No essay in English has a better title than De Quincey’s ‘On Murder Considered as One of the Fine Arts’. I wonder whether, if he were alive today, he might be tempted to go back to the well and write a follow-up, ‘On Financial Disaster Considered as One of the Fine Arts’? The basic material might be less immediately captivating, but there’s a lot to choose from. As Warren Buffett has pointed out more than once, ‘It’s only when the tide goes out that you learn who’s been swimming naked.’ Financial and economic downturns always cause a rash of scandals and exposure. The tide has gone out – it’s still going out – and, frankly, it’s hard to know where to look.

In the UK, our most recent outrage has featured Northern Rock, the bank whose collapse in the autumn of 2007 was the first harbinger of the credit crunch and subsequent Great Recession. The new news was the Rock’s sale to Virgin Money, for a price of £747 million. If the bank’s profits rise, the taxpayer’s share of the payout will go up, as far as a possible cap of £1 billion. Since the cost of nationalising the bank was £1.4 billion, and since this only represents the ‘good’, i.e. allegedly more solvent, part of the bank, this deal, even on the headline news, is not great. The best-case scenario sees the taxpayer losing £400 million. Back before the disasters of 2008, that was seen as a lot of money. But the more one looks at it, the worse it gets. Behind the apparent simplicity of Richard Branson’s Virgin having bought the Rock lies a more complicated story in which the bulk of the money for the deal comes from Branson’s partner, W.L. Ross and Co, a specialist in distressed companies and undervalued shares (one of Wilbur Ross’s nicknames is ‘the King of Bankruptcy’). The shares are: £260 million W.L. Ross, £50 million Virgin Money, £50 million Abu Dhabi investment fund. You’d be forgiven for noticing that those numbers don’t come close to £747 million, so where’s the rest of the money? Answer: the deal is in large part paid for with the new bank’s own capital, to the tune of £400 million. At the time of its last results, the Rock had a Tier One capital ratio of 30 per cent. That number measures how safe a bank is: it is in effect the bank’s margin for error, showing how much cash of its own the bank has. The higher the percentage, the safer the bank; British banks must have a Tier One ratio of 10 per cent. Virgin has promised that the new combined bank will have a ratio of 15 per cent, way down on the margin currently held. That means that there is a lot of capital going spare – in effect, free cash for the purchaser. So the buyers are using the Rock’s own assets to help buy it. This is a fairly standard transaction in the world of finance, but not one guaranteed to assuage the anxieties of a public thoroughly sick of complex financial engineering.

To sum up: the Virgin deal guarantees big losses for the taxpayer, uses exotic financial techniques analogous to those which caused the Rock to collapse in the first place, and leaves us with a bank which is measurably less safe. The deal is in every respect a worse outcome than most people’s preferred alternative, of a remutualised building society. Or rather, in every respect except one: which is that it is actually a deal being offered right here, right now. After the Virgin buyout was announced, it emerged in Parliament that the European Commission, in return for allowing the nationalisation of the Rock, had placed a limit on how long the bank could stay in state ownership. (The thinking was that ownership by the state allowed the Rock to offer customer guarantees, and also to make risky investments, that no other bank could match.) The deadline for selling off the Rock was 2013. Faced with that, and with the fact that there was no serious offer on the table from a mutualised building society, the government had to choose between a bird in the hand and a faint rustling noise in the bush. I don’t think they had much choice. The taxpayer has been comprehensively hosed, but it isn’t a fresh scandal so much as the inexorable unfolding of the disaster that happened when the Rock imploded in 2007.

I think De Quincey, from the aesthetic point of view, would have preferred the MF Global scandal in the US. The central character in that story is Jon Corzine, whose name isn’t well known outside the States. He was the chief executive officer of Goldman Sachs responsible for taking the bank from a private partnership to the stock market, in the process making one of the all-time great capitalist paydays for every Goldman partner. As CEO of Goldman he reportedly would often greet his colleagues with the salutation, ‘Peace’. (I like to think that had I worked at Goldman, my response would have been to say, ‘Money’.) Corzine made $400 million. After the payday, he left the bank and went into Democratic politics, where he used his fortune to buy himself a Senate seat for New Jersey, the way you do. He was a senator from 2001 to 2006, and then governor from 2006 to 2010, when he lost to the Republican Chris Christie. Then, having gone from money into politics, Corzine went back into money, becoming CEO of a derivatives broker called MF Global with the avowed intention of turning the firm into a rival of Goldman.

Many have tried to rival Goldman. The story never has a happy ending. MF Global was a broker and brokers, essentially, buy and sell things on behalf of their clients. (The company was spun off from the Man Group, which sponsors the Man Booker Prize, in 2007. James Man was a sugar cooper and broker who in 1784 won the contract to supply the Royal Navy with rum; then the firm moved from sugar and rum into other commodities, then into futures contracts, then into derivatives more generally, then into financial services.) A firm like that can never grow big enough or quickly enough to challenge the big investment banks, so Corzine took the company into the business of trading on its own account. In that capacity, it made huge investments – read, bets – on sovereign debt in the EU. The timing of this was roughly equivalent to making a huge punt on the prospects of airships, just as the Hindenburg set out on its final voyage. When the eurozone crisis hit, the value of those investments collapsed, and led to a requirement that MF Global stump up more cash to show that it could stay in business. It couldn’t, so on 31 October, the firm filed for bankruptcy – and that was the point at which this lurid but otherwise routine story of failure took a turn towards scandal. It seemed to be the case that as well as being itself broke, MF Global couldn’t find all of the money it was supposed to be looking after for its clients. The first figure for missing cash was $600 million, but that has now been revised up to $1.2 billion. Bear in mind that this number doesn’t represent the firm’s losses, but the money belonging to its customers which it seems to have mislaid. That’s where the story now stands.

By a happy coincidence, the missing sum is almost exactly the same as the amount which has gone astray in our third scandal. This involves the Japanese camera-maker Olympus. Earlier this year, the company appointed a British executive, Michael Woodford, as its new chief executive. Woodford had worked for Olympus for thirty years, but the appointment of a Westerner to head the firm was nonetheless unusual in Japan. (The only comparable appointment is that of the Welshman Howard Stringer to run Sony.) Almost the first thing Woodford did as boss was to raise concerns at board level about a series of inexplicable payments the company had made: $687m in advisory fees over the purchase of a British medical-devices firm, booked via mysterious intermediaries in the Cayman Islands and New York; another $773m for a cosmetics company, a maker of plastic containers and a waste-disposal business, all of which lost three-quarters of their value within a year. The sums involved in these bizarre transactions come to about $1.4 billion. The board’s response was to sack Woodford on 14 October, blaming his inability to understand Japanese business culture. The firm has admitted the dodgy payments but said they were designed to hide losses on other investments. The latest reports say that police and prosecutors are looking into the possibility of a connection between the suspicious transactions and organised crime – the yakuza.

The possibility of a gangster connection, and the fact that it involves the largest sum of money, make l’affaire Olympus the most aesthetically charged of the recent scandals. Maybe, though, the most important detail lies in one crucial similarity between the cases. Three leading companies in three different businesses in three different countries, and the common thread between them is that an interested outside party, paying the closest of attention, and immersing herself in all the publicly available information, would have had no chance of knowing what was really going on. It’s the kind of thing De Quincey calls ‘a vicious obscurity’. Nobody knows anything: that was William Goldman’s axiom for anyone who has anything to do with the movie business. Fair enough – but it isn’t supposed to apply to the working of huge, publicly owned companies in developed modern economies. And yet, it seems to be the case that even here, especially here, nobody knows anything. Wow. There’s so much big-picture bad economic news at the moment that it may seem hard to get excited about this point – but it is an important one, because it shows just how badly capitalism has been functioning, even on its own terms.