In a development that has sent shockwaves through the corseted corridors of Whitehall faster than a penny-farthing down a cobbled hill, the UK Treasury today issued a wan, trembling statement warning of 'global instability' following the United States' decision to unceremoniously drop a £1.4 billion fund designed to prevent financial instruments from being turned into weapons. The fund, known rather charmingly as the 'Financial Peace and Love Initiative' (or FPLI, but we digress), was the result of years of hand-wringing, diplomatic flummery, and the consumption of a truly staggering quantity of middling Chardonnay on the international conference circuit.
Now, it is gone. Poof. Like a politician's promise to resign, or a sensible Brexit plan.
The Treasury's statement, issued through the sort of tightly-pursed lips that denote genuine panic, suggested that the removal of this fund could lead to 'a return to the dark ages of financial warfare, where sovereign debt is used as a cudgel, and currency swaps become instruments of destabilisation.' In other words, the sort of behaviour that characterises Tuesday. But no matter.
Let us pause here to consider the fund itself. £1.4 billion, which in the grand scheme of government spending is roughly the cost of a single round of golf at Donald Trump's Turnberry, minus the hagiography. Its purpose was to ensure that high-frequency trading algorithms, derivatives, and other arcane financial contrivances did not suddenly mutate into something resembling a plausible threat to global security. One imagines a committee of very serious people in very serious suits, nodding gravely at the notion that a bunch of wobbly-nerved traders in Canary Wharf could, with a few keystrokes, bring down the economy of a small nation. Now, without the fund, that scenario is apparently back on the table. Huzzah.
The real question, of course, is not what the fund did, but what the Americans were thinking. In the febrile atmosphere of the current White House, where policy is made via reality TV and semi-coherent tweets from a man who once described the gold standard as 'the thing they use to weigh gold,' the decision to can the FPLI is likely less a strategic masterstroke and more a misplaced bit of paperwork. Somewhere in the bowels of the US Treasury, a clerk named Dave probably filed it under 'tree-saving initiatives' by mistake. But the result is the same: a yawning hole in the global financial safety net, and the UK Treasury left to issue increasingly shrill press releases about the end of the world as we know it.
Meanwhile, the City of London, that great engine of prosperity and low-level tax evasion, has greeted the news with the sort of equanimity usually reserved for the arrival of a third spouse at a wedding. After all, instability is where money is made. The traders, those sharp-elbowed barons of the dealing floor, are no doubt already salivating at the prospect of new arbitrage opportunities, new ways to extract profit from the impending chaos. The Treasury might be warning of 'systemic risks,' but to a certain kind of mind, systemic risk is just another name for 'a bonus pool.
And what of the rest of us, the poor plebs who can't quite follow the intricate dance of credit default swaps and sovereign bond yields? We are left to wonder if our pensions are safe, if the value of our homes will collapse, if we should start hoarding tinned goods and bitter recriminations. The Treasury's statement, for all its solemnity, had the ring of a man shouting 'Fire!' in a crowded theatre, then adding, 'But please, no refunds.'
In conclusion, the US's decision to drop the £1.4bn anti-weaponisation fund is a masterstroke of incompetence, a glorious symphony of mismanagement that will be studied by future historians as Exhibit A in the case of 'How the West Was Lost to a Bunch of Gibbering Berserkers.' The UK Treasury, meanwhile, can do little more than wring its hands, issue sternly worded letters, and prepare for the inevitable arrival of a financial crisis that tastes faintly of gin and desperation.
Brace yourselves, dear readers. It's going to be a bumpy ride. And the bar is closed.
