Click here to see Martin Wolf’s opening salvo
By Jo Johnson
And what did people call Talleyrand? “A shit in silk stockings”, I believe, or “de la merde dans un bas de soie” in the original.
Anyway, just a couple of quick points:
First, re the big wobble: there seems to be a logical inconsistency in your position, if I understand it correctly. On the one hand, you cite Keynes’ “if the facts change, I change my mind…” to justify the big clampdown. Then on the other hand you say that my statement that systemic breakdowns are surprisingly rare in the free-wheeling Anglo-Saxon model is false and argue that they in fact happen on average about once a decade.
Have you been changing your mind on this rather crucial question once a decade too? I think not. In fact, this is a very unusual financial crisis, one on a global scale not seen since the 1930s. To my mind, that makes this a ‘once in 80 years’ kind of crisis. That is surprisingly rare.
Second, I fail to see why some Grand Chamberlain (or junior bottle-washer) from the Treasury will be better at running, say, Royal Bank of Scotland, with its £1,800bn balance sheet, than a figure from the private sector with a suitably structured incentive package. History suggests the opposite. Surely you must remember the fable of Jean-Yves Haberer, the énarque & inspecteur des finances who spectacularly bankrupted a state-owned Crédit Lyonnais in the early 1990s.
The break-neck expansion of that French bank, motivated by a lust for gloire and the corruption of the French socialists of that epoch, surely should serve as a healthy reminder that public control of the banks (which will be necessary if you want to dictate pay) will create problems that will make your concerns over bonuses appear utterly trifling.
