Libor is the benchmark for investments all over the world—the Financial Times estimates that $350 trillion worth of contracts have been pegged to it. It is also considered a barometer of a bank’s health. Just as customers with bad credit records have to pay higher interest rates, banks deemed in financial distress have to pay more to borrow. In October 2008, a doomsday month for the world banking industry, it looked like Barclays was next in line for a rescue after taxpayers bailed out the Royal Bank of Scotland and Lloyds/HBOS on October 13. One big warning flare was that beleaguered Barclays could borrow from the common money pool only at a very high rate of interest. The answer was to fix the rate, with Barclays traders secretly winching it down. It was all completely illegal.
Next thing we knew, there was Diamond being reprimanded by a Select Committee of the House of Commons for being nothing better than a common thief. But then into the hurly-burly suddenly intruded a new actor, actually one in the form of a savior: Paul Tucker, deputy governor of the Bank of England. It turned out that Diamond and Tucker had had a conversation of considerable moment, one prudently recorded by Barclays, on October 29, 2008.
Diamond said Tucker had relayed concerns from “senior Whitehall figures” that Barclays’s Libor was consistently higher than that of other banks. Tucker is alleged to have conveyed the view from Westminster that the bank’s rate did not “always need to appear as high as it had recently.” In other words, Westminster wanted Barclays to massage its rate to a lower level.
But all with full deniability. According to Barclays, “Bob Diamond did not believe he received an instruction from Paul Tucker or that he gave an instruction to [former top Barclays deputy] Jerry del Missier. However, Jerry del Missier concluded that an instruction had been passed down from the Bank of England not to keep Libors so high and he therefore passed down a direction to that effect to the submitters.”
Barclays said there was no allegation by the authorities that this instruction was intended to manipulate the Libor. And when he was questioned by Tory MP David Ruffley on July 9, Tucker testified that “a bell did not go off in my head” that banks were lowering their Libor submissions.
Marvelous: the join between civil society and state was tactfully seamless, with deniability all round.
So first there are the “senior Whitehall figures” (one turned out to be Cabinet Secretary Sir Jeremy Heywood)—i.e., the permanent government running Britain. When a senior Whitehall figure urges the commission of a serious crime, he merely murmurs that the bank’s Libor did not “always need to appear as high as it had recently.” There then follows a flurry of talk about misunderstandings but, Lord save us, certainly not an order to fix the Libor. Then, unmistakably, there is a huge plunge in Barclays’s rate. The government’s concern—that Barclays might appear to be on the brink—is averted.
But we live in a capitalist world, duly furnished with its rewards and penalties. Barclays has agreed to a $450 million settlement, and Diamond and del Missier have resigned. On his way out the door, Diamond said he’d been promised £18 million ($28 million) as a golden handshake. The standing committee had a good jeer, but Diamond stuck to his guns, and there the matter rested until July 10, when Barclays announced that Diamond will forfeit up to £20 million ($30 million) in bonuses and incentives but will retain one year’s salary, pension, and other benefits worth £2 million ($3 million).
Of course, there have been furious calls for further punishment and reform. Labour leader Ed Miliband says, “We should break the dominance of the big five banks … and strike off those whose conduct lets this country down and prosecute those who break the law.” He also wants to increase competition by forcing the big banks to sell off up to 1,000 of their branches. In the current culture of rabid criminality in the banking system, that would surely be unwise, unleashing 1,000 small-time banksters.
People calling for banking reform on either side of the Atlantic are underestimating the problems of enforcement. A writer on the financial news blog Zero Hedge recently remarked that “the Libor scandal seems to be waking people up to manipulation and fraud by the big banks.” Of course, there are tools at the ready: sanctions, tribunals, a ban for life for crooked traders. But Libor was meant to be the prime glittering advertisement for the free market. Now it turns out that the whole thing is a fix—a grimy hand all too visible. It’s like the spy in Conrad’s Secret Agent vowing to destroy the first meridian.
Is it possible to reform the banking system? There are the usual nostrums—tighter regulations, savage penalties for misbehavior, a ban from financial markets for life. But I have to say I’m dubious. I think the system will collapse, but not through our agency.
July 13
Two years after he was sacked by President Obama as the top commander in Afghanistan for suggesting to Rolling Stone magazine that the real enemy were “the wimps in the White House,” General Stanley A. McChrystal has recycled a perennial chestnut: Bring back the draft—i.e., a conscripted army, not the volunteer army of today. These days McChrystal teaches at Yale with what must be a protection unique in the annals of academic freedom. Everything he tells his students is by contractual agreement off the record.
But he made his proposal about the draft in a public venue. McChrystal claimed: “One of the few good legacies of Vietnam is that after years of abuses we finally learned how to run the draft fairly. A strictly impartial lottery, with no deferments, can ensure that the draft intake matches military needs. Chance, not connections or clever manipulation, would determine who serves.”
It’s certainly true that the volunteer army is a mess. Suicides are surging among the troops. According to AP, the 154 suicides for active duty troops in the first 155 days of the year far outdistance the US forces killed in Afghanistan. The volunteer army also struggles with increased sexual assaults, alcohol abuse, and domestic violence. Liberals like the idea of a draft army because they think it would curb any President’s eagerness to go to war. There are indeed sound arguments for a draft. They were put eloquently not so long ago by Bill Broyles, a Vietnam vet: “In spite of the President’s insistence that our very civilization is at stake, the privileged aren’t flocking to the flag.”
The war, Broyles wrote, is being fought by Other People’s Children. If the children of the nation’s elites were facing enemy fire without body armor, riding through gauntlets of bombs in unarmored Humvees, fighting desperately in an increasingly hostile environment because of arrogant and incompetent leadership, then those problems might well find faster solutions. The truth is that despite all these fine words, a draft is never going to happen. The military-industrial complex needs the money—it’s why they’re cutting back troops right now.
When Obama introduced “the new strategy” last year, he emphasized that the Pentagon will be getting more money not less. In the past five years the US has spent $2.59 trillion on defense. The new plans call for an allocation of $2.725 trillion between 2013 and 2017. So much for any peace dividend when the troops come home from Afghanistan.
As my brother Andrew Cockburn recently predicted, the budget will grow but the military will shrink. There will be no more “nation building” with its long and expensive occupations. Overall, troop levels will be cut by about 100,000 soldiers and marines. Fewer new planes will be built. America will no longer be equipped to fight two full-scale wars at the same time—an official requirement for decades.
Such was the military-cultural context for calls for the draft: huge ground forces stocked with draftees. What we have now is precisely the opposite—robot/drone wars, with no need for suicidal soldiers or politically awkward draftee casualties. The money all goes to Lockheed and the other big aerospace companies. Remember there’s a good reason why they abolished the conscript army. It mutinied in Vietnam and thus was a prime factor in America’s defeat.
Afterword
In one of the many diverting episodes in A Colossal Wreck my father describes an evening in his house in Petrolia, when, as a storm blow
s outside and friends are over, he recounts adventures with 7 Days, a weekly newspaper he worked on in London in the sixties: “By dawn we had the pages made up and then it was a rush to the train station, then an hour down to the printers. So different now; so much easier, so much cheaper. Who says there isn’t progress in human affairs, though I do miss the inky excitement of those old hot type days.”
My father embodied a kind of inky excitement. It wasn’t just that his clothes often bore the traces of his involvement with leaking pens, old cars, gardening tools, or blackened saucepans, but also that he contained the energy and strength of a team of nineteenth-century revolutionary printers working to a deadline.
I remember how, on childhood trips with my father, I tried to keep up with his lean galloping figure as he sped through airports and car parks laden with the tools of his trade. In the age before laptops and mobiles, he’d think nothing of carrying a fax machine and a typewriter along with his favored fiberglass suitcases heavy with books, a leather (ink-stained) sack-like bag of old cameras and lenses, Turkish coffee decanters and an electric ring for motel breakfast enhancement, as well as an array of colorful scarves to put over the motel lamps to create a more couvivial atmosphere. On arrival at any new place his suitcases exploded with useful and charming items, which he’d immediately deploy. To his amazement his favorite penknife was once confiscated in De Gaulle airport—he’d forgotten it was in his pocket.
He could write anywhere, and he did. Throughout the last three months of his illness in Spring 2012 he wrote in the crowded Wi-Fi lounge of the cancer clinic where we resided, his back to a piano from which often thundered grotesquely sentimental tunes played by a fellow patient. Always a deadline looming, he dictated his last column to me for the UK site The First Post. One word came back by email from the editor, Nigel Horne: “Brilliant.”
Nigel was not the only one who had no inkling my father was ill. Though his colon cancer had been diagnosed two years previously, almost none of his friends knew. He wanted to keep his illness to himself, out of his writing, out of the press and out of many of his close friendships. He didn’t want the distraction of death talk, and he wanted to be seen as he had always been—engaged, interested, unambivalently alive.
His energy was such that he was assumed invincible.
Friends felt they would forever call on him for his take on world events, or for a gossip, or advice on anything from heartbreak to the best kind of glue for fixing broken china. Neighbors dropped by to discuss all manner of things. Young local artists knew him as a patron and came by to see their work up on his walls. Master craftsmen called in to go over plans for the next building project. The cider house, Greek temple, redwood tower, still room, dark room, stables and library were just some of the additions resulting from these collaborations. At home the phone rang constantly and I admired his habit of picking it up every time, if only to say he was on a deadline and could he call them back in ten minutes …
Friends took it for granted that they would one day see his ninety-five-year-old figure behind the wheel of the 1959 Chrysler Imperial as he roared past the ordinary Subarus on the road out of Petrolia. His cars were more than just vehicles. Repeated breakdowns, though exasperating, provided adventure that would otherwise be missing. Each time one of his various cars failed last year, he was miraculously rescued, by a really nice Marine for example, or an engaging nurse, and in the most unlikely or dangerous of spots. He would report on these encounters when he got home. He was always interested in people. A few days before he died, when a doctor asked him, “How are you feeling Mr. Cockburn?” he replied, “I’m good. And how are you?”
When I was a teenager my father used to suggest I read the dictionary when I had a spare minute, or if I was feeling a bit down. His own father Claud had recommended a dip into Marx if darkness descended. The point being made was a reminder not to collapse, to find meaning, counter chaos with spirited punches—get to the root of things and then improvise, blow your trumpet from there.
“Beat the Devil,” “Fanning the Flames of Discontent”—these phrases were at one point in the ’80s darned into colorful patches onto his jacket and baseball cap. And more recently Counterpunch designed a badge featuring the slogan “Dogs Against Romney” above an image of our dog Jasper (who wouldn’t forget Seamus’s ordeal on the roof of Mitt’s car).
His death came as an impossible blow, not only to those closest to him, but to the thousands that depended upon his voice week after week. That voice remains, and is at its constant best, in A Colossal Wreck.
Daisy Cockburn
Petrolia, March 2013
A Colossal Wreck Page 62