Tangled webs

So the Chief Exec and now the Chairman of Barclays have both resigned in the great 'rate fixing' scandal. It seems there's to be a Parliamentary Inquiry into the goings-on at all the major banks, and the murky world of inter-bank finance is going to be held open to the scrutiny of a public who will, largely, no doubt understand very little of what's revealed.

I'd certainly never heard of LIBOR before this all hit the news, but it seems it's a peculiarly important piece of financial data which apparently affects all of us. This is typical of the alarming lack of both transparency and clarity in banks' dealings with each other, and exemplifies the sort of labyrinthine complexity and secrecy they seem to have relied on to be allowed to continue doing things to suit themselves, unhindered by concerns of scrutiny. Or morality, apparently.

That's the problem with the 'market will see things right' dogma of Thatcherist economic theory, which dogs us to this day. The market does not run according to what's best for the economy. The market runs to make money for all its constituent parts – the banks, the brokers, the über-rich individuals like George Soros, who can, for example, affect exchange rates simply because of the vastness of their wealth.

I am very, very far from an economist, but one thing I do know about finance is that, while I suspect none of this nefarious conduct is done with deliberate mendacity, instead being undertaken purely in search of profit, that search means that all the cogs in the machine are little solipsists, turning in the direction which suits them best as an individual entity, rather than working as one to run the machine smoothly. The result, inevitably, is a broken machine.

Labour are not likely to engage fully with the Parliamentary Inquiry, so exactly how 'cross party' it's going to be remains to be seen. They're calling for a wider-ranging Public Inquiry, with a judge reporting, as with the Leveson Inquiry into press standards. It seems to me that they're looking to that, rather than a Parliamentary Inquiry, because a PI could drag on for ages, beyond even the next election. The quicker Parliamentary version may, for example, reveal (as well as other banks inevitably having done exactly the same thing as Barclays) a rather laissez faire attitude to the banks during Labour's administration, more befitting their ideological opponents than a supposedly left of centre party, and do them harm before the next election. Though I may just be being cynical.

So yes, there's a global economic crisis, the causes of which are far more complicated and wide-ranging than the simplistic evil bankers' misdeeds some of the tabloids have presented us. But I believe that, had the major financial institutions not been allowed to get away with so little outside scrutiny for so long, we may have been in a slightly better position to ride it out than has proved the case.