Miliband sought to portray Labour as somehow outside the ring of immorality, but Ed was himself so far up Rupert's backside that he could almost see the soles of David Cameron's shoes.
The exposure of the craven deference of the politicians, in the face of Murdoch's media power, followed the revelations of the looting by MPs, who took advantage of loose policing of expenses and plundered at will. All this took place against the background of a banking system that had choked on its own obese bonuses.
When a ruling class is seen to trash its own supposed moral doctrine, it weakens (and in extreme cases can lose) its moral right to govern.
For 30 years, since the old, stumbling social democracy ran aground on the rocks of Thatcherism, the exaltation of personal greed as the engine of an economy has been triumphant.
"Who is society?" Thatcher asked in 1987. "There is no such thing!" And she acted accordingly.
And it wasn't just the victory of a ruthless market system. Notions of decency were dismissed as "political correctness". Morality deferred to market forces. Eventually, someone decreed that the Murdoch drive for circulation, and the political power it gave the corporation, required the hacking of a murdered child's phone.
At the highest levels in every sphere of power -- finance, politics, the civil service, the private sector, the professions -- there was unashamed looting. It happened here too; arguably, to an even greater extent. The powerful were explicit -- inequality is the dynamic of society -- and in recent years it soared to dangerous heights. The police could (until last week) be relied upon to regulate the wastage such a system inevitably produces -- those without the skills or the mindset to thrive in the marketplace. Happily, the police are largely content to leave "the market" to regulate itself.
Poor old Nicky Sarkozy was working on his tan when the news of widespread financial rioting brought him running home. He and the governments of Italy, Spain and Belgium, had to abruptly ban "short selling", to protect the banks from looters in bespoke suits.
And what might "short selling" be? Let's try to outline a no-frills version of what can be a complicated transaction.
Suppose I "go short" on a hundred million shares in Banco de Fatcats, which are trading at one euro a share. It doesn't mean I buy them. Instead, I borrow the shares through a broker (who is holding them for another gambler). The broker then sells the shares for me, at the market price of one euro each, collects the €100m from the buyer and gives it to me.
To complete the transaction, I must buy the same number of Banco de Fatcats shares that I've borrowed and give them back to the broker by a certain date -- say next Friday. The broker is essentially a bookie. I'm gambling that the price of the shares will go down. If the price goes up, I lose.
Now, if I want to improve the odds on winning, I pull the stroke that seems to have happened last week in France and other countries, and here's how that works.
Having sold the shares, I put my people to work, quietly rioting in the market place. They put word out through their network of contacts that Banco de Fatcats is in trouble. This network will be highly trusted, an integral part of the financial world. The rumour about Banco de Fatcats may be true, something I've been told or figured out. Perhaps it's false, a total invention. Doesn't matter. The point is to attack the share price.
As word spreads, those with shares in Banco de Fatcats will hurry to sell, to get out before the price drops further. This will push the price down. By Friday, the market price of a Banco de Fatcats share may be 80 cents. So, I buy the hundred million shares for €80m and return them to the broker. And I've made a €20m profit.
At any minute of the day, such deals and millions of more complex gambles, are being played out. It involves attacks on banks (Societe Generale was a victim last week), on companies, on currencies, on the bonds of individual countries. This kind of looting requires specialist skills, just as a Birmingham looter needs to know how to get through a security shutter, to hotwire a van or shift three dozen 50-inch HD TV screens at a good price.
The notion of capitalist investment -- the use of accumulated wealth to grubstake a business that will pay dividends -- is somewhat quaint, seen in the context of this kind of sophisticated market looting. To take part in such riots, you need three things: huge wealth, membership of a gang of similarly avaricious and well-connected thugs and the morals of a Tottenham looter.
Over the past three years, the determination of various gamblers and financial powers to defend their interests, at the expense of the rest of us and with the collaboration of the politicians, has been naked. The lessons of this have been obvious -- this is how you thrive. Morality is for wimps.
This is the world these people have made over 30 years of unrestrained power -- though they shirk responsibility for it. They will whinge, as they habitually do, about the dangers of supposed "liberal" policies, but the liberals have long accommodated to the victory of the political right. Last week, with a shudder and a lunge, parts of that world momentarily escaped their control and frightened the hell out of them.