On 9th August 2007 the banking sector observed the first shudder of what was to become a debilitating earthquake of seismic proportions.
The markets woke up to find French bank BNP Paribas had halted redemptions on three investment funds because it was unable to measure the value of the (then) obscure (but now infamous) collateralised debt obligation (CDO) instruments in its portfolio. The bundles had been designed to make risky debt look secure, thus increasing their availability and flooding the market with shoddy financial products.
But as bankers wined and dined their way through a gloriously gluttonous era for the financial industry a huge pile of bad debt was mounting that would ultimately cripple advanced economies. Northern Rock fell, Bear Stearns went and other mega institutions such as Fannie Mae and Freddie Mac and Lehman Brothers started to topple before the whole thing collapsed. As governments stepped in to bail them out the greatest cover-up story of all time was being devised to justify spending such vast sums on a clearly broken sector. Rather than considering how to change their practices the government focussed on an entirely different question; how can we blame poor people?
Although the banking crisis has origins under governments that far precede that of the Conservative-Liberal coalition of 2007, it was under David Cameron and George Osborne that the rhetoric shifted from “banking crisis” to “austerity Britain”. It was an interesting phrase to use. Austerity is aimed at reducing public expenditure and suggests that countries have been spending above their means. But other than the huge sums paid out to cover the banking crisis that simply wasn’t the case in Britain.
Regardless, the public discourse had been shifted to over-spending. Almost over night poverty porn was unwittingly embraced by the country. Benefit cheats were brandished across the front pages of newspapers and TV schedules became overrun with programmes such as The Great British Benefits Handout and Life On The Dole. The poor became victimised as a result of a financial crisis that they had no hand in – and people wonder why they voted in protest when the EU referendum came around.
The reality is that ten years on from the start of the Credit Crunch austerity has hit the country hard. A report leaked yesterday to The London Economic by Shadow Health Secretary Jonathan Ashworth shows the NHS is in tatters because of Tory underfunding of primary care services, and that barely scratches the surface. Pension ages are to be increased, education is falling short, fire brigades and policing numbers are being cut to the bone and we can’t even afford to fund our own Job Centres anymore. All as evidence emerges that banking practices are returning to the pre-crisis ‘norm’.
But so ingrained is the notion that poor people are to blame for the financial crisis one wonders whether we will ever see it for what it really was. All I will say is, amidst the doom and gloom, thank God for Jeremy Corbyn. At least he has no qualms about upsetting rich banking pals and putting the blame at the feet of those who really deserve it. In this day an age we really need people like that in power if we are to avoid this ever happening again.
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