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February 24, 2012 10:01 pm
During the will-he-won’t-he saga of Stephen Hester’s bonus, I took an executive decision to quit watching rolling news channels. The TV perma-backdrop of the banker and his pay had become mind-numbing. Images of the RBS chief executive, velvet-clad astride a horse, or jogging, ruddy-faced, along a Kensington pavement, were overplayed to the point where the news package had begun to pose existential questions quite aside from the bonus one. Will he catch the fox? Is he one of those irritating joggers who run on the spot at pedestrian crossings?
My quest to find something more wholesome led me to a programme about why eating fatty food makes us fat. Pseudo-documentaries such as I’m Fat and I Don’t Like It Much or I’m So Heavy, My Blood Type is Ragù have come to dominate the televisual backwater once lorded over by detective dramas and slapstick panel shows.
In this particular episode, a man from a sweet-maker described in great detail why guzzling chocolate bars can be bad. The serious message was accompanied by footage of pale nut shards being shovelled into a gloopy cauldron of chocolate and gelatine stew. My reaction was simple: I wanted a nutty chocolate bar immediately.
This unintended consequence of the programme is a good ruse for the confectioners; they get to look concerned about what their wares might be doing to people, while giving viewers subliminal encouragement to gorge themselves.
This self-flagellating/self-serving paradox has become a staple of executive speak during the financial crisis. The ability to be at once apologetic for my industry and ensure better returns for myself and my shareholders has become a must-have for budding business leaders. Even politicians are in on it, forever rabbiting on about how they feel responsible, while simultaneously underscoring the point that they are better at taking responsibility than rivals.
The undisputed masters of this recessionary vogue, though, are the upper echelons of the banking community. They have refined it to a perfectly equilibrated art whereby the more they own up to the shortcomings of the market they have created, the more valuable their personal assets, namely their homes, become. In helping to first destabilise the world’s economy and then – by doing things like turning down their rewards for trying to fix it – perpetuate the feeling of uncertainty, the self-styled masters of the universe have turned prime property into gold.
This perfect circle of unfairness is particularly unappealing for most of us, who can only afford to, or, indeed, aspire to own the kind of houses that at best hold, but more likely lose, value when the economic going gets tough. And, while it is perhaps overly cynical to suggest the string-pullers in the financial world have a vested interest in a faltering economy, it is hard to see how they can be on the losing team whichever way their bet goes.
Take Greece’s ongoing dalliance with the notion of quitting the eurozone and its debt repayments.
If it takes its medicine and coughs up the money it owes, the bankers, or at least the ones who were smart enough to buy the debt cheaply, come up smelling of roses.
On the other hand, worries over which way it will go have already driven hoards of Hellenic buyers into the haven property clusters of London, fuelling house price inflation across the banker-saturated enclaves, such as St John’s Wood. If Greece takes the quitter option, this is only likely to increase.
Prime property prices in the UK capital are booming. In 2011 alone, houses worth upwards of £1m rose by £395 a day – the sort of growth rate that would at least cushion the sadness of not being able to take home one’s bonus. In New York and Paris, Hong Kong and Shanghai, the story is the same, with the top properties on the market pulling rapidly away in value terms as rich domestic buyers, and foreign investors, seek out shelter from the storm.
This then leads to an unpleasantly intriguing conundrum for our aforementioned masters of the universe: muck in with the effort to save the economy and have the value of my house fall back in line with the wider housing market. Or, balls to the economy. If it all goes pear-shaped I will be sitting on a gold-mine. I can remortgage and buy a dozen pieds-à-terre.
If it’s deliberate, this double-Dutch wizardry of appearing deeply dismayed about the growth of the desert while simultaneously owning the oases puts our chocolate-bar doomsayer’s trickery to shame. The confectionary equivalent would be for Willy Wonka to short sell shares in his factory, before coming out and announcing he is giving up using elevators for a year in a bid to raise awareness of heart disease.
This ingenious win-win approach is perhaps the reason bankers feel justified in paying each other bonuses that look to most of us like rewards for failure.
Ed Hammond is the FT’s property correspondent
More columns at www.ft.com/perspective
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