A Martian checking in on Earth News for the first time since 2008 might well wonder whether our global banking history is repeating itself.

One of the world’s gold-plated banks goes rogue, the eurozone in crisis, and the bond market experiences a collective nervous breakdown.

It doesn’t take a Martian to work out that maybe all but nothing has been learned from the financial meltdown of 2008. Indeed, stop more or less anyone on any European street, or any American street, and they will tell you nothing’s been done to address the ingredients of the 2008 crisis.

JPMorgan: a tempest no longer in a teapot?

JPMorgan: not just any bank

The ‘tempest in a teapot’ at JPMorgan – first spotted by other traders and financial experts four weeks ago – involves all the stupidity and miscalculation that described the elements of the 2008 banking crisis. When a bank anticipates $17bn in profits in 2012, a $2bn loss may not sound too bad. But JPMorgan isn’t just any bank.

I have spoken with a close contact who worked in the upper echelon of the bank. He tells me that there has been a ‘cultural breakdown’ at the bank, not by a lone ‘rogue trader’ but by the entire team in the trusted department in which the losses occurred.

JPMorgan, largely spared in the 2008 crisis, has sported more than a century of ‘gold plated’ behavioural reputation. Not any more.

Greek tragedy

And all this against a backdrop of the Greek shambles and the vulnerability of the eurozone that it exposes. Beware Greeks bearing splits, the democratic crisis in the country, the uncertainty over its membership of the euro threaten banking and currency stability well beyond the eurozone, including our own here in Britain.

This is a dangerous time. We have become inured to financial scare stories. But this is no longer a scare, it is a fact. It might be wise for us all to tune in, and hang on to our hats, or should that read back pockets?

It is, in the immortal words of someone much wiser than I, “the economy, stupid”.

As the New Year turns, it is still hard to determine which will come first: an individual massive bank failure that spooks the entire global financial system, bringing others crashing behind it, or the default of a sovereign economy, causing the disintegration of the euro altogether.

What is undeniable about 2011 is that the capitalist model ran out of road. What once was intimate and national – banking – has gone global, and the governance of financial activity that was once equally intimate and national has not gone adequately global.There is no global regulator. Hence extraordinary financial deals are conducted across borders in nanoseconds that are neither effectively regulated, nor, in many cases fully understood.

The horror of the sub-prime mortgage scandal in the US in 2008 that signalled the scale of what was going on has not been addressed.

In 2012 therefore the stage is set at many levels for financial and consequent economic disaster.

In Europe the ECB (European Central Bank) staved off catastrophe by printing half a trillion dollars and allowing over three hundred banks to draw upon it. But that has only “kicked the can down the road” – my key City source tells me it may have bought three or four months. The euro may or may not have as long.

But it is not just the economy. The greatest threat to world peace lies in the 21st century’s “great game” between two of the world’s biggest oil producers – Iran and Saudi Arabia. Somewhere below the surface in Syria, both are present. The great Sunni/Shia battle is under way. It is being acted out in a contained way in Saudi itself, and in Bahrain, and principally – for all to see, in Pakistan. Pakistan is a big country to watch in 2012.

Try Jon Snow’s quiz of the year

America, battered by Iraq, Afghanistan, and its own economic legacy, will turn inward. In the presidential election, money will prevail as never before (note the changes in political funding laws).

Dissent in Russia and in China will build, partially fuelled by the Arab Spring. That spring itself, now contorted by the bigger “game” to which I have referred, will peak again in earnest in Egypt.

The international community will do nothing about Israel and Palestine. The internal dissent in each entity, fuelled by economic inequality, will continue.

2012 is a daunting prospect and may provoke some return to “small is beautiful” thoughts – the renewal of community and neighbourhood amid shared austerity. Let’s hope so.

Follow Jon Snow on Twitter: @jonsnowC4

When I was a child, a gloomy portrait hung above the mantle in the dining room. My father, whenever pressed, would tell us of the sitter – Tom Snow, a banker in the City of London – our many times great, and not so great, grandfather.

Tom made a killing out of the eighteenth century South Sea Bubble. Some time in the 1960s my father sold the last of Tom’s ill-gotten bequests, a Georgian silver salver, to fund private schooling for your blogger.

One of Tom’s unlucky investors, lured into losing his money in the South Sea Bubble, was Jonathan Swift who damned my forebear in his “The Bank Thrown Down”. Snow himself lost nothing in this City scandal in which investors poured money into supposed assets far away in the Southern seas.

Today the “bubble” is back. Old Tom Snow survived with his wealth through activities in the City that no one fully understood. So it is today. Derivatives, algorithmic mechanisms, credit default swaps, the instruments abound.

I meet endless city operatives who tell me of the invention of still more incomprehensible mechanisms for gambling, betting, skimming, and simply making money out of moving money in nanoseconds. Much, if not most of this activity, has been facilitated by the evolving power of computing. Much of it has been classed by the Chairman of the Financial Services Authority, Lord Adair Turner, as “socially useless”.

We are now at a point in our global history where sovereign national wealth, corporate capital, and even the smallest domestic investment, are in play in a market the ramifications of which almost no one fully understands. Perhaps it is worse than that. Perhaps we are in a market in which absolutely no one fully understands every mechanism in play. That would include financial regulatory authorities, the police, and us. Hence the return of the Bubble, a moment in which massive fast money seems to be winnable within the law.

But should it be? Should the world’s financial systems include massive bets on failure? At least the bubble was built on the myth that the betting was on distant success.

One of the reasons no banker has been jailed for either the 2008 crash, or the present mire, is that what they did, and what they are still doing, is perfectly legal.

Yet it has resulted in this threatening, looming, global meltdown. We have no idea of the scale of what is out there or how it will play out.

But will not history ask why we allowed interplays of dealing, betting, trading, gambling, and the rest which enriched so few at the cost of threatening the well-being of so many?

Why is there no G20 meeting, no UN debate, no international, or national debate centred on achieving a global ban of these “socially useless” activities?

At least Jonathan Swift was able to understand the criminality that produced the bubble. How many of us today can claim the same of our own very present, infinitely larger, and disastrously toxic bubble?

Follow @jonsnowC4 on Twitter.

The publication of the Vickers report into British banking reform sparks the question why the UK has so far failed to prosecute a single individual for his or her misdeeds during the financial meltdown of 2008.

It is now all but three years since the global financial crisis and the virtual implosion of the British banking system.

We were told at the time that the banking regulator, the FSA, had started a ‘major investigation’. Last night on Channel 4 News when I pressed the City Minister, Mark Hoban, he referred constantly to the FSA’s involvement. But where is the Serious Fraud Office? No sign of much happening on that front.

Yet investigators on both sides of the Atlantic have had no doubt that criminality, subterfuge, and downright dishonesty accompanied many of the ingredients that brought about the crash. At the very least there was gross dishonesty in the representation of exposure to the sub-prime mortgage business.

The convenient fall-guy was the Ponzi magician, Bernie Madoff who was quickly jailed for thieving billions with his criminal scheme. But Madoff had nothing to do with bringing down the banks. He’d have been jailed anyway. But his jailing served to suggest that a high profile scalp had been secured.

Last year, the then New York Attorney General Andrew Cuomo produced a laundry list of institutions and individuals who were being investigated for potential prosecution. That work too has slowed.

In one month, hundreds of rioters and looters have been prosecuted and punished by the English courts, often for offences with a value of under fifty pounds. Yet the threat to the wellbeing of UKplc was far greater from the bankers than from any number of more arrestable rioters.

There is a strong impression abroad that the UK doesn’t want to prosecute anyone for the banking crisis, a crisis that has affected every tax payer in the Kingdom.

Soon enough the statute of limitations will kick in to ensure that no-one will ever be prosecuted for their role.

Then we can all breathe easy – no banker will ever go to jail, and we can stop asking the nightly question, ‘why not?’

Follow @jonsnowC4 on Twitter.

Be afraid. Be very afraid. No, not of Murdoch, but of the looming financial crisis from which the phone hacking vortex shields our eyes.

The serendipitous daily drip drip of revelation has so consumed our naive appetites that our eye is as far off the financial ball as it has ever been. I know very little about high finance, but I know enough to know that when the price of gold assumes a level never seen before by mankind, there is something very ugly in the woodshed. The price per ounce of the stuff – $1,600 – is some record.

On any other day, a collapse in the share price of Lloyds and Barclays by a staggering 7% would have led every news bulletin in the land. RBS shed 6%. Need I say more?

Disparate Europe cannot see a way forward in the Greek debt crisis. The catastrophic fallout from allowing Lehman Brothers to go bust in 2008 has made cowards of us all when contemplating doing the same for a national entity like Greece. In short, no one knows where it would end… Dublin? Madrid? Lisbon? Rome? Shiver our timbers… London?

And I haven’t mentioned the madness on the Hill. The unending playing of politics with the American economy on Capitol Hill. Deadlock sustains as deadline looms.

Another test I understand is that of the Swiss franc. You have guessed it – yesterday it hit a record 1.1397 against the Euro.

Do not therefore spare a thought for the mere $1 billion that Mr Murdoch’s news Corp has lost in value since the hacking rumpus exploded on 4 July. It won’t stop us watching his Parliamentary grilling today. One suspects the old boy won’t know much detail, Rebekah Brooks will try to say little, on legal advice – leaving the focus on James Murdoch.

Oh, and while you worry about your bank, and your hacked/unhacked phone, do spare a final thought for the badger. It is to be officially announced today that he and she badger are for the chop, or rather the gas and the bullet. Rustic, rural, green-field England is going for the cull… maybe…

@jonsnowC4

 These are eerie days. I am no economist, no banking expert, but the stirrings of insecurity seem to be with us again.

Spain is in the frame again…stress testing her banks seems not to have been a particularly reassuring experience.

France has added a couple of years to her retirement age to cope with her own burgeoning economic difficulties.

I am meeting too many people who seem to understand these things and who think we are headed for another catastrophe.

They talk of Spain requiring a bail out. They talk of Greece headed for eventual total collapse and exit from the Euro – irrespective of their remedial actions.

Above all, I am hearing the phrase ‘the Banks are back to their old ways – nothing has changed.’ I am beginning to fear they are right.

Is this a ‘double dip’ I see before me? Emergency Budget Day – next Tuesday here in the UK assumes an ever larger and more draconian form.

Has global finance run out beyond the control of any national or global system of control?

Again?

The authoritative Which? Commission report (Chaired by David Davies MP) tells it like it is.

In the 21st century we get a rotten service. The Economist Will Hutton’s warning in yesterday’s Observer declares in stentorian tones ‘The Banks Have Refused to Mend Their Ways’.

At noon on Friday I had occasion to ring my bank’s Visa department. An online error on my part had led to an over-payment on my card (never dabble with bill payments when your mind is on six other jobs!).

I was ringing to ask them to pay me the several thousand pounds by which my account was in credit.

They promise to do so, by cheque. Because it was Friday at noon they warned me the cheque would not be issued before Monday.

They added that it would take FIVE to TEN BANKING days to arrive! It would then take me the standard THREE to FIVE banking days to get the cheque cleared. In other words it could take TWO weeks to recover several thousand pounds of my own money.

I suggested that they pay me by bank transfer. They said they simply don’t do that. I asked why.

They told me ‘well all credit card companies are the same, you wouldn’t get any different treatment from any other card company’. So that’s it. I spoke to a manager and secured a repeat performance and no improvement.

Then I asked for a reference number so that I could track what was happening. ‘We do have a reference number, but its for our use, we don’t disclose it to the customer’.

So, if after TEN days there is no cheque, I have no reference number, and every possibility of starting the two week operation all over again.

Why when our payments to a bank can go though in an hour does it need to take them up to two weeks to pay us?

They did offer helpfully, that I could go out and spend the money right now – on my credit card. But I didn’t want to. Despite all the debt, the failure, and the liquidity collapse of the banks, has nothing changed?

And given that we own a bank or two, why don’t we turn them into model providers to sting the rest of the market into reform?

The figures are dry – the information, to the layman, even boring. “Lending to the private sector in the Eurozone shrank last month year on year for the first time ever” – even as the zone’s economy was returning to growth.

In other words, in common with Britain’s banks, Europe’s bankers have scaled back on making credit available at an unprecedented pace.

This bland piece of information discloses the reality of the times in which we are living. Having tipped truly vast amounts of public money into private bankers’ pockets, not only are those self same bankers paying themselves vast bonuses, but they are most specifically NOT lending the stuff to keep the economic wheels turning.

Short-term loans - those under a year - are almost 10 per cent down. Those are the loans that enable companies to buy forward raw materials and stock to enable them to participate in the renewed growth across Europe’s economy.

Although these figures affect those countries inside the Eurozone, the UK is in no different place.

That’s why it is so instructive to look at how both the investment and the retail banks are working across the world. There is no better example than Goldman Sachs, whose gigantic “profits” and consequent bonuses appear to have played little role whatever in productive economic activity.

The UK shadow chancellor, George Osborne, wants bankers’ bonuses “purified” and turned into shares, so that the cash they would have taken can go into lending to make widgets.

It’s a brave though empty call. If after chucking £1.3 trillion of taxpayers’ money at the banks in Britain alone, the availability of credit has actually contracted, what on earth will persuade the bankers suddenly to lend their erstwhile bonuses?

The Governor of the Bank of England, Mervyn King, last week demanded the break up of the mega banks. His call represented a lone warning by a central banker. The banking system that got us into this mess has not changed.

We are effectively stoking up another disaster with precisely the same ingredients as the last one. That’s why today’s boring figures from the Eurozone are so instructive.

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I have blogged before about one of the best yet most under-used economic indicators, the Baltic Dry Index. This charts the movement (or lack of) of the world’s shipping.

To add to what I said, last month refrigerated-shipping operator Eastwind Maritime filed for bankruptcy in New York. Sweden’s Nordea bank seized and sold on 13 of its ships. Don’t hold the front page but I suspect these moves signal a further gloomy and probably prolonged period of global recession to come.

But there may be a glimmer of justice at least.

I note that a banker in Germany may feature in that country’s first trial related to the money meltdown. A Mr Stefan Ortseifen has been charged in Dusseldorf. He was the CEO of the IKB Bank and has been charged with manipulating the share price. A press release was declared by the prosecutor to have been “too positive” and caused investors to buy stock just a week before the bank came close to going bust altogether.

Mr Ortseifen is a rare breed. He’s one of the very, very, very, few bankers charged since the crash. Despite all the hoo-ha about Bernie Madoff’s 150-year sentence and Sir Alan Stanford’s alleged misdoing cloud, the reality is that the long arm of the law remains strangely stilled as this financial crisis continues to unfold.

Oh, and while I’m about it, are we drifting back to our bad old ways? Is it still possible for some rogue trader inside a London brokerage at 2am on a Tuesday morning to cause a spike in the world oil price? It seems so. Plus ça change!