Could they by chance be connected? In the news today Credit Suisse, long thought to be untouchable, has been hit hard by the banking crisis and is blaming employees for its massive losses:
The Zurich bank said it has concluded a previously announced internal probe into the value of some asset-backed securities in its collateralized debt-obligation trading business, which had been wrongly priced by a small number of traders who have since been sacked or suspended.
The company said the final write down comes to 2.86 billion francs, 200 million francs less than originally estimated.
Similarly the UK financial regulating body is saying that the attempted run on HBOS yesterday was deliberate market manipulation by rogue employees:
Authorities avert run on HBOS caused by false rumours
The Financial Services Authority yesterday launched an unprecedented investigation into dealings in the shares of major financial companies amid suspicion that speculators have been spreading false rumours to force down shares in HBOS.
In an extraordinary day on the stockmarket, shares in the country’s biggest mortgage lender were suspended for five minutes in early trading as its shares plunged almost 20% amid speculation it was facing a Northern Rock-style liquidity crisis.
The Bank of England took the unusual step of publicly denying talk that it was cancelling staff holidays over Easter and convening emergency meetings to discuss a bank in crisis. The Bank rubbished rumours ripping through the City as “fantasy”.
Seemed highly co-incidental to me, even allowing for the natural venality of arseholes in the financial sector. So I asked myself the question I’ve learned to ask of any political or economic situation these days – who benefits?
Step forward Larry Elliot with one potential answer:
Oil money is coming – and there is little the west can do about it
Energy producing countries are buying global power after decades of subjugation
[…]
The fivefold increase in the price of crude oil to more than $100 a barrel has provided a windfall for the coffers of oil and gas producing countries, while the nations of east Asia have amassed huge holdings as a result of export-led growth. Britain, as a report by PricewaterhouseCoopers pointed out this week, could have built up a £450bn sovereign wealth fund had it not spent its North Sea bonanza on politically expedient tax cuts and higher public spending.
Elsewhere, sovereign funds are rich, they are growing in size and they have been bailing out the west’s tottering banks after ill-advised speculation saw their assets slashed in value by the American sub-prime mortgage crisis. The Abu Dhabi Investment Authority – the world’s biggest SWF – has taken a $7.5bn (£3.8bn) stake in Citigroup; one of Singapore’s funds has injected $11bn into the Swiss bank UBS, the other has invested $5bn into Morgan Stanley. China has ploughed $5bn into Merrill Lynch.
Train wreck
A study by one of the biggest banks, HSBC, noted: “The owners of emerging SWFs look unlikely just to roll over. They are enjoying the boot being on the other foot after an awfully long time. The train wreck that was the 1990s, when they had to go cap-in-hand to the developed world, was bad enough.
“Going back further, western jibes about state capitalism would, perhaps, have more power had they themselves not ruled many of these countries for years via state-licensed companies.”
[…]
There are few signs that SWFs are being used as an instrument of foreign policy, although Brussels clearly has misgivings about the Kremlin’s intentions. Equally, there is evidence that the governments behind the SWFs are enjoying the clout their wealth has given them. And with no immediate end in sight to the credit crunch, their bargaining position is strong and getting stronger.
Capitalism has always been warfare by other means and while western governments have been busy whipping up public fear of Moslems with bombs, to consolidate their political power, sovereign wealth funds have been quietly undermining their whole economic systems without firing a shot.
When the US, supported by the UK, pushed hard for punitive world free trade agreements and for the liberalisation of global trading and relaxation of banking regulations they assumed they’d always be top dogs, the exploiters not the exploitees. Now those carefully crafted economic weapons have been turned against them.
Those ‘rogue employees’ may well have been greedy little shits on the make. Lord knows there’s plenty of them about. On the other hand international finance is, well, international, as are its workers. Who knows what little tweaks to an already unstable system are being made – for whatever motives.
