Outlook: City gossip that raises wider issues

Gordon Brown's press spokesman, Charlie Whelan, seems to have a particular liking for the expression "load of old bollocks" so had he not been in Brighton with more important matters on his mind, he would have been in his element yesterday fielding questions about a story that appeared in one of our rivals, The Times. On this occasion he would have been right. The story concerned the FT 's apparent scoop last Friday about a shift in government policy on EMU.

According to The Times there had been heavy buying, by Goldman Sachs in particular, of gilts futures ahead of this story appearing and millions had been made by doing so. The story then went on to draw the inference that since the wife of Goldman's chief economist, Gavyn Davies, works in Gordon Brown's office, Goldman might have known about the shift in policy too, or at least that the FT had been briefed about it. Dear, oh dear. Let's hope The Times has good libel lawyers, for the inference is nonsense, as is the suggestion that the position taken by Goldman's in the futures market was anything out of the ordinary. The joke is that, had Goldman's really known about the story and its likely effect on markets, the positions taken out would have been a great deal larger.

All the same, this malicious little piece of City gossip does raise some wider issues about the power of investment bankers over policymakers and markets. The best investment banks go to great lengths to ensure both that they are close to policymakers and have the very best of information on anything that might affect markets, and that they have opinion-formers of sufficient calibre to influence what policymakers do. It becomes hard to know, at times, just who is influencing whom. Is it investment bankers interpreting the information they derive from policymakers, or is it their own opinion-formers and the weight of their money in the markets that instruct the policymakers?

Some foreign central bankers and governments actually go so far as to consult big market players as to what reaction might be to this or that change of tack. Though it seems a bit far-fetched to believe this is what happens in Britain too, ministers are certainly very conscious of how their actions might play with the markets and the opinion formers that influence them.

By the same token, what might look to be something akin to insider trading by particular market players is often just inspired speculation. Goldman Sachs has been urging a more pro-EMU stance on the Government for months and has long taken the view that gilt yields should be converging with bond yields in Germany and France. Can anyone blame a proprietary trader for backing its view with a position in the market? Politicians may not like the power and influence of these people very much but, for the time being, it is the way of the world.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Recruitment Resourcer

£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn