Any other business

You sport a huge beard and a towel on your head and in the name of Allah you try to bring down the computer infrastructure on which the world depends. You are, in contemporary argot, a ‘cyber-terrorist’. You wear a button-down shirt and chinos, and in the name of turning a profit you deliberately set out to wreck a pillar of the financial system, or a country’s economy. In this case you are, it appears, a ‘market manipulator’. Can you spot the difference? Aside from motive, little separates the two: one wants to create a global caliphate, the other to make billions, but neither employs violence and both are indifferent to the chaos they cause. Is it time for hedge-fund managers to be subjected to extreme rendition from their Mayfair offices?

To judge from the media coverage of Northern Rock, one might imagine that the circumstances of a bank collapse have never occurred before — or at least not for 150 years. But this is not the case. There have been several in recent years, including those of Johnson Matthey and Barings. But the closest parallel is one that is less well known: the collapse of National Mortgage Bank (NMB), of which I was appointed chairman in February 1992 to supervise the run-off of its business. The story begins with the collapse of the fraud-ridden Bank of Credit and Commerce International in 1991. This was not the direct responsibility of the Bank of England, but it had the effect of causing collateral damage to secondary banks in the UK.

Whenever I return to England from abroad, which is often, a very troubling question comes insistently into mind: why are the people here so ugly? I do not mean by this that I think all foreigners are handsome or beautiful, far from it. One of the tricks that Stepmother Nature has played on humanity is to give it an idea of beauty in its own kind, and then deny the thing itself to so large a proportion of the race. Still, there is something special about English ugliness. It is not of the face alone, but of the soul. As Sir Thomas Browne put it (and he must have known, because he was a doctor): ‘For there are mystically in our faces certain characters which carry the motto of our souls, wherein he that cannot read ABC may read our natures.

During the boom years, it was fashionable to say that London owed its success as a financial centre partly to the quality of its regulation. Thanks to the Financial Services Authority’s astonishing internal audit of its supervision of Northern Rock, published last week, we can now see what that means. For Northern Rock, the UK’s fabled light-touch regulation was very nearly no-touch regulation. Those charged with supervising the Newcastle-based mortgage lender barely bothered to call on it; when they did, they didn’t know what questions to ask; afterwards, they didn’t bother to keep proper records. With a watchdog like that, no wonder financial services firms flocked to London. Of course, the FSA insists its failures over Northern Rock were a one-off.

I think I’ve spotted the ‘trash and cash’ merchants, dining at Mayfair’s best tables A posse of hedge fund managers came round to The Spectator the other day, not to indulge in ‘trash and cash’ — or the even less attractive ‘pump and dump’ — but to participate in a breakfast discussion about how they are perceived by the media and the political world, and what they ought to do about it. I was asked to kick-start the debate, so I gave it to them straight in the croissants.

Guy Monson and Subitha Subramaniam on how the US Federal Reserve is facing up to recession US policymakers are at war against recession. Since January, the Federal Reserve under Ben Bernanke has cut interest rates by 1.25 per cent; markets expect another cut of as much as 1 per cent this week. Such dramatic reductions are a far cry from the studied gradualism of the Greenspan years. In addition, Treasury secretary Hank Paulson has deployed fiscal policy to offset the housing squeeze with an aggressive package of $152 billion in tax rebates. At its core, this ‘war’ aims to shore up US house prices, the essential collateral for the US financial system.

I have no objection to washing up. I prefer it to most other chores. When I was very small my mother allowed me to ‘help’ with the washing up. This meant doing the drying. I got praise for the thorough and conscientious way I did it, polishing the delicate pieces of old china till they reflected the light. My mother had a gift for making all dull jobs seem important and requiring craftsmanship. She said: ‘You’re a first-class dryer now.’ I preferred it to washing up in those days. Now it’s the reverse. I like putting on a big striped apron and taking over the sink.

If you would like to see the kind of out-at-elbow tweed jackets once beloved of schoolmasters before they discovered the joys of earrings and the like, and still by far my preferred apparel, you must go to provincial book fairs. They are smaller and less frequented than they used to be. It is a strange thing, but I am now usually at the lower end of the age spectrum of the people who attend the events that I enjoy. I have the not altogether unsatisfying impression that civilisation is collapsing around me. Is it my age, I wonder, or the age we live in? I am not sure. Civilisations do collapse, after all, but on the other hand people grow old with rather greater frequency.

The Letters of Lytton Strachey, which I have just been reading, are a mixed joy. Odd that a writer supposedly so fastidious in the use of words should have produced effusions in the 1920s using ‘divine’ or ‘divinely’ half a dozen times in a single letter, just like a Bright Young Person from Vile Bodies. On the other hand, they provide nuggets of discreditable facts, chiefly about the sexual tastes of the Great and the Good, such as the Labour Lord Chancellor, Jowett. He also relates how he himself was pleasurably crucified by the young Roger Senhouse, an elaborate business which involved making a blasphemous ‘cut’ in his side.