Ambrose Evans-Pritchard’s blanket blame apportionment this morning is a sick joke

I’m at a loss to understand these days what exactly is happening inside the head of The Daily Telegraph’s Ambrose Evans-Pritchard ( or AEP is he’s more often known).

Towards the Left end of the spectrum, I’ve sort of grown used to Will Hutton’s continuing struggle to suggest that everything New Labour did was more or less right, but the bankers let them down. Blair and Brown supported everything the banks perpetrated between 2003-2008, and ignored the warnings of the thousands of us who said the economy was built on the shifting sands of paper-shuffling and derivative salamis.

But you do have to hand it to Hutton, he did come out hard against the banks before it all went mammories skywards, and what he said would happen did. Similarly, AEP has, since the Crash, warned that Sovereign responses to everything from the Greek debt to Lehman Brothers was insane. However, the role played by the bankers themselves is slowly disappearing from his memory of events. Either Ambrose goes home at night, and then some Channel Islands-based Gremlin rewrites his copy; or the old boy is going a bit doolally.

What, for example, are we to make of this extract from his piece last night (my emphasis):

‘The banking crash of 2008-2009 has tempted some in China’s Politburo to conclude that Leninist planning is superior to Anglo-Saxon markets, and prompted many in Europe to ask whether Capitalisme Sauvage is worth saving at all. They misread events of course. It was governments that caused the crisis: the West by fixing the price of credit too low, the East by amassing reserves and flooding the world with excess capital. But that is not the narrative of the web, or political discourse.’

Mind-boggling. Ironically, the piece mainly looks at the history of slavery, quickly exonerating early liberal economists of being for it (on the basis of two examples) and then applying this across two centuries to say we should move towards ‘a vindication of free markets’.

I could be here all morning refilling the oddly emptied memory-banks inside AEP’s noddle, but I shall try to be brief. If governments can be said to have caused the crisis by letting the bankers do whatever took their mad fancy, then yes – they were to blame. But the following points need to be reiterated:

1. It was Fed Chief Greenspan who let the credit-money rip after 2003, when he should have brought in a tight squeeze on it. OK, Fed Chairman is a government post; but Greenspan learned his trade under Eugene Banks, a managing director at the Wall Street investment bank Brown Brothers Harriman, working in the firm’s equity research department. For three decades after that he ran a banking and economic consultancy, as chairman and president of Townsend-Greenspan & Co. in New York. He was not, by training, either politician or bureaucrat.

2. Once the depth of the crisis became clear, the completely reckless, interest-conflicted and illegal nature of almost everything going on in Wall Street became so obvious, even middle-market Republican Americans called for radical reform of bank practices and for bankers to go to jail. The man who, by contrast, demanded $870 billion immediately for the banks was Hank Paulson. Fine, a man in government at that time, but the Chairman & CEO of  Wall Street banking firm Goldman Sachs from 1974 to 2006. Paulson was up to his neck in the mess. Nobody seems very clear, even today, about what happened to the $870 billion. Hank himself remains evasive and tight-lipped on the subject.

3. The real start of the confidence collapse in 2008 was the British bank Northern Rock, a foolishly demutualised third-rate Building Society run by the immensely stupid Adam Applegarth. Applecart’s entire business model was based on money market rates remaining low. This caused the first run on an English bank for over a century, and Adam went on (after being given a £760,000 payoff by his fellow-directors) to consult for Wall Street firm Apollo after the debacle. Fair enough, Gordon Brown conspired to bail out the bank because its main customer base contained three Labour constituencies. But this was the match that lit the fuse; nobody remotely near lit the fuse: Northern Rock was a glittering jewel in the deregulated Big Bang Crown.

4. Since the near total collapse of the banking sector in 2009, their lobbyists have fought every useful reform tooth and nail. They continue to launch idiotic investment products (last week, for instance, a bond in the US ‘backed’ by the rental repayments sector), and in turn are convicted at regular intervals of interest conflicts, malfeasance, investment scams, withholding asset information, and cheating customers. RBS faces 1,500 fraud suits from the UK SME sector, Goldman Sachs faces 23 outstanding class action suits, JP Morgan 17. Every single case to date has resulted in the banks involved having to pay massive fines. I cannot find a single instance of the banks using QE monies primarily for the its stated purpose. When business needs liquidity, to a man the banking community withholds credit.

5. The Lehman collapse was based on exactly the same overstretched leveraging, and once again forced the US taxpayer to cough up. But it was screaming bankers who bullied Dubya into putting up the money, for this was a bank that was “too big to fail”. The Zirp policy that followed was driven entirely by central bankers and Wall Street (to my mind it made the recession worse, because it stopped Empty-nester Silvers from consuming) who since then have been found guilty of manipulating the Libor rate – purely for profit, with no thought at all for the economy or the citizen. QE may well have been largely inititiated by Ben Bernanke, but the banking firms and stock market big players regularly blackmail the Fed Chairman every time he suggests tapering it off.

There is little doubt that QE is indeed a US Government scam designed to pump up the stock market with dividends derived from meaningless paper trading in cheap money. But I very much doubt it was the Black Dude’s idea. And the enthusiasm with which markets adopted it, perverted it and encouraged it for purely venal reasons is beyond any reasonable doubt.

AEP tells us that ‘free markets’ have been vindicated. If that is the case, why is every market in the West now utterly dependent on taxpayer’s money and artificial manipulation? The stock market, the gold price, the interest rates, the banking assets, and the endless bailouts: all of them have come from Sovereigns and their central banks being forced to step in and save these gargoyles from themselves. Even in the eurozone, where deranged Brussels-am-Berlin austerity drivel has quickly destroyed ClubMed, the crisis was started to reckless loans and advice on fraud being offered to the Greek Government by….Goldman Sachs. The ECB’s head is from….Goldman Sachs. The new Governor of the Bank of England is from….Goldman Sachs. The interim Prime Minister of Italy was from….Goldman Sachs.

Fine, Ambrose: go ahead and blame Government for the disaster; but as most government strategy since 2008 has been either forcibly adopted as a result of (or run by) two or three Wall Street banking firms, the argument is hoist by its own patade. Or perhaps canard, I’m not entirely sure.

Why AEP writes this intermittent Party Line twaddle in between pieces of stunning insight based on clever analysis is beyond me. Perhaps he doesn’t know whether those in the white or black hats are going to win, and is hedging his bets. Either way, I’m rapidly losing faith in the bloke: and trust me, I’m not the only one.

Yesterday at The Slog: The ageless bollocks of the Western political class