The Greed Merchants

Writing earlier today Adam recalled Ted Heath coining the phrase ‘the unacceptable face of capitalism’. Checking it out on Google, as one does these days, Adam came across a review in an issue of the Spectator , June 25, 2005, to be exact of a book by Philip Augar a former banker. The book is titled The Greed Merchants and discusses the excesses which the writer saw as being perpetrated by the investment banking industry.

This was the final paragraph of the review:-

But that does not diminish the force of Augar’s argument – that investment bankers working within a market structure that allows them to aggregate so much power are basically incorrigible. However carefully they may tread for the time being in the aftermath of Enron and other recent scandals, the nature of the personalities and the scale of the rewards mean that there is always bound to be a next time.

To Adam writing in March 2009, almost 4 years later, Augar seems to have been unusually prescient, but underestimating the impact.

Interestingly the review notes that:-

Augar thinks that the only way to minimise temptation and maximise honest dealing would be to reintroduce the kind of barriers that existed in the London market before the Big Bang reforms of 1986, so that brokers, traders and corporate financiers operated in separate firms with clearly delineated roles and interests. Those barriers were dismantled in the hope of creating a more open, efficient capital market to recycle savings into productive investment: that a commentator of Augar’s authority – he is a former senior banker himself – should conclude it would be better to return to the status quo ante is testimony to how unsatisfactory and morally troubling the outcome has been.

This is very similar to the approach advocated by Nigel Lawson in his recent article for the FT, which Adam commented on.

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