Wednesday, May 8, 2013

A Tale of Two Cities

I generally walk through the City at one point or another of my daily commute.  The City of London is not to be confused with the city of London.  The city of London actually contains the City of London, which is usually just called "the City".  It is almost precisely one square kilometre of what was the original city bounds and which remained so for centuries after it was first settled by the Romans in the 1st Century AD. It wasn't until after the Middle Ages that the city grew into the surrounding areas, but the original City was and still is a separate city with its own mayor and ceremonial customs quite apart from what we commonly call the city of London.

Got that?  Good! Going on.....

"The City" also references the financial services industry, as this was and still is where many head offices in the international banking industry reside.  When someone says they work "in the City" it usually means they are connected to the financial industry and they may not actually work in the City.

Well done!  You are much cleverer than I am.  It took me ages to understand the idiosyncrasies of the City in the city.  Like why there was a Lord Mayor's parade starring someone who was not the person I had always seen identified as the mayor of London (as opposed to the mayor of the City of London).  I learned to look out for the capital letter "C" in the word "city".  If it was a large C then I slowly learned which one was being referenced.

The City of London is a fascinating place these days, given that the meltdown in the British economy over the last few years was to a fairly large extent due to the unrestrained activities in which the banks ran rampant.  The City has historically given a lot of rein to the banking industry and still does. In fact, one of the largest unrestrained tax havens in the world is the City of London.

When you mention the words "tax haven" I instantly think of Swiss Bank accounts or the Cayman Islands.  Those tax laws are not designed for the benefit of the average Swiss or Caymanians, but for those wealthy people and corporations that are in a position to make use of them in order to avoid the tax rules in their own countries. This results in one set of rules for a rich elite and another for the rest of us.

Over severeal centuries, sovereigns and governments have sought loans from the City of London in exchange for privileges and freedoms from rules and laws to which the rest of Britain has to deal with.  The City has an enormous cash reserve that has built up over the last thousand years or so, which is very useful in buying off dissent. The Freedom of Information Act ensures most of this is invisible, as the Act applies solely to City functions such as local or police authority.  The cash assets are beyond all scrutiny. 

As noted in an atrticle in the New Statesman:
"By the 1980s, the City was at the centre of a great, secretive financial web cast across the globe, each of whose sections - the individual havens - trapped passing money and business from nearby jurisdictions and fed them up to the City: just as a spider catches insects. So, a complex cross-border merger involving a US multinational might, say, route a lot of the transaction through Caribbean havens, whose British firms will then send much of the heavy lifting work, and profits, up to the City."

The article goes on to describe the inner part of the web being a collection of islands: Jersey, Guernsey and the Isle of Man.  The next ring includes British territories like Burmuda and the Cayman Islands (I knew they were involved somehow!) Then there are those places with looser connections, like Mauritius, Hong Kong and the Bahamas.

The point to be made is "Thus, the role of the City of London Corporation as a municipal authority is its least important attribute. This is a hugely resourced international offshore lobbying group pushing for international financial deregulation, tax-cutting and tax havenry around the world."

Pretty strong sentiments. Is it accurate?  A best selling book called "Treasure Islands" by Nicholas Shaxon indicates it is. ( ) 

Every morning the underground disgorges a river of black and grey suits that swarms down the streets of cafes and coffee shops.  There's a temporary lull and then it moves again, to Tesco Express checkouts, and HSBC bank machines and pubs that promote real ales or food deals or screens devoted to rugby and football. And then at 5pm or so, the river flows back to the underground stations and the train stations, with slow eddies outside of pubs for a pint or two.

My work was always in the West End,and never in the City, so this time provides me with a new sense of this most ancient part of  London.  In the West End there are circuses and squares and Malls, but in the City there is directness to the language of places.  There is a large monument marking the spot where the great fire of London took place in 1666.  It is called the Monument.  There is a tube station nearby, called Monument station.  There is another station right by the Bank of England.  It is called Bank station. 

The only time I have ever seen it quiet in the day time (and this place is dead quiet at night) was on the bank holiday Monday.  It was like a ghost town - I could walk right down the middle of Fenchurch street.

 I walked that day from the clinic to Leicester Square, about an hour. The first half was so quiet - shops closed, pubs silent, roads still.  But as soon as I got near Covent Garden I could see and hear a swell of crowds, mostly tourists, and my brisk walk bacame a crawl.  It told my what I knew in my heart, the City is for the business of business and not a lot else.

As long as the City is allowed to conduct itself they way it has for centuries, there will be crowds of tourists mavelling at its sites, and immigrants attracted to its reputation.  And money flowing in for the benefit of who knows who?

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