The Sunday Times – It’s the ordinary folk who carry the can

The danger confronted by Hank Paulson, America’s Treasury secretary, was of a financial system ceasing to function with devastating consequences for the United States and the rest of the world. The danger for Gordon Brown was of being forced into a nationalisation that would have made Northern Rock look like a small business hiccup and would have finally impaled his political career.

That financial markets have pulled back from the brink owes much to the speed of response of Mr Paulson and his colleagues. When the global financial system is in danger, policymakers in the home of capitalism call the shots. Critics will say that a problem made in America had to be solved there. Anyone who believes that US economic influence is diminishing had only to observe the market reaction to the rescue plan on Friday. Mr Brown played a bit part in signalling the government’s willingness to nod through the Lloyds-HBOS deal, but the response to the crisis by the Treasury and Bank of England has been leaden-footed.

So, London has been the number one city for trading for the past few years (overtaking New York as the financial capital of the world to just years’ worth of crowing). I wonder if this will cause people to rethink all that? Or are there completely different sets of factors deciding that sort of thing.

The telling political point is that ordinary taxpayers will be made to stump up because of the greed and folly of exceptionally well-paid bankers such as Dick Fuld, the former head of Lehman Brothers. Others have lost their jobs but it is hard to feel too much sympathy. Today we report that under the acquisition of part of the Lehman business by Barclays, the Lehman bankers will still get their bonuses.

Oh no. And we get upset at these poor mechanics unions for wanting it all as their poor airline is ground under the heel of global forces? And who knows about here, but I saw a headline last night that the British can expect a 5% tax increase to pay for all this.