Comments, Economy, In Focus

The crisis: they played with that which wasn’t theirs

It is a question of ethics and scruples. The new Barclays scandal places banking regulations and that of the finance sector in general under examination once again.


Nuria Riutord Lleonart

The Libor, or its equivalent: the interest levels at which the banks in the United Kingdom lend money for diverse enterprises, has been decisive, for example, in the lives of many citizens with a mortgage on their shoulders, whether here or in the countries that use the Euro, where it is named Euribor.

But its significance does not end here. To calculate the amount that one finance company must pay in order to obtain a loan from another, in any determined moment, is also significant in determining the reliability of the bank.

Experts calculate that international transactions, exchange rates, interest or all types of loans for values that can exceed hundreds of trillions of pounds are established in agreement with this value, Libor.

For having manipulated this figure for years, on June 27th Barclays was fined by various official organisations: the Financial Service Authority of the United Kingdom, and in the United States, the Commodity Futures Trading Commission and the Department of Justice.

In total the fine reached £290 million, an unprecedented amount equal to the magnitude of the scandal which has supposedly lied about what it cost the company to receive loaned money from other banks between 2005 and 2009.

The consequences that it could have provoked are incalculable. A change of a decimal in the Libor could cause a variation of millions of pounds.

In the short time since the scandal became public the head of Barclays resigned.

Neither ethics nor morals

News networks from around the world are creating echoes of what has happened and continues to happen since the beginning of the current economic crisis; they are once again questioning whether the financial system is sufficiently regulated and whether there exists morality in banking.

The players of the money game know that behind their actions there are grave consequences that others must pay.

And even more important is what must the state do to protect these “others”, the common citizens that have so little to do with and in some cases are not even aware of the problem, but they have become enwrapped in a vulgar crisis that is continuously worsening their work conditions and quality of life.

For this reason it is important to clarify and establish the role of the Bank of England in these events.

This is because the problem with the financial system does not lie only in the City of London, which is considered to be the world’s financial centre.

Coincidently and simultaneously, the Barclays scandal in Spain placed responsibility on the principal directors of Bankia, which is considered the fourth company in the country to have an implication in the housing bubble which has resulted in the accumulation of a debt so large that it has required partial nationalisation.

These are only two cases, that of Bankia and Barclays – the most recent but not the first – and all signs seems to indicate that they won’t be the last cases of dishonest, corrupt and ineffective management.

Without doubt, with the crisis years passing and becoming more difficult for the majority of the population, one can deduce that the larger part of the problem is the lack of scruples in those who are in charge.

In gaining a position of power it seems that one loses sight of the fact that they are not simply managing numbers but that the lives of millions of people can be affected by their decisions.

And when their actions have negative results, they do not have to pay their fair share as any other citizen would have to, but they shirk their responsibility and continue with their lives instead sacrificing the innocent.

They should be subject to tougher laws. But we are subject to a capitalist economy of the “hyper-globalised” market and appropriate legislation does not exist.

The most recent example of an absence of integrity demonstrates once again that current legislation is outdated.

To the contrary, ordinary people are paying as a consequence of the crisis. Many governments have had to impose austerity measures and ask the general population to make sacrifices in order to overcome the current situation.

Therefore the population is forced to work more for less; there are even countries such as Spain where 50% of those under 25 years of age are unemployed.

The rates of unemployment within the Eurozone are again and again reaching new records. The most recent public survey found that 11.1% are without work.

This represents a point in the external countries where unemployment affects nearly 25 million people.

It is a dangerous situation that Britain has not escaped, despite using the pound as currency. General unemployment remains at 8.2%, but youth unemployment is more of a problem, with ups and downs ever more pronounced.

To solve any complex problem, one must identify its root, and in the case of the turbulent economic and financial situation of recent years, the root appears to be the absence of principle or morality.

They have played with what was not theirs and what belonged to others in order to benefit the few. And Barclays is only one example.

(Translated by Oliver Harris)

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