This is nasty. We’ve lived off The City’s profits for a decade or
more and without it Britain is a very unimportant second-rank
country. This is not something to shrug your shoulders over and turn
to trhe next bit of trivia.
afford to let London go or be shut out of the EU economic circle )
xxxxxxxxxxxxx cs
======================================
TELEGRAPH 5.5.09
"There is an extreme stickiness in financial centres," writes Peter
Spufford, a Cambridge historian, reviewing the rise and fall of
Genoa, Florence, Venice, Bruges, Antwerp, Amsterdam and London over
eight centuries.
The fall can be swift. Antwerp's arcaded "Beurs" was Europe's
commercial hub in the 1550s. The tremors hit when the Spanish and
French monarchies restricted debt payments to interest only, rolling
over the principle. Then the Counter-Reformation queered the pitch,
stifling free thought. Persecution of Portuguese Jewish financiers
caused their flight from Antwerp to Amsterdam. Within half a century
Antwerps' population had fallen from 100,000 to 40,000. It was hard
to sell a house.
Amsterdam's demise was gentler but, by the late 18th century,
Alexander Baring was shifting parts of his empire to London. So too
was Abraham Ricardo, father of the economic theorist David. The coup
de grace came from France. "The reason why Amsterdam eventually
succumbed was political, the fear of what would happen to financiers
when revolutionary Frenchmen were in charge," Ricardo said.
There was eerie resonance to last week when the EU unleashed its
assault on Britain's hedge funds and private equity. Those behind
this drive are well aware that hedge funds were no more than bit
players in the credit bubble. The real villains were banks with 30 to
50 times leverage and we know from the IMF that Europe's banks were
the worst with their off-books "conduits".
Given that 80pc of Europe's hedge business sits in Mayfair, the
latest EU directive is a discriminatory political attack on the City
and almost certainly the start of something broader and nastier.
Powerful forces in Paris, Berlin, and the EU institutions have long
held a repressed urge to break the City's hold on chunks of global
finance, from bonds to currencies and metals. Some wish to shut "Le
Casino" altogether. They at last have the chance to act on it.
Charlie McCreevy, the Irish Thatcherite in charge of the EU's market
machinery, made a valiant effort to defang the hedge code but he will
be gone soon. Gone too will be Commission President Jose Manuel
Barroso, an Iberian reformer (of sorts), who placed free marketeers
in the key posts of economic control in Brussels.As the tide turns
against Anglo-Saxon influence, Britain will struggle to maintain its
blocking alliance in the voting structures of the EU Council and the
European Parliament. [This latter is a vital reason reason for
loosening our ties with Brussels. Let’s have that referendum anyway,
Mr Cameron -cs]
East Europe is no longer in thrall to ultra-market Friedmanites in
their 20s, siding eagerly with Britain against the Rheinland
corporatists. The violence of economic collapse in parts of the ex-
Soviet bloc may tarnish market capitalism for a political generation
and it is fair to assume that the centre of ideological gravity will
shift in Germany too as the economy contracts at 1931 rates. The
Movement for Militant Resistance is already torching Porsches on
Berlin's streets.
While it is true that Europe's Left has not been able to capitalise
on the window-smashing, boss-napping, backlash against banks, this is
chiefly because the Right has beaten them to it.
In short, Britain is about to discover that it cannot easily stop the
EU apparatus doing "an Antwerp" to London.
One sympathizes with Poul Rasmussen, Denmark's ex-premier and head of
the European Socialists, in raging at the locust raid on his country
by the private equity pack of Apax, Blackstone, KKR, Permira and
Providence. Their leveraged buyout of Denmark's telecoms group TDC
was textbook provocation. They quickly extracted $7.6bn in special
dividends, leaving the company and its workforce saddled with debt
obligations going into the downturn.
I do not see why funds should be allowed to distort the market to
their advantage in this fashion, nor do I see why any democracy
should tolerate it. It seems blindlingly obvious that the City should
stop this nonsense before it does any more damage to the reputation
and interests of this country.
That said, our predators did not cause the global financial crisis.
The ultimate villains are the central banks of the US and Europe,
which set the price of credit too low for year after year, and Asian
governments holding down currencies for export advantage. The banks,
buyout funds and assorted miscreants were mere instruments of
destruction, not causal agents. If we fail to see that, we have
learnt nothing.
Tuesday, 5 May 2009
City in danger of falling victim to EU wiles and becoming another
Antwerp
The City of London is on borrowed time. Great banking centres can
prosper for 40 years or so after the host country has lost industrial
leadership but then some shock or political upset exposes the
fragility of it all.
By Ambrose Evans-Pritchard
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