The chairman warbles his way through his own version of Y.M.C.A., with lyrics dedicated to the chance of making some ’free’ money from the ECB’s long-term refinancing operation.

“Why are you grinning and, more importantly, why are you whistling ’Y.M.C.A.’?” I asked the chairman of the implausibly-sized investment company Second Coming Asset Management as we met up for a few pints of Viva Zap! at The Liddle Knell. “The ECB’s long-term refinancing operation,” he replied. “What else?”

“What’s that got to do with you?” I asked. “Aside, of course, from presumably stoking the sorts of asset bubble on which Scam has previously thrived … oh, I get it – you’re using the LTRO to make some ’free’ money through Scambank, aren’t you?” “Why do you always have to make everything sound so sordid?” the chairman protested.

“Scambank is perfectly within its rights to apply for assistance and if we should deem it prudent to have the ECB repurchase our low-yielding illiquid investments and use the cash to buy something a little punchier for the resulting yield pick-up, then good for us. Frankly, I see it as downright negligent if any bank baulks at asking for a piece of this action.”

“Sorry,” I apologised. “I didn’t mean to sound preachy. But what is The Village People soundtrack about?”

“Stung bank, there’s no need to feel down,” the chairman sang ominously in reply. “I said, bust bank, pick yourself off the ground. I said, broke bank, ’cause you lending is down, there’s no need to be in-sol-vent.” (Scam continues below)

“OK, sorry I asked,” I sighed.

“Stung bank, there’s a place you can go,” the chairman continued, warming to his theme. “I said, bust bank, when you’re short on your dough. You can apply, and I’m sure you will find, many ways to make a quick dime. Oh yes, it’s fun to play with the L-T-R-O. Let’s all get paid by the L-T-R-O.”

“Please stop now,” I pleaded.

“It has everything if your assets are freezed, you can be quantitatively eased,” the chairman ploughed on regardless. “Oh, it’s fun to play with the L-T-R-O. Let’s all get paid by the L-T-R-O. You can balance the books, you can make a good deal, you can do whatever you feel …

”Let’s all get paid by the L-T-R-O. You can balance the books, you can make a good deal, you can do whatever you feel …”

“Stung bank, are you listening to me? I said, bust bank, ring up Signor Draghi. I said, broke bank, you can make real your dreams, but you’ve got to know this one thing. No bank does it all by itself. I said, bust bank, put your pride on the shelf, and just go there, to the L-T-R-O I’m sure it can help you today. Oh, it’s …”

“It’s time you stopped singing,” I said firmly.

“Really?” said the chairman sadly. “I have another six verses.”

“I’m sure you do,” I sighed. “But best leave the audience wanting more, eh? Now, with your newfound interest in the vagaries of the global banking system, perhaps you can answer a question that has been niggling me since the credit crisis began.”

“What is it?” the chairman asked.

“If all the banks are in trouble because they all owe each other money and have each other’s assets as collateral,” I began, “why can’t we just lock them all in a big room and not let them out again until they have reconciled all their loans, debts and whatever?”

“A fine question with a one-word answer,” replied the chairman.

“Rehypothecation.” “Gesundheit,” I said, predictably.

“No, the answer is rehypothecation,” the chairman repeated. “It is the global banking equivalent of having your cake and then eating it again and again and again. Common sense might dictate you can only pledge an asset as collateral once but then, here in the world of high finance, we don’t really do common sense.

“So everyone is in hock to each other several times over but with only one set of assets – and not just in Europe. Say the eurozone breaks up at midnight and all debts are recalculated in francs, lira and so on, then the UK’s banks go down at one minute past, the US’s at five-past and Japan’s around 12.15am.” “But that’s terrifying,” I said. “Not really,” shrugged the chairman. “It’s a bit like the nuclear-arms race theory of mutually-assured destruction and is actually quite comforting if you think about it. Now, all together, let’s all get paid by the L-T-R-O …”