Former Verve men Nick McCabe and Simon Jones are set to release the debut album of their new band Black Submarine at the start of next month (3 February). While awaiting New Shores, and a handful of UK live dates, you'll find him the cinema, well tonight (17 January) anyway, watching The Wolf Of Wall Street. In a guest column for Q, Jones explains why the book the film is based on is not just a historical account of financial misdeeds but a warning for today.
I've been awaiting Martin Scorsese's The Wolf Of Wall Street with great anticipation. I'd read Jordan "The Wolf" Belfort's memoirs a long time ago, as I became obsessed with high finance, its relationship with our governments and the unprecedented level of corruption that existed between the two after the collapse of the global financial system back in 2008/09. So, after reading books like Too Big To Fail by Andrew Ross Sorkin, House Of Cards and Money And Power by William D. Cohan, I got interested in more personal accounts like Liar's Poker by Michael Lewis, Binge Trading by Seth Freedman, The Greatest Trade Ever by Gregory Zuckerman and, inevitably, Belfort's The Wolf of Wall Street.
What interested me in the latter's book was initially the front cover. Bearing a huge line of cocaine and the tag line: "I partied like a rockstar and lived like a king". It sounded pretty crass, but if it was as good a holiday read as a Mötley Crüe biography I was game! Briefly, in summary, Jordan Belfort was a (self-confessed) completely self-obsessed scumbag who, from humble beginnings in Queens, New York, had by the age of 26 set up his own stockbroking firm and proceeded to rip off investors, in what are commonly known as "Boiler Room - Pump and Dump" schemes.
The pinnacle of his corruption was in making companies public, (known as IPOs - initial public offerings). He'd have massive stakes in the company and then proceed to drive the stock prices up (The Pump), then get his brokerage boys to call investors and hard sell the stock, offloading his stake at highly inflated prices (The Dump). His most famous IPO, and the one that led him to a prison sentence, was that of Steve Madden shoes, where he made over $20million in two hours the morning the company went public. Unbelievable!
Anyway, the point of all this is not a movie/book review - though it must be said Scorsese and Leonardo DiCaprio thankfully portray him as the scumbag that he was - but to highlight the fact that this shit is just an everyday occurrence in the land of high finance and investment banks. On that note, we come to the most infamous of all: Goldman Sachs, AKA Government Sachs, due to the incredibly high number of ex-employees who now work in government departments in the US. The most high profile of these ex-employees is one Henry "Hank" Paulson, who became George W Bush's Treasury Secretary. The former CEO of GS was the man behind the bailout of the American financial system and, reportedly, imposed a somewhat self-serving agenda where he looked after his old Wall Street mates - one being his successor at GS, CEO Lloyd Blankfein.
He later claimed GS didn't even need the money - if true, this is probably something to do with the fact that GS were selling dodgy mortgage-backed securities to unwitting investors, thus dumping their toxic investments and making billions as the world around them collapsed. Ironically, the dodgy product they were selling was called Timberwolf (hmm - "Wolf") and a paper trail of e-mails uncovered traders at GS calling these products "pieces of shit". Yep, good ole Goldman Sachs made billions selling this "shit" to their clients... nice guys, eh? That is unless they were too busy fixing LIBOR rates to notice what was going on - yes Barclays, come on down!
So, let's observe Goldman Sachs in action on our home shores, living up to Rolling Stone writer Matt Taibbi's description as "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money", GS has been carrying on with its fun and games at the expense of the Brits. Along with UBS, GS were the ones responsible for guiding our government in its sale of the Royal Mail. Yes, they advised our government on the IPO of the Royal Mail, at a recommended price of 330p per share ahead of its flotation on the London stock exchange (sound familiar?). Business secretary Vince Cable insisted he was given "very clear and unambiguous advice" that pushing the offer price higher than 330p would be "very unwise". What were Cameron/Osborne/Cable thinking? Their defence: it was too risky to have investors walking away from the flotation if priced too high. What? So underprice it by nearly half? And these idiots are running our country! It reminds me of Gordon Brown's "impeccable financial wisdom" in selling off the majority of Britain's gold reserves for prices between $256 and $296 per ounce, only to watch it subsequently soar as far as $1,615 - genius!
Anyway, as per the Jordan Belfort story, it will come as no surprise that GS bought truckloads of shares in the Royal Mail and now, only a few months after the 330p per share valuation, GS have set a target price of 610p. Unbelievable! The shares are nearly there too, sat at around 600p currently. All this sounds a bit familiar, but instead of a shoe company it's one of our freaking national treasures. So, the good old taxpayers, who still haven't seen a return on bailing out the banks, don't get to benefit on any significant scale, as you and I could only buy about £700-worth of stock. Yes, you could make a few hundred quid but the big banksters are raking it in!! It makes the Wolf seem like a saint!
No matter how loud our governments shout about rectifying scandals of our financial past, they're complicit, full stop. It was only a couple of months ago that it was reported that the number of UK bankers earning at least €1m (£833,200) rose to more than 2700 last year, in a new City pay explosion. The figure is 12 times more than any other country in the EU. So it seems the wolves are still at the door - beware people, beware of the American Werewolf in London! Simon Jones
For more, including shows at Manchester's Deaf Institute (5 February) and London's Wilton's Music Hall (6), head to Blacksubmarine.co.uk.