This is the second episode of Peretti’s investigation into the relationship between the super-rich and us – the other 99% of the population. He begins with a sobering statistic, but only if you’re drunk, eighty-five people own the equivalent of half the world’s population. I quite like that statistic. But it’s unfathomable by its sheer immensity. Sure you can divide three-and-a-half billion by eighty-five and come up with an answer, but I was always crap at arithmetic and like Bartleby the Scrivener, addressing my four faithful readers, I’d rather not. I’d rather tell you about the people I hate. I hate the Rangers and I hate Tories.
The Rangers one is easy to explain. Celtic and Rangers were not always bitter rivals. At the end of the nineteen century supporters shared a home or away ground with little animosity. But a familiar pattern was emerging. Celtic kept beating Rangers at football. A cry went up from the sons of the manse, the Edinburgh Kirk, that a team should be put together to beat the Irishmen. The 1918 Education Act that separated boys and girls on the basis of their religion into separate schools pretty much set up the tramlines for the future. It was estimated that a quarter of the Glasgow population was Catholic, but even in the post-Second World War era Catholics were not thought capable of working heavy machinery, restricted to manual labour and the poorest housing. Catholic ghettos produced the best football players, and if football was a religion the Celtic fans were the most religious people in the world. There was a blip, when the club used to be called Glasgow Rangers won nine Scottish league championships in a row. Glasgow Rangers were better than Celtic, but like Peretti and Sean Connery in The Untouchables we’ll follow the money.
Perretti interviews Countess Batthurst and asks her about the net worth of the polo club she owns on the edge of London in which members spend conservatively £10 million a year on dogfood. I turned the sound down for this, because my hatred of Tories is so great I might have chewed my knuckles off, but luckily I could lip read –and anyway it’s always the same script, the equivalent of the chairman of Glasgow Ranger’s David Murray’s spiel that if they spend a pound, we’ll spend a tenner. And Ranger did. They bought Gary Steven in 1988 for £1 million to join England captain Terry Butcher. Then they brought in Mo Johnston. Imagine a Scottish club being able to bring in a Spurs striker, Gordon Durie, or the iconic English icon Gazza. An equivalent signing would be Luis Suarez moving from Liverpool to Rangers. Rangers could afford to pay the largest wages in Europe because of equity.
Equity means what you want it to mean. During the 1970s when a bank manager was paid the equivalent of a school teacher, his job (and it was a he) was simple. You went to the back manager and asked him for a loan. He would ask you what collateral you had. You would tell him you were in a good job, in secure employment and the bank manager would get out his ready-reckoner and would inform you that based on the information you have given him, you would be able to afford to buy one of Gazza’s knees in 978 years, and no you weren’t getting that loan. Bank managers were the men that liked to say no. Some of them would have made damn good school teachers.
But Rangers had more than Gazza’s knees, they had Ibrox Park and Murray Park and Walter Smith’s chin and Ally McCoist’s nose. Assets such as these could be pulled together into tranches and sold as shares on the stock market. Buyers were guaranteed a fixed sum and hedge betting on whether Mark Hateley’s hair would grow before it receded was seen as common sense.
Robert Dall did much the same thing with securitisation of mortgages. On Wall Street, he bundled together the good with the very good and a few bad properties and sold them on the stock market. No gain without risk was the mantra. Security just mean that, scouts honour, you’ll do you’re dimmest to pay that money back and if you default you’re covered because Mark Hateley’s hair will always grow one way or the other.
In the meantime all banks liked to say Yes. So you say to your local bank I need X amount and they offer XY amount so you can pay Z amount to the bank that owed XY and as long as your company can leverage finance from B bank and lend faster than the flow of money going one way rather than another then you are ahead.
Notional assets become real assets because of their value. Housing is the prime example. When the bubble burst and the world went into global financial meltdown in autumn 2008, Rangers went on holiday to Manchester and melted the city. These two factors may seem unrelated (because they are) but in a world based on how big you say your balls are, David Murray, the lender of last resort, based on the net worth of Murray International Metals was getting a bit of a stiffie on the world markets. He had to offload Rangers – and quickly. Pass the parcel before he got caught with debt. He didn’t get stung. He passed it on to Craig Whyte. Craig Whyte promised to make the changes necessary to ensure, with due diligence, to make as much money as possible in as short a time as possible and get out before the bills come in. To a certain extent he managed this. He pledged money he didn’t have and didn’t lose the money he didn’t have to pledge. So he made a net gain.
Compared to the biggest game in town Craig Whyte, however, is little more than the guy selling sticks of chewing gum and macaroon bars that used to inhabit football grounds at half-time.
The British Prime Minister Gordon Brown may not have saved the world, he did, however,organise international funds to bail out the banks that had recycled money and spun it into new and curious shapes. He effectively nationalised three of Britain’s most toxic banks (a moot point which ones) and ensured the other banks in the banking system had liquidity. By liquidity he meant that in the short term they could borrow and lend money and fulfil their banking function. It was quite a simple move, printing money and giving it to the bank. Banks were warned if they did not reform and follow strict monetary regulations they would be penalised by being given even more money. In the meantime they were given a bung, called quantitative easing, to help the along, with promises if they didn’t reform more quantitative easing would follow. The equivalent position would be if Rangers did not make the fiscal changes asked of them they would have been punished by keeping Brian Laudrup at Ibrox, and further punished by signing his brother Michael.
Piretti estimated that the initial bung to the bankers cost the equivalent of £6000 for every man, woman and child in the land. I’m waiting for my £6000 cheque to come through the post because I didn’t sign it. I didn’t authorise it.
But Piretti did get a bit lost in explaining things. Some things are more complex than derivatives. The Super Rich put their narrative in terms of cowboys and Indians and they are the guys with the white hat rolling in to rescue the rest of us from ourselves. The great scandal is not how much these Tory bastards stole and continue stealing from the poorest members of society, the great scandal is how an economic debate has been shifted from what the rich did to us to a moral problem. We’re too fat. We’re too drunk. We don’t work hard enough. We smoke. Above all we claim government benefits. Money flows increasingly in one direction from the poor to the rich, a tax on the poor is an attack on common decency. That’s why I hate the Tory bastards.
I hate Rangers because I hate Rangers.