A new buzzword for greed?

A couple of years ago some of the fastest selling books were the Harry Potter "sagas". Meanwhile, progressively a different phenomenon emerged. Books about atheism. In just a few months we had at least three international best-sellers competing to make a case for atheism. Whether this was triggered by emotional or intellectual considerations is far beyond me. I think it was more of an easy way of fattening their bank balances.

Predictably, "thanks" to the credit crunch we are now being flooded with a number of books setting out in graphic detail the consequences and fall-out of the credit crunch.

While some have been claiming that they have been predicting this crunch to happen all along, others, like Alan Greenspan, are seeking to save face by trying to explain the unexplainable turn of events that derailed the whole process.

The problem is that, although many have ended up with more than just their fingers burnt, there are still many in our midst who can hardly tell the difference between private equity funds and hedge funds.

One brave author who has decided to name names is Robert Peston, the BBC's award-winning business editor.

Initially, in the early weeks of 2008 he published a hardback edition of a book titled Who Runs Britain. Not one to sit on his laurels and always smart and quick enough to see the prospects of a best-selling "devastating account", he turned his book around, updated it, inserted completely new chapters, flooded it with names that even included former Prime Ministers and past and serving Cabinet ministers until, hey presto, he turned his book into Who Runs Britain?... And Who's To Blame For The Economic Mess We're In.

He might be a genuine insider but he writes with a direct style that anyone can follow. The Dart Vader and Dark Lord of the Sith (with apologies to Star Wars fans) is this time what he describes as "turbo-capitalism".

Concerned how the gap between the rich and the poor started to widen in his country and would never narrow again, he even pointed a finger or two at the Brown Administration for having made this gap widen even further and faster.

I have nothing against those who make it on their own steam, those who have initiative and a strong sense of enterprise. Every country should ideally be a land of opportunity. But there is one thing between enterprise and greed, and greed is basically what his book is all about.

His main targets are hedge fund and private equity firms.

There is no envy in his writing except concern about a type of greed that has seen the UK being reconstructed in a manner where the share of national income taken by those at the pinnacle of the income scale is at levels not seen for a century.

He mentions names and figures how the private-equity doyens have contributed millions of pounds respectively to major political parties in the UK, arguing that in his opinion Tony Blair had long decided that it was preferable for Labour to be financially dependent on wealthy individuals than on the party's trade union founders. Whether these forms of dependence can and did create conflicts of interest in the formulation of policy I leave it up to readers to decide.

He names bankers who over the years greased what he termed as a money recycling machine by trying to convince one and all that this mad lending has or had a socially useful purpose.

He argues that "In the US and the UK it gave those on low incomes and with uncertain prospects access to credit that had not hitherto been available, giving them the opportunity to accumulate property and to finance all sorts of desirable purchases."This is true, up to a point; except that quite a lot of them are now losing their homes, having been unable to keep up the payments.

The tragedy of it all is that "cheap money was spewed out and lent in terrifying quantities to individuals and businesses whose ability to repay was predicated on self-delusion".

Although we are still living through the implications of all this, the climax happened last August when the whole machine of fecklessness came to a juddering halt. "And at that point, when it became impossible to repay one load of debt by borrowing another bigger load even more cheaply, all sorts of banks, financial institutions, companies and home owners had a frightening realisation that they had accumulated huge and horrible liabilities."

I personally have nothing against privatisation, but when one has poor regulators and capitalism and free markets fail to serve the public interest then there is room for worry and concern.

You can skip this book at your own expense. But the lesson for us all is that any business that acquires the power of a monopolist usually needs to be reined in, for fear that it would overcharge customers or stifle competition.

A private equity firm's gain is often a pension fund's loss!

Mr Brincat is a Labour member of Parliament.

brincat.leo@gmail.com