Joined: 25 Jul 2005 Posts: 12103 Location: St. Pauls, Bristol, England
Posted: Sat May 19, 2012 9:30 pm Post subject:
King Mervyn and OBR
Deliberately sabotaging the solutions
Q: At his press conference on Wednesday morning (pdf), Sir Mervyn King, the governor of the Bank of England, seemed to be saying – and I paraphrase – that it was so difficult trying to work out the impact of Greece leaving the eurozone that there was no point even trying.
A: Fundamentally the governor is right, and we've taken a similar approach in most of the recent forecasts that we've done
Joined: 25 Jul 2005 Posts: 12103 Location: St. Pauls, Bristol, England
Posted: Tue Jul 03, 2012 11:54 am Post subject:
This is a total disaster
The jobless rate for the eurozone climbed to 11.1% in May from 11% in April, the highest level since the creation of the euro. Youth unemployment rose to 22.6% in May, with 52.1% of the under 25s in both Greece and Spain without work.
Joined: 25 Jul 2005 Posts: 12103 Location: St. Pauls, Bristol, England
Posted: Tue Jul 03, 2012 11:57 am Post subject:
Barclays’ Libor Scandal: Prison Will Remedy
Larry Doyle, Sense on Cents | Jul. 2, 2012, 7:11 AM | 28 |
Many executives on Wall Street and in The City, London’s central business district, have reason to be VERY NERVOUS this morning.
Their sweaty palms have nothing to do with the ongoing crisis in Europe or this week’s likely weak employment report here in the United States. The nerves have everything to do with the fallout from the Libor-manipulation story that has been centered on Barclays but likely encompasses every major bank in the global markets.
The industry would like to take one large broom and sweep this story back under the rug. The weekend ‘execution’ of Barclays chairman Marcus Agius is an attempt to do just that.
This Libor intrigue is only the latest of the financial industry’s market manipulation schemes. What do people think was going on in the auction-rate securities markets? How about the daily trading within the equity markets?
Manipulating markets has gone on for ages. As a resident member of the Sense on Cents Hall of Fame shared with us a few years back, “markets don’t go up, they’re put up.”
How and why do these manipulative behaviors persist? Very simply. The benefits accrued from the manipulation far outweigh the costs imposed. What are the costs? Simple fines. These fines — even exceptionally large fines — are the real payoff of the captured self-regulatory system that operates on both sides of the pond.
Self-regulation of the financial industry DOES NOT WORK.
When will market manipulation stop? When the penalties imposed fit the crimes.
Instead of Barclays chairman Marcus Agius merely stepping down in very unceremonious fashion, what if he and his sidekick Barclays CEO Bob Diamond and other executives within Barclays privy to the manipulation faced hard time?
The captured regulators do not get this but the public certainly does as highlighted by the Wall Street Journal in writing,
The U.K. government, along with the Financial Services Authority and the Bank of England, has been reviewing the regulation and supervision of Libor since March of this year.
Business Secretary Vince Cable said there should also be a criminal investigation into the Libor-fixing scandal.
“[The public] just can’t understand why people are thrown into jail for petty theft and these guys just walk away having perpetrated what looks like conspiracy,” Mr. Cable told Sky television Sunday.
So how do we stop the market manipulation? Only when the following sound resonates for all to hear:
If you agree with my assessment, please state as much and share this story with your friends and colleagues.
Larry Doyle was formerly the National Sales Manager for securitized products at JP Morgan.
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Joined: 25 Jul 2005 Posts: 12103 Location: St. Pauls, Bristol, England
Posted: Sat Jul 14, 2012 3:55 pm Post subject:
The Blue Arrow Trial as mentioned above on the Max Keiser show.
The unofficial true story followed by the official lie
Rowan Bosworth-Davies | Has the UK rediscovered its appetite for prosecuting ‘white collar’ crime?
March 16th, 2012
In the second in a series of guest posts, Rowan Bosworth-Davies, a financial crime consultant and former Scotland Yard detective, provides a historical perspective on the UK authorities’ lack of appetite for prosecuting high level financial crime
Edwin Sutherland, the American sociologist and criminologist (pictured right), is perhaps best known for his 1949 book ‘White Collar Crime’. But it was ten years earlier that he coined the phrase ‘white collar crime’. Back in the late 1930s, this was fairly radical.
At the time, the assumption among politicians and judges was that “respectable” upper echelons of society — professionals, bankers, financiers etc — were incapable of criminal behaviour. Despite Sutherland’s best efforts, I sometimes wonder how much has changed.
There was a brief interlude in UK history when the authorities had no qualms about prosecuting ‘white collar’ crime. In the 1980s, the Serious Fraud Office prosecuted the mainstream bank, County NatWest, a division of NatWest. The main players were convicted of the criminal offence of covering up a failed issue of £873m of new stock (intended to finance the takeover of Manpower).
The scandal became known as the ‘Blue Arrow’ affair. The jury had no difficulty in convicting all the leading defendants, who included some of the ‘great and the good’ of the City at the time. However, for reasons that are almost beyond comprehension, the Court of Appeal overturned the guilty verdicts.
Normally, the Court of Appeal is loathe to overturn a conviction reached in a jury trial. It will consider an appeal against the sentence, and consider an appeal if it can be shown that the judge erred in law. But to overturn a sensibly-arrived at jury conviction is very rare, partly because such an appeal can be so damaging to public policy. Those who remember the ‘Guildford Four’ will recall how long it took to get their convictions challenged.
In the ‘Blue Arrow’ case, the Court of Appeal sat within a few months of the convictions and came to the conclusion that, since the case had taken so long to prosecute, it was impossible that any reasonable jury to reach a sensible verdict, and the convictions were quashed.
This was the most egregious example of people from the upper socio-economic classes being given a ‘get-out-of-jail card’ that I can think of, although I have witnessed other equally appalling efforts to help their kind.
After the ‘Blue Arrow’ case, a friend of mine in the SFO told me that the message had come down from on high that there would never again be any similar kind of prosecution of any City institution or its senior executives. The reason the ‘Blue Arrow’ affair proved so terrifying for the managerial classes and senior financiers was that it demonstrated that ordinary juries could understand the ramifications of complex fraud cases, and that they could convict.
The lawyers in the trial had spent hundred of hours of court time trying to cloud the issue and obfuscate, but the jury saw through that and potted all the defendants that mattered. The question is, in the wake of a disastrous decade of “light touch” regulation, will we see it’s like again?
Blue Arrow trial labelled pounds 40m disaster
GEOFF FROST , Press Association - Wednesday 29 July 1992
THE Blue Arrow fraud trial, which ran up legal bills of pounds 40m, was a 'costly disaster' that must never be repeated, the Court of Appeal ruled yesterday.
Lord Justice Mann said the year-long Old Bailey trial - the second-longest criminal case in English legal history - was an ordeal for the jury and a daily 'punishment' for the accused.
Its length and complexity were directly attributable to the length and complexity of the indictment faced by the accused, he said. The prosecution had a heavy responsibility not to overload indictments.
The trial judge, Mr Justice McKinnon, did reduce the size of the case, but at a very late stage after prosecution and defence counsel had addressed the jury. He should have split the case into separate triable issues much earlier.
Lord Justice Mann, sitting with Mr Justice Ognall and Mr Justice Buckley, said: 'We think in this case, and with respect to him, the judge should much earlier have used his power of severance to achieve then what he sought too late to do.'
A robust and early use of the power of severance did have disadvantages - a second Blue Arrow trial was still pending. But it was the only power available to limit issues to secure a manageable and fair trial.
'Judges must not be reluctant to exercise their power in order to secure that end but - and importantly - they will seldom have occasion to do so if, when performing their difficult task, the prosecuting authorities frame indictments which have due regard to the limitations of a jury trial.'
The appeal judges were giving their reasons for quashing earlier this month convictions of conspiracy to defraud against four City advisers who stood trial in the Blue Arrow case. The clearing of the four and the earlier acquittal of other defendants means that no one now stands convicted as a result of the trial.
The judges had cleared Jonathan Cohen, 48, David Reed, 44, and Nicholas Wells, 37, all senior executives of County NatWest, the merchant banking arm of the National Westminster Bank, and set aside their 18-month suspended prison sentences.
Martin Gibbs, 62, a stockbroker and former director of UBS Phillips and Drew, also had his conviction and 12-month suspended sentence quashed.
Three other accused and three corporate defendants were acquitted during the trial. The four cleared on appeal were awarded their trial and appeal costs from public funds.
They had been convicted on 14 February this year of conspiring to mislead the markets over the result of the 1987 pounds 837m Blue Arrow rights issue - launched to finance the company's takeover of the larger American employment agency Manpower - by secretly buying shares themselves to raise the take-up level announced to other investors.
The trial judge decided, a month before the jury retired, to restrict the case to the 'late take-up' issue and tell the jurors to ignore 75 per cent of the evidence.
It was that decision that led the appeal judges to intervene. Lord Justice Mann said that the decision to sum up only in regard to late take-up constituted a 'material irregularity' in the course of the trial.
The accused were in no way to blame for the length of the case, Lord Justice Mann stressed. The trial judge himself had realised by 10 January this year that the trial had become unmanageable.
'This trial will rightly be regarded by the public as having been a costly disaster,' Lord Justice Mann said. The jury must have found the case an ordeal and the defendants must have regarded their daily experience of the trial as in itself a punishment.
The Court of Appeal had thought it 'appropriate to consider how the disaster, ordeal and punishment came about in order that a lesson can perhaps be learnt'.
http://www.independent.co.uk/news/business/blue-arrow-trial-labelled-p ounds-40m-disaster-1536262.html _________________ www.rethink911.org www.actorsandartistsfor911truth.org www.mediafor911truth.org www.pilotsfor911truth.org www.mp911truth.org www.ae911truth.org www.rl911truth.org www.stj911.org www.l911t.com www.v911t.org www.thisweek.org.uk www.abolishwar.org.uk www.elementary.org.uk www.radio4all.net/index.php/contributor/2149 http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
Joined: 13 Sep 2006 Posts: 2333 Location: One breath from Glory
Posted: Sat Jul 14, 2012 6:31 pm Post subject:
Money can buy power and influence and connections. John Terry obviously had more than Luis Suarez !! _________________ JO911B.
"for we wrestle not against flesh and blood but against principalities, against powers, against rulers of the darkness of this world, against wicked spirits in high places " Eph.6 v 12
Heather Stewart, business editor - guardian.co.uk, Saturday 21 July 2012 21.00 BST
The Cayman Islands: a favourite haven from the taxman for the global elite. Photograph: David Doubilet/National Geographic/Getty Images
A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary £13 trillion ($21tn) of wealth offshore – as much as the American and Japanese GDPs put together – according to research commissioned by the campaign group Tax Justice Network.
James Henry, former chief economist at consultancy McKinsey and an expert on tax havens, has compiled the most detailed estimates yet of the size of the offshore economy in a new report, The Price of Offshore Revisited, released exclusively to the Observer.
He shows that at least £13tn – perhaps up to £20tn – has leaked out of scores of countries into secretive jurisdictions such as Switzerland and the Cayman Islands with the help of private banks, which vie to attract the assets of so-called high net-worth individuals. Their wealth is, as Henry puts it, "protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy". According to Henry's research, the top 10 private banks, which include UBS and Credit Suisse in Switzerland, as well as the US investment bank Goldman Sachs, managed more than £4tn in 2010, a sharp rise from £1.5tn five years earlier.
The detailed analysis in the report, compiled using data from a range of sources, including the Bank of International Settlements and the International Monetary Fund, suggests that for many developing countries the cumulative value of the capital that has flowed out of their economies since the 1970s would be more than enough to pay off their debts to the rest of the world.
Oil-rich states with an internationally mobile elite have been especially prone to watching their wealth disappear into offshore bank accounts instead of being invested at home, the research suggests. Once the returns on investing the hidden assets is included, almost £500bn has left Russia since the early 1990s when its economy was opened up. Saudi Arabia has seen £197bn flood out since the mid-1970s, and Nigeria £196bn.
"The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments," the report says.
The sheer size of the cash pile sitting out of reach of tax authorities is so great that it suggests standard measures of inequality radically underestimate the true gap between rich and poor. According to Henry's calculations, £6.3tn of assets is owned by only 92,000 people, or 0.001% of the world's population – a tiny class of the mega-rich who have more in common with each other than those at the bottom of the income scale in their own societies.
"These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people," said John Christensen of the Tax Justice Network. "People on the street have no illusions about how unfair the situation has become."
TUC general secretary Brendan Barber said: "Countries around the world are under intense pressure to reduce their deficits and governments cannot afford to let so much wealth slip past into tax havens.
"Closing down the tax loopholes exploited by multinationals and the super-rich to avoid paying their fair share will reduce the deficit. This way the government can focus on stimulating the economy, rather than squeezing the life out of it with cuts and tax rises for the 99% of people who aren't rich enough to avoid paying their taxes."
Assuming the £13tn mountain of assets earned an average 3% a year for its owners, and governments were able to tax that income at 30%, it would generate a bumper £121bn in revenues – more than rich countries spend on aid to the developing world each year.
Groups such as UK Uncut have focused attention on the paltry tax bills of some highly wealthy individuals, such as Topshop owner Sir Philip Green, with campaigners at one recent protest shouting: "Where did all the money go? He took it off to Monaco!" Much of Green's retail empire is owned by his wife, Tina, who lives in the low-tax principality.
A spokeswoman for UK Uncut said: "People like Philip Green use public services – they need the streets to be cleaned, people need public transport to get to their shops – but they don't want to pay for it."
Leaders of G20 countries have repeatedly pledged to close down tax havens since the financial crisis of 2008, when the secrecy shrouding parts of the banking system was widely seen as exacerbating instability. But many countries still refuse to make details of individuals' financial worth available to the tax authorities in their home countries as a matter of course. Tax Justice Network would like to see this kind of exchange of information become standard practice, to prevent rich individuals playing off one jurisdiction against another.
HSBC, the London-based British multinational banking and financial services giant operates in 85 countries with 7,200 offices worldwide with assets totaling more than $2.6 trillion (£4.06tn).
They're also caught-up in serial scandals: the Libor interest rate-fixing scam, serious charges of drug money laundering as well as suspicions that bank officers "palled around" with terrorist financiers.
Founded in 1865 when the British Crown seized Hong Kong as a colony in the aftermath of the First Opium War, British merchants (today we'd call them drug lords) needed a bank to handle the brisk trade in the illicit substance and launched the Hongkong and Shanghai Banking Company Limited. Rebranded "HSBC" in 1991, the bank expanded at breakneck speed in the heady days after The Wall fell.
While some might call them a success story, exemplars of financial wizardry in tough economic times, more appropriately perhaps, we might borrow a term from Mafia lore to describe their preeminent position in the capitalist pantheon of corrupt institutions: juiced.
'Sorry, now Go Away'
Today, the "War on Drugs" rivals the "War on Terror" for top spot on the global hypocrisy index.
Moral equivalencies abound. After all, when American secret state agencies manage drug flows or direct terrorist proxies to attack official enemies it's not quite the same as battling terror or crime.
Pounding home that point, a new report by the Senate Permanent Subcommittee on Investigations accused HSBC of exposing "the U.S. financial system to a wide array of money laundering, drug trafficking, and terrorist financing risks due to poor anti-money laundering (AML) controls."
That 335-page report, "U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History," (large pdf file available here) was issued after a year-long Senate investigation zeroed-in on the bank's U.S. affiliate, HSBC Bank USA, N.A., better known as HBUS.
Drilling down, we learned that amongst the "services" offered by HSBC subsidiaries and correspondent banks were sweet deals with financial entities with terrorist ties; the transportation of billions of dollars in cash by plane and armored car through their London Banknotes division; the clearing of sequentially-numbered travelers checks through dodgy Cayman Islands accounts for Mexican drug lords and Russian mafiosi.
From richly-appointed suites at Canary Wharf, London, the bank's "smartest guys in the room" handed some of the most violent gangsters on earth the financial wherewithal to organize their respective industries: global crime.
A case in point. In 2008 alone the Senate revealed that the bank's Cayman Islands branch handled some 50,000 client accounts (all without benefit of offices or staff on Grand Cayman, mind you), yet still managed to ship some $7 billion (£10.9bn) in cash from Mexico into the U.S. Now that's creative accounting!
Playing fast and loose with U.S. banking rules, Subcommittee Chairman Carl Levin (D-MI) said that by exploiting the bank's "poor AML controls, HBUS exposed the United States to Mexican drug money, suspicious travelers cheques, bearer share corporations, and rogue jurisdictions."
Describing a "compliance culture" that was "pervasively polluted for a long time," Levin said it "will take more than words for the bank to change course."
Yet weasel words and butt-covering were all that were proffered to the American people even before Senate hearings began. Bank spokesman Robert Sherman said in an emailed statement that HSBC "will acknowledge that, in the past, we have sometimes failed to meet the standards that regulators and customers expect. We will apologize, acknowledge these mistakes, answer for our actions and give our absolute commitment to fixing what went wrong."
Right on cue, chief compliance officer David Bagley dramatically fell on his sword during those hearings and resigned on camera. It was quite a performance even by Washington's tawdry standards.
Appearing contrite, Bagley told the panel: "Despite the best efforts and intentions of many dedicated professionals, HSBC has fallen short of our own expectations and the expectations of our regulators. ... I recommended to the group that now is the appropriate time for me and for the bank, for someone new to serve as the head of group compliance."
While there's no word yet just how big Bagley's golden parachute will be, it's a sure bet he won't spend a day in jail, nor for that matter will Lord Stephen Green, HSBC's former Chairman and Chief Executive Officer.
Between 2003-2010, Green tilled the helm after serial stints directing The Bank of Bermuda Ltd., HSBC Mexico, SA, HSBC Private Banking Holdings (Suisse) SA and HSBC North American Holdings Inc.; units which feature prominently in the scandal. Sensing perhaps that the jig was up, last year he joined David Cameron's Conservative government as Minister of State for Trade and Investment.
Unlike Pappy Bush who claimed to be "out of the loop" during the Iran-Contra guns-for-drugs affair, Green was fully apprised of bank shenanigans and the Senate published emails which prove it.
Cheekily however, while underlings take the fall, Green told The Daily Telegraph, "I do not believe that I have a case to answer other than in the important sense that as chairman and chief executive I was responsible for what the company did. HSBC has expressed regret for the failures. I share that regret."
The Telegraph noted that Green has not considered resigning from Cameron's government, saying he was "very engaged" with his current plum post.
Ironically enough, the current Baron of Hurstpierpoint is an ordained priest in the Church of England and the author of an inspirational tome, Good Value: Reflections on Money, Morality and an Uncertain World. And no, you can't make this stuff up!
The top spot is now occupied by Stuart Gulliver who, quicker than you can say "we're sorry," admonished employees to "do better" and expressed remorse over his firm's "unacceptable behavior." Never mind that before ascending the throne, Gulliver was director of HBUS, HSBC Latin American Holdings Ltd., and HSBC Bank Middle East Ltd., divisions that have raised more than an eyebrow or two amongst Subcommittee investigators.
Topping Bagley's Kabuki-lite performance with her own rendition of clown car camp, Irene Dorner, HBUS's President and CEO told the Senate: "We deeply regret and apologize for the fact that HSBC did not live up to the expectations of our regulators, our customers, our employees, and the general public. HSBC's compliance history, as examined today, is unacceptable. ... We've worked hard to foster a new culture that values and rewards effective compliance, and that starts at the top."
Bathos aside, it was a polite way of saying "let's move on" and get back to the business of lining our pockets; after all, it's what we do best.
'The past is never dead. It's not even past'
Years before hijackers slammed passenger planes into the World Trade Center and the Pentagon killing nearly 3,000 people, secret state agencies began to exploit the fraternal links between Osama bin Laden's Afghan-Arab database of disposable Western intelligence assets, also known as al Qaeda, and prominent financial institutions.
In his 1999 book, Dollars for Terror, journalist Richard Labévière relates how a former CIA analyst explained: "The policy of guiding the evolution of Islam and helping them against our adversaries worked marvelously well in Afghanistan against the Red Army. The same doctrines can still be used to destabilize what remains of Russian power, and especially to counter the Chinese influence in Central Asia."
Was a new Cold War dawning?
No. In fact, it was the same Cold War. Only this time it was tricked-out in seductive finery by denizens of Western think-tanks and on-the-make NGOs. In the age of spin and endless news cycles, they'd hit upon a splendid formula to pour the "old" imperialist wine into new bottles: "humanitarian intervention" and a "responsibility to protect."
It was a brilliant script. In the blink of an eye our media-saavy masters could "enhance democracy" and "reform markets," magically transforming publicly-owned resources into privately-held assets controlled by banks! That terrorist proxies would serve as walk-ons and help drive the final nail into the coffin of national sovereignty wasn't considered proper conversation in polite company.
Labévière wondered whether "the new forms of terrorism actually embody the highest stage of capitalism?" They did, and "the straw men of the bin Laden Organization's subsidiaries [were] very well received by the business lawyers of Wall Street and the Bahamas, by the wealth managers of Geneva, Zurich and Lugano, and in the hushed salons of the City of London."
Not so curiously perhaps, "the privatization of violence and the privatization of the economy has become paradigmatic." In fact, "apart from any religious purpose," Labévière wrote, "the 'Jihad' is gaining ground as a profitable activity. It becomes liable to all the mafioso devolutions, and sinks into pure banditry. In many cases, Islamist ideology is used as a wonder worker to paper over banditry in all its forms."
Bin Laden as a Mafia capo di tutti capi? It certainly was a novel reading of geopolitical machinations!
More to the point, if an "army marches on its stomach," who then are the money men who put food in their bellies and kalashnikovs in their hands?
Bankrolled by Saudi and Gulf banks with a wink, a nod and logistical support from their old friends, the CIA and the Pentagon, today's Green condottieri once again are on the march, wrecking havoc and sowing chaos, with particular attention paid to states targeted as official enemies by the Global Godfather. Just ask the Iraqis, Libyans and Syrians.
While the Senate report may have disclosed that HSBC turned a blind eye to terrorist financing among it correspondent banks, the Riyadh-based Al Rajhi Bank for one, Saudi Arabia's largest privately-held financial institution, such arrangements hardly flourished in a vacuum.
With assets totaling $59 billion (£92.5bn), the Al Rajhi's are amongst the wealthiest families in the Kingdom. Investigators found that after 9/11 "evidence began to emerge that Al Rajhi Bank and some of its owners had links to organizations associated with financing terrorism, including that one of the bank's founders was an early financial benefactor of al Qaeda."
While the Al Rajhi family deny any role in financing terrorism, they have declined "to address specific allegations made in American intelligence and law-enforcement records, citing client confidentiality," The Wall Street Journal reported back in 2007.
Journalist Glenn R. Simpson averred that "a 2003 CIA report claims that a year after Sept. 11, with a spotlight on Islamic charities, Mr. Al Rajhi ordered Al Rajhi Bank's board 'to explore financial instruments that would allow the bank's charitable contributions to avoid official Saudi scrutiny'."
"A few weeks earlier," the Journal disclosed, the Agency said that "Mr. Al Rajhi 'transferred $1.1 billion to offshore accounts--using commodity swaps and two Lebanese banks--citing a concern that U.S. and Saudi authorities might freeze his assets.' The report was titled 'Al Rajhi Bank: Conduit for Extremist Finance'."
Although U.S. law enforcement and secret state agencies "acknowledge it is possible that extremists use the bank's far-flung branches and money-transfer services without bank officials' knowledge," the Journal noted that CIA analysts had concluded that "senior Al Rajhi family members have long supported Islamic extremists and probably know that terrorists use their bank."
It goes without saying that one should always approach CIA reports with a healthy dose of skepticism, especially in light of the Agency's well-documented history of employing cut-outs such as al Qaeda as terrorist cats' paws.
Such reports however, lay a trail of bread crumbs that policy makers can either act upon or more likely, ignore. That senior Bush and Obama administration officials did nothing with this information, never mind the regulatory agencies charged to enforce anti-money laundering laws, is testament to the corrupt, bipartisan nature of American policy as a whole.
It also beggars belief that Lord Green or the bank's compliance officers were unaware of CIA allegations or that Britain's own foreign intelligence arm, MI6, hadn't apprised top officials of the risks involved. In fact, as we'll see below, HSBC's own internal documents prove otherwise.
Osama's 'Golden Chain'
There were certainly plenty of red flags flying which should have alerted bank officials.
In March 2002, al Qaeda's list of financial benefactors surfaced when computers were seized in Sarajevo at the Bosnian headquarters of the Benevolence International Foundation, "a Saudi based nonprofit organization which was also designated a terrorist organization by the Treasury Department."
Osama bin Laden, who held a Bosnian passport issued by the breakaway government fronted by Western "liberal interventionist" darling Alija Izetbegović during NATO's dismemberment of socialist Yugoslavia, was a supporter of the Nazi SS Handschar Division during World War II. Bin Laden referred to this group of financial angels as his "Golden Chain."
Additional evidence also emerged in 2002 during Operation Green Quest, a Treasury Department effort to "disrupt terrorist financing in the United States."
In March of that year, law enforcement officials raided the Herndon, Virginia offices of the SAAR Foundation "an Al Rajhi-related entity." Indeed, the name "SAAR" was an acronym for the organization's founder, Sulaiman Abdul Aziz Al Rajhi, the controlling partner of the Al Rajhi Bank.
Subcommittee investigators commented that "one of the 20 handwritten names in the Golden Chain document identifying al Qaeda's early key financial benefactors is Sulaiman bin Abdul Aziz Al Rajhi, one of Al Rajhi Bank's key founders and most senior officials."
An affidavit supporting the search warrants "detailed numerous connections between the targeted entities and Al Rajhi family members and related ventures. The affidavit stated that over 100 active and defunct nonprofit and business ventures in Virginia were part of what it described as the 'Safa Group,' which the United States had reasonable cause to believe was 'engaged in the money laundering tactic of 'layering' to hide from law enforcement authorities the trail of its support for terrorists."
Green Quest investigators were particularly keen on unraveling links between the SAAR Foundation and the Swiss Al Taqwa Bank, incorporated in the Bahamas in 1988 for "tax purposes."
Founded by Swiss Nazi sympathizer and convert to Islam, Albert Armand (Achmed) Huber, who professed admiration for both Adolph Hitler and Osama bin Laden, the bank was accused by U.S. officials in helping al Qaeda launder funds. Although the Treasury Department froze its assets in 2001, the investigation was shut down by the Bush administration before deeper linkages could be fully uncovered.
In 2011, a lawsuit was filed by insurance giant Lloyd's of London against Saudi Arabia which sought to recover pay outs to victims of the 9/11 attacks. The suit noted "that two individuals who were former executives at Bank al Taqwa, Ibrahim Hassabella and Samir Salah, were also associated with the SAAR Foundation."
At the time, The Independent reported that the legal claim suggested that defendants "'knowingly' provided resources, including funding, to al-Qa'ida in the years before the attack and encouraged anti-Western sentiment which increased support for the terror group."
According to court briefs, "Absent the sponsorship of al-Qa'ida's material sponsors and supporters, including the defendants named therein, al-Qa'ida would not have possessed the capacity to conceive, plan and execute the 11 September attacks. The success of al-Qa'ida's agenda, including the 11 September attacks themselves, has been made possible by the lavish sponsorship al-Qa'ida has received from its material sponsors and supporters over more than a decade leading up to 11 September 2001."
Senate investigators, citing Green Quest and Lloyd's case files, noted that "Mr. Hassabella was a former secretary of al Taqwa Bank and a shareholder of SAAR Foundation Inc. Mr. Saleh was a former director and treasurer of the Bahamas branch of al Taqwa Bank, and president of the Piedmont Trading Corporation which was part of the SAAR network. The U.S. Treasury Department has stated: 'The Al Taqwa group has long acted as financial advisers to al Qaeda, with offices in Switzerland, Liechtenstein, Italy and the Caribbean.' Regarding Akida Bank, the lawsuit complaint alleged that Sulaiman bin Abdul Aziz Al Rajhi was 'on the board of directors of Akida Bank in the Bahamas' and that 'Akida Bank was run by Youssef Nada, a noted terrorist financier'."
The report went on to state that "HSBC was fully aware of the suspicions that Al Rajhi Bank and its owners were associated with terrorist financing, describing many of the alleged links in the Al Rajhi Bank client profile."
As icing on the cake, a 2007 study published by the Congressional Research Service (CRS) also found that "Saudi individuals and other financiers associated with the Golden Chain enabled bin Laden and Al Qaeda to replace lost financial assets and establish a base in Afghanistan following their abrupt departure from Sudan in 1996."
Assets I might add, that were used to bankroll the 9/11 attacks.
'Keen to maintain the relationships'
HSBC's dubious links to the Al Rajhi Bank didn't end with information discovered in the "Golden Chain" files; it fact, they were the tip of the proverbial iceberg.
After 9/11, the FBI reported that three of the hijackers, Hani Hanjour, Nawaf Alhazmi and Abdulaziz Alomari cashed thousands of dollars in travelers checks and received wire transfers from an unnamed individual drawn on accounts at the Al Rajhi Bank.
As researcher Kevin Fenton pointed out in Disconnecting the Dots, links among most of the hijackers were discovered through their banking transactions. "In this context," Fenton wrote, "it is worth noting that Global Objectives, a British banking compliance company, identified fifteen of the nineteen hijackers as high-risk individuals and established database profiles for them before the attacks. ... The list of high-risk people maintained by Global Objectives was available to dozens of banks," a list that presumably also included HSBC.
While there is no evidence that HSBC, or for that matter the Al Rajhi Bank, had prior knowledge of the 2001 atrocity, the gross indifference exhibited by these institutions through their violation of "know your client" (KYC) rules governing financial transactions reveal a callous disdain for elemental norms as they raced to inflate their balance sheets come hell or high water.
Privileged communications amongst senior staff revealed they were well aware of the issues and risks involved, yet did worse than nothing, they lobbied that HSBC continue their arrangements with the Al Rajhi Bank.
Suspicions were such that senior staff "classified Al Rajhi Bank as a 'Special Category of Client' (SCC), its highest risk designation." This was done, Senate investigators noted, because the Kingdom was considered a "high risk country" and due to the fact Al Rajhi's largest shareholder, Sulaiman bin Abdul Aziz Al Rajhi was considered "a Politically Exposed Person (PEP)."
Internal HSBC documents also revealed that in 2002, that is, after the 9/11 provocation, "the International Private Banking Department asked to transfer [several] accounts to HSBC's Institutional Banking Department in Delaware which had superior ability to monitor account activity."
In fact, transferring Al Rajhi accounts to the bank's Delaware division would have just the opposite effect and bank officials knew it.
As journalist Nicholas Shaxson noted in his exposé of offshore banking, Treasure Islands, "Delaware is the biggest state provider of offshore corporate secrecy." Shaxson pointed out that Delaware's Chancery Court has a "'business judgement rule' under which courts should not second-guess corporate managers," thereby "granting corporate bosses extraordinary freedoms from bothersome stockholders, judicial review, and even public opinion."
So much for any alleged "superior ability to monitor account activity"!
HBUS's Joseph Harpster wrote an email, stating: "The most recent concern arose when three wire transfers for small amounts ($50k, $3k and $1.5k) were transferred through the account for names that closely resembled names, not exact matches, of the terrorists involved in the 9/11 World Trade Center attack. ... The profile of the main account reflects a doubling of wire transfer volume since 9/01, a large number of travelers checks but with relatively low value and some check/cash deposits. According to the account officer, traffic increased because they have chosen to send us more business due to their relationship with Saudi British Bank and the added strength of HBC versus Republic. ... Maintaining our business with this name is strongly supported by David Hodghinson of [Saudi British Bank] and Andre Dixon, Deputy Chairman of [HSBC Bank Middle East]. Niall Booker and Alba Khoury [of HBUS] also support."
Aside from adverse publicity, the "low value" of the transactions seemed not to have troubled Harpster or his associates in the least. After all, the total "cost" of murdering 3,000 human beings were certainly small compared to the price of a vacation home in the Hamptons or a new Maserati.
Anxious there might be increased scrutiny from regulators (no worries there!), Harpster's email was forwarded by Douglas Stolberg, the head of Commercial and Institutional Banking to Alexander Flockhart, then a senior executive in Retail and Commercial Banking at HBUS. Stolberg noted: "As we discussed previously, Compliance has raised some concerns regarding the ongoing maintenance of operating/clearing accounts for Al Rajhi group." He forwarded recommendations on how to handle the account: "Retain [International Private Banking] as the relationship manager domicile for continuity purposes, and as we understand there is interest in further developing private banking business with family members. ... Domicile the actual accounts with Delaware where HBUS's most robust account screening capabilities reside."
"Screening capabilities" which could be shielded from nosy regulators due to Delaware's strict bank secrecy laws.
Stolberg went on to state: "[T]his has become a fairly high profile situation. Compliance’s concerns relate to the possibility that Al Rajhi's account may have been used by terrorists. If true, this could potentially open HBUS up to public scrutiny and/or regulatory criticism. SABB [Saudi British Bank] are understandably keen to maintain the relationships. As this matter concerns primarily reputational and compliance risks, we felt it appropriate for SMC [Senior Management Committee] members to be briefed ... so that they may opine on the acceptability of the plan. Please advise how you would prefer us to proceed." (emphasis added)
According to Senate staff, "Mr. Harpster reported a week later that Mr. Flockhart had decided to transfer the accounts to HBUS in the Delaware office."
But HSBC weren't the only entities hoping to curry favor with the Kingdom. A 2009 Government Accountability Office (GAO) report went on to note that "certain performance targets set by the State Department had been dropped in 2009, such as the establishment of a Saudi Commission on Charities to oversee actions taken by Saudi charities abroad as well as certain regulations of cash couriers."
Although GAO "recommended that the United States reinstate the dropped performance targets to prevent the flow of funds from Saudi Arabia 'through mechanisms such as cash couriers, to terrorists and extremists outside Saudi Arabia,' the State Department's "most recent annual International Narcotics Control Strategy Report contains no information about Saudi Arabia's anti-money laundering or terrorist financing efforts."
One reason why the State Department's report contains "no information" just might be the Obama administration's policy of supporting Saudi-backed Salafi terrorists soon to come online in Libya and Syria, financed through "Saudi charities abroad" or more directly through "cash couriers."
'You'd better be making lots of money!'
The Senate disclosed that HSBC "provided Al Rajhi Bank with a wide range of banking services, including wire transfers, foreign exchange, trade financing, and asset management services."
"In the United States," investigators learned that "a key service was supplying Al Rajhi Bank with large amounts of physical U.S. dollars, through the HBUS U.S. Banknotes Department."
"The physical delivery of U.S. dollars to Al Rajhi Bank was carried out primarily through the London branch of HBUS, often referred to internally as 'London Banknotes'."
Indeed, "HBUS records indicate that the London Banknotes office had been supplying U.S. dollars to Al Rajhi Bank for '25+ years.' In addition to the London branch, HBUS headquarters in New York opened a banknotes account for Al Rajhi Bank in January 2001. The U.S. dollars were physically delivered to Al Rajhi Bank in Saudi Arabia."
"On one occasion in 2008," Senate staff reported, the head of HSBC Global Banknotes Department told a colleague: 'In case you don't know, no other banknotes counterparty has received so much attention in the last 8 years than Alrajhi.' Despite, in the words of the KYC client profile, a 'multitude' of allegations, HSBC chose to provide Al Rajhi bank with banking services on a global basis."
Even though the Al Rajhi Bank "had not been indicted, designated a terrorist financier, or sanctioned," HSBC's Group Compliance section recommended that affiliates should sever their ties.
After that initial decision however, "HSBC affiliates disregarded the recommendation and continued to do business with the bank, while others terminated their relationships but protested HSBC's decision and urged HSBC to reverse it."
Complaints by lower level staff continued, disregarded by higher-ups, even though a U.S. indictment was issued in February 2005 for two individuals "accused among other matters, of cashing $130,000 in U.S. travelers cheques at Al Rajhi Bank in Saudi Arabia" and then smuggling the cash to CIA-backed terrorists in Chechnya.
Although internal bank documents showed that officials decided to cut their ties to the Saudi financial institution, they reversed themselves when pressure was brought to bear by Al Rajhi officials. Between 2006 and 2010, Al Rajhi received shipments totaling more than $1 billion in physical cash in the lucrative banknotes business from HSBC's U.S. affiliate according to investigators. Officials at the Saudi bank "had threatened to pull all of its business from HSBC if the U.S. banknotes business were not restored."
Senate staff reported that on January 4, 2005, "HBUS AML Compliance head Ms. Pesce sent an email to Daniel Jack, an HBUS AML Compliance Officer who often dealt with the London Banknotes office, instructing him to: '[p]lease communicate that Group Compliance will be recommending terminating the Al Rajhi relationship.' Mr. Jack inquired as to when that recommendation would be made. She responded: 'I expect to see an email from Susan Wright today. She tells me that HBME [HSBC Bank Middle East] does not agree with Compliance and will not be terminating the relationship from the Middle East, but she/David B[agley] recommend that in light of US scrutiny, climate, and interest by law enforcement, we in the US sever the relationship from here'."
At the time, Susan Wright was "the Chief Money Laundering Control Officer for the entire HSBC Group. She reported to David Bagley, head of the HSBC Group's overall Compliance Department."
Senate investigators noted that the "documents do not explain why HSBC Middle East disagreed with the decision or why it was allowed to continue its relationship with Al Rajhi Bank, when HSBC's Group Compliance had decided to sever the relationship between the bank and other HSBC affiliates due to terrorist financing concerns."
It soon became clear however, that "HSBC Group Compliance began to narrow its scope." Shortly thereafter a trader in the Banknotes department wrote, "for us is business as usual." Alan Ketley, HBUS AML Compliance Officer commented on the decision not to include Al Rajhi Trading in their earlier decision to sever all ties: "Looks like you're fine to continue dealing with Al Rajhi. You'd better be making lots of money!"
Meanwhile, "Al Rajhi Bank communicated the threat to 'pull any new business with HSBC' unless given a 'satisfactory explanation' why HSBC had stopped supplying it with U.S. dollars via its relationship managers," the Senate disclosed.
In short order, it was business as usual.
Despite continuing allegations of terrorist financing swirling around Al Rajhi Bank, HBUS "continued to supply, through its London branch, hundreds of millions of U.S. dollars to Al Rajhi Bank in Saudi Arabia. In addition, at Al Rajhi Bank's request, HBUS expanded the relationship in January 2009, by authorizing its Hong Kong branch to supply Al Rajhi Bank with non-U.S. currencies, including the Thai bat, Indian rupee, and Hong Kong dollar." (emphasis added)
When concerns were raised internally once again, Christopher Lok, the head of HSBC's Global Banknotes Department in New York fired back: "This is an on-going debate that will never go away. My stance remains the same, i.e. until it[']s proved we cannot simply rely on the Wall Street Journal['s] reports and unconfirmed allegations and 'punish’ the client'."
Needless to say, Hong Kong's "arrangement" with Al Rajhi went forward.
Despite "troubling information" which should have led to HSBC's quick exit from the banknotes market, the Senate reported that "HBUS continued to supply U.S. dollars to the bank, and even expanded its business, until 2010, when HSBC decided, on a global basis, to exit the U.S. banknotes business."
• • •
In conclusion, one needn't be a "conspiracy buff" to posit a link from HSBC to Al Rajhi to "cash couriers" operating across the Middle East in support of a multitude of U.S.-Saudi-backed "regime change" gambits in play today; policies which "worked marvelously well in Afghanistan against the Red Army."
As investigative journalist Ed Vulliamy pointed out in The Observer, the issues involved here are wider than drug money laundering or terrorist finance. "It is about where banks, law enforcement officers and the regulators--and politics and society generally--want to draw the line between the criminal and supposed 'legal' economies."
Commenting on the HSBC scandal, Robert Mazur, a former Customs Department deep-cover specialist and author of The Infiltrator, who penetrated Medellín cartel money laundering operations during the prosecution and collapse of BCCI in 1991, told The Observer that "the only thing that will make the banks properly vigilant to what is happening is when they hear the rattle of handcuffs in the boardroom."
Austerity measures, withheld benefits & a worsening economy perpetuated by a vampiric political class are forcing thousands of people to turn to food banks to stay fed. Whilst corrupt bankers are let off of unimaginable theft and politicians continue to destroy the economy leaving more and more without work the poor turn to charitable organisations for assistance.
_________________ 'Come and see the violence inherent in the system.
Help, help, I'm being repressed!'
“The more you tighten your grip, the more Star Systems will slip through your fingers.”
As LEAP/E2020 anticipated since the end of 2011, the end of summer 2012 marks the beginning of the revival for Euroland with the emergence of a positive dynamic fed by two lasting phenomena: first, the progressive operational installation of the instruments bitterly discussed and decided upon during the last 18 months and, secondly, the visionary spark brought by the political changes of the last six months which have put Euroland’s medium to long term future back in the middle of the decision-making process. The Euro’s progress these past weeks offers a perfect illustration of the phenomenon (1). That being said, Europe will be in recession for the next six to twelve months. It just goes to show that the only good news that we announced in the June 2012 GEAB issue is far from being miraculous.
In a certain sense, it’s even the contrary, since henceforth it’s no longer possible to hide the global economy’s tragic state behind the pretext of the “Euro or Greek crisis”. The more Euroland advances constructively, the more the “Potemkinien” (2) character of the US, Chinese, Japanese and Brazilian... economies’ « health » will show itself. The tree will no longer hide the forest, namely that all the major global economies are entering recession or slowing growth simultaneously, leading the socio-economic and financial world into a black hole.
At the same time summer 2012 will have marked a major acceleration in world geopolitical dislocation with a Syrian conflict which becomes more dangerous for the Middle East and the world day by day (3), Israeli-Iranian tension which is ready to explode at any time, and widespread testing of declining US power – from the China Sea to Latin America via the whole Muslim world. The strategic-military world is heated white-hot as the massive resumption of arms sales worldwide illustrates for that matter, with the United States supplying 85% of the total (4).
Global arms sales and principal exporters’ share (2010-2011) - Source: New York Times, 08/2012
For these reasons, LEAP/E2020 maintains its June 2012 Red Alert and estimates that, by the end of October 2012, the global economy will be sucked into a black hole against a backdrop of world geopolitics heated white-hot. Suffice it to say that the coming weeks will, according to our team, carry the planet away in a hurricane of unprecedented crises and conflicts.
So, in this GEAB issue, LEAP/E2020 sets out the list of the seven key factors of this double shock without modern historical equivalent:
Before you go ranting in the comments about why it "won't work" please watch this video and part two as well. Work here DOES NOT MEAN it will be a good thing or it will fix anything, it is about a short term gambit by the Fed and the Elite Bankers as they set up a shift to a new financial paradigm.
The Libor gets its name from the City of London, one of the largest financial centers in the world.
Whenever financial swindlers prosper at the expense of investors or a bank jiggers interest rates to b* their competitors or tax evaders flee fiscal crises or rent gouging petrol monarchies recycle profits or oligarchs pillage economies and drive millions to drink, drugs and destitution they find a suitable secure sanctuary in London.
They are wooed and pursued by big British realtors eager to sell them multi-million dollar estates, trophy properties and landmark mansions. Pompous and pretentious British academics convince them to send their progeny to six digit private schools, promising them that when they graduate they will be speaking English through their nasal cavities, rolling their r’s and mastering the art of eloquent but vacuous elocution. British governments, Labor Liberal and Conservative, in the best and most hypocritical legal traditions, fashion the legal loopholes to attract the biggest and wealthiest parasites of the world.
Crime Wave Sweeps City of London
A veritable crime wave has invaded the City of London, where millionaire investment bankers cook the books for billionaire clients and bilk the Treasury to pay their fines and flout the Law. Courses in business ethics are obligatory at Oxford and Cambridge since it has become standard operating procedure for mega-swindlers to plead guilty, to pay a fine and avoid jail and to solemnly promise to never, ever, flout the law….. until the next mega-deal.
London has become the center of global financial capital by engaging in long term large scale active collaboration with multi-billion pound drug, arms, people smuggling and sex-slave cartels. The “Brits” specialize in laundering funds from the Mexican, Colombian, Peruvian, Russian, Polish, Czech, Nigerian narco-kings. Albanian white slavers have their ‘private bankers’ at prestigious City banks with a preference for graduates of the London School of Economics. Bi-lingual Greek kleptocrats, lifelong billion dollar tax evaders, fleeing from their pillaged homeland have their favorite real estate brokers, who never engage in any sort of naughty ‘due diligence’ which might uncover improper tax returns. The City Boys with verve and positive initiative, aided and abetted by the hyper-kinetic “Tony” Blair’s open door policy to swindlers and saints of all colors and creeds, welcomed each and every Russian gangster-oligarch-democrat, especially those who paid cash for multi-pound ‘Olde English’ landmark estates’.
The London Sanctuary for the world’s richest plunderers and parasites offers unprecedented services, especially protection from extradition and criminal prosecution at the site of their crimes. Impartial British legal and judicial officials are experts in citing constitutional precedents that, in strict regard for the established legal order, uphold the denial of extradition, denying the legal and justice systems of every pillaged country and the cries of justice of the impoverished Irish, Russians, Greeks and Spaniards.
Real and feigned indignation among the highly moralistic City Boys and cynical grins among the experienced senior partners, greet the unruly victims of their guest billionaires. The impoverished masses demand that the British creditor banks should collect their debt payments from the accounts of the swindlers who received the loans, passed their debt to the public treasury and recycled their ill-gotten gains into their British accounts.
When the Saville dressed, swashbuckling swindlers cross swords with their counterparts, as when the venerable and respectable, Barclays Bank fixed the Libor to profit on the interest rate differentials, at the expense of other banks, the bankers all agreed the solution was to pay a 290 million pound fine, admit the crime and try to save a system which should “only” bilk the public treasury, retail investors and ‘market takers’. Barclay’s “crime” was, of course, poisoning the trough from which their peers and partners prosper.
The Barclay Boys of both sexes, outraged by the indecent finger pointing by the other City Boys, raised an issue which nobody could deny: they were not alone. HSBC, Standard Charter, the Royal Bank of Scotland, Lloyds of London and many other bankers of equal or lesser assets across the Atlantic were engaged in similar unethical, (daresay criminal) or at least questionable undertakings. They also paid fines and were duly chastised. The older and more experienced senior officers of the City sent internal memos to their brash PR underlings to stop this unseemly washing of soiled silk shirts in public; mutual denunciations created the false image that there was a crime wave running through the suites of the City of London.
Unfortunately, the British legal system is not merely protective of overseas billionaire swindlers, it is also accommodative, supremely vindictive and bending over frontward when it comes to requests for extradition from its “Special Partner” in Washington. Let it be an Islamic religious figure or an Australian whistleblower (Assange) and, in due haste, with the extradition papers in hand, “the bobbies” are ready to break embassy doors to facilitate compliance.
London: Pimping for Parasites:
The global economic crisis is a boon for London’s high end real estate corporations, as overseas millionaires and billionaires, tax evaders, political raiders of the public treasury, abandon pillaged economies and pour billions into mansions and penthouses. Super-rich rentier monarchists from the despotic Gulf States join Russian commodity speculators and new rich Chinese sweatshop owners in bidding up London properties in prestigious postal codes in Belgravia (Ebury Street, Eton Place, and Eton Square) Knightbridge, Mayfair (Park Street). Corpulent Russian oligarchs and pious Saudi royalty loll in country estates in, Hertfordshire, Herefordshire and Cheshire overlooking their elegant English gardens and enjoy the purring and caresses of their very upscale British courtesans, in one or another of the two dozen bedrooms. The British government’s tolerance and open minded attitude to Russian and Albanian gangster oligarchs, whose bloody ascent to wealth can match any Sicilian godfathers, greases the wheels for the rise of what the Financial Times chooses to call, the real estate ‘industry’, bankrolled by the financial ‘community’ and aligned with the insurance ‘investors’.
The predators international, take their afternoon tea at 4 p.m., sherry at 6:30 p.m. They are entertained by the gossip of Her Majesty’s Court and the Queen’s Anniversary Celebration and indulge in the sporting life (soccer teams over polo horses). They cultivate a taste for culture. Accompanied by Oxbridge experts they shop for “collectibles” – paintings at Ordovas on Saville Row, Richard Nagy on Old Bond Street, Frank Auerbach at the Malborough, sculpture in Jean & Luc Baroni at St. James and jewelry shops for a Vacheron Constatin.
The Gulf oil oligarchs, who gouge exorbitant rents from energy poor African and Asian countries and Chinese and Indian billionaires who exploit hundreds of millions of Asian female factory workers and deny migrant workers residence, rest and health insurance, spent $9 billion pounds ($14.4 billion dollars) on central London houses in 2010-2011. Between 2011 and mid-2012, 60 percent of the buyers in the prime central London market were foreign millionaires and billionaires.
The Cameron-Clegg regime demands sacrifice, austerity and belt tightening in Greece, condemning millions to destitution, suicide and desolation, even as it encourages the top 1% of Greek kleptocrats to “invest” and reside in central London’s exclusive neighborhoods.
According to the IMF 56,000 Greek plutocrats are tax evaders. According to a US study of their annual income, $28 billion Euros ($36 billion USD) is unreported. Most of which is deposited in London banks or ‘invested’ in luxury property in Mayfair, Belgravia or thereabouts.
If the illegal accounts were taxed or better still used to pay for the foreign debt, it would conform to Greek law, reduce the deficit and social cuts and perhaps revive the economy. But respecting Greek tax laws would mean fewer commissions for the real estate moguls at Savells, Marsh and Parsons, Knight Frank; less private accounts for HSBC and Barclay’s; less sales at the upscale art galleries; fewer patrons for the high end ‘escort’ agencies of both sexes.
Crime pays. FIRE plays. Public hospitals close. Tuition rises. Private clinics and schools catering to the overseas oligarchs and their British partners flourish. Where’s “the crises”? Not to be found in central London, nor in the City; nor in the legal system; nor in the Special Forces. Bank swindlers flourish. Judicial litigation among oligarchs pays. Dirty mercenary wars in Afghanistan, Libya, and Syria and elsewhere provide lucrative contracts for retired Colonel Blimps– in the best traditions of empire.
The crises? That’s for the other England outside of the City, with the wrong postal codes. Where workers crowd emergency rooms, where the poor await evictions in what were once council houses and where those who study and work can look forward to debt and dead end jobs.
Joined: 25 Jul 2005 Posts: 12103 Location: St. Pauls, Bristol, England
Posted: Tue Oct 23, 2012 9:20 pm Post subject:
Currency Wars Part II
"All war is based on deception. Of all those close to the commander, none is more intimate than the secret agent; of all rewards none more liberal than those given to secret agents; of all matters none is more confidential than those relating to secret operations."
"Let Hercules himself do what he may,
The cat will mew, and dog will have his day."
William Shakespeare, Hamlet
There is a currency war underway.
The international trade clearing mechanisms are tottering. Countries are using their economic power, their banks and currencies, as a part of overall foreign as well as domestic policy.
This is a huge source of the tensions and problems which are are seeing both economically and militarily in the world today.
The current trade system based on the US dollar reserve currency is not sustainable. It has had a good long run, but like the euro it has reached the end of its rope. The US cannot continue to print enough money and increase its debt balance through trade any further. See Triffin Dilemma. Yes I am familiar with Eichengreen's counter argument.
And I am also aware of the already written and vetted proposals for a 'single world currency' with independent local governments, an arrangement which is even more fallacious and ill founded than the euro. Yes I know that there could be a series of agreements that could kick this down the road five or ten years. But something has got to give. The charade is getting a bit thin but the deception must go on.
I still think the only tenable solution, if one still wishes to cling to the notion of 'free trade' internationally, is an SDR based on a wider basket of currencies with a gold and silver component. And I am of the opinion as you know that much of these international theatrics and sword hammering is just the 'negotiations' phase with regard to the composition of the new SDR, and the ownership of its maintenance.
There are some who would treat the dollar as an arm of the military strategy, but that becomes a bit dramatic, in the Dr. Strangelove sense, but is nevertheless a good source of Defense Department consulting fees for those who promote the idea.
And I would hope that it goes without saying that the currency war is intimately tied in with the oil/energy situation, via the petrodollar. If you are going to send your country into multiple preemptive wars, one might take the time to understand the reasons why they are doing it. It is about the oil, and the positioning for it.
The problem is that there is no mechanism in place to bring the disputing parties together for an expedient resolution, given their conflicting interests. And those interests run deep, particularly for the Anglo-American banking cartel in NY and London. The dollar is the basis of their power.
And so we are locked in a 'currency war,' a resolution of differences in interest by other, less destructive, means than war itself. After all, nine-tenths of diplomacy is economic, if money is power.
If this notion is alien to you, then one can sympathize, because it is like watching an opera in a foreign tongue without a libretto to help you to understand the action on the stage. To have such knowledge of the basic plotline might not only help your understanding, it could be good for your investment portfolio. For in this currency war, your accounts and your savings are cannon fodder.
If you wish to read one pivotal post on the subject read the first part of this: Currency Wars.
If you click on the label 'currency wars' at the bottom of this post, it will bring up all the other posts here that touch on that subject, some admittedly only tangentially.
I think the currency war will intensify quite a bit before it resolves. I have been tracking this since 1999. It is the reason I first became interested in gold. I went looking for something like it, and only gold really fit, and to a lesser extent silver.
Gold and silver are intimately involved in the unfolding currency war, because they take no sides, and have no counterparty risk. No one can print them. And this is why I think GATA is right, not because of the evidence they have, which is more substantial than one might suspect given obsessive secrecy and the disinformation campaigns, but because it is exactly what one would do if there was to be a currency war, and such things as gold and silver existed. It is basic strategy of war: seek to control the high ground. And along with oil, gold and silver are strategic high ground in a currency war. And the first victim in a war is the truth.
If one does not understand these things, and the scope of what is happening with the dollar and the euro, then the significance of the important things that are happening will be missed and dismissed. People will connect the dots that they see and draw their pictures accordingly and they will be wrong. And what is particularly Machiavellian is that some of that is being done by intent.
CNBC MOPE: Actual Existence of Gold Reserves is Irrelevant, It’s the Bookkeeping That Matters!
October 26, 2012 By The Doc
With this week’s reports that Germany repatriated 1,000 tons of its gold reserves from the Bank of England between 2000-01, and is repatriating 150 tons of its gold reserves from the NY Fed over the next 3 years, clearly the awake participants have realized the music stopped long ago, and are grabbing their physical gold chairs.
It is now inevitable that an avalanche of central banks, hedge funds, and wealthy investors worldwide will begin to emulate Venezuela and Germany and request physical delivery of their unallocated (rehypothecated) ‘gold’.
In an amazingly weak and futile attempt to stem the inevitable onslaught of delivery and repatriation requests, CNBC’s senior editor John Carney has released an editorial claiming that it matters not whether the gold held at the NY Fed and the BOE is filled with tungsten, has been leased or swapped, or that it even exists- all that matters is the Fed’s bookkeeping ledger that states the gold is there.
CNBC begins by attempting to claim that it doesn’t matter whether Germany’s gold reserves held at the NY Fed are actually there and tungsten free, as long as the Fed says it’s there:
In reality, it does not matter one bit whether the Federal Reserve Bank of New York actually has the German central bank’s gold or whether the gold is pure. As long as the Fed says it is there, it is as good as there for all practical purposes to which it might be put. It can be sold, leased out, used as collateral, employed to extinguish liabilities and counted as bank capital just the same whether it exists or not.
Carney then attempts to claim the gold serves no actual purpose unless the Bundesbank wants to go into the gold watchmaking business:
The actual presence of the gold wouldn’t make a lick of difference unless, say, Germany’s central bank decided it wanted to start using the gold for some practical, non-monetary purpose like making watches.
CNBC would love investors to believe it’s not the actual physical Central Bank gold reserves that matter, it’s their book ledgers!
For almost all imaginable operational purposes, the actual existence of the gold in Fort Knox or in the vault beneath the FRBNY’s Liberty Street headquarters is irrelevant. The bookkeeping is what really matters here. So long as the Fed says Bundesbank owns X tons of gold, the Bundesbank can act as if it did own the gold—even if the gold had somehow been swallowed into a gold-eating galactic worm hole.
At least Carney is rational enough to acknowledge what happens when the jig is up:
I’m sure the Bundesbank officials understand this quite well, even though the German Audit Court does not. There is nothing to be gained by inspecting the gold. If it is all there and pure, there is no difference from an undiscovered absence. But if the gold isn’t there, well, calamity could follow as trust in the central bank gold depositories evaporated instantly.
Where there is smoke, there is always fire. Rather than investigating the source of the smoke, CNBC goes into overdrive MOPE denying the existence of the smoke.
Unfortunately for the Fed and the BOE, Hugo Chavez & now the German Audit Court have triggered a coming avalanche of physical gold delivery and repatriation requests.
Joined: 25 Jul 2005 Posts: 12103 Location: St. Pauls, Bristol, England
Posted: Thu Nov 15, 2012 12:12 am Post subject:
The current system has led to ruin: the asset grab by the one percent, wars and militarism, the erosion of our rights, and environmental destruction.
Democracy is strangled by the power of money to buy politicians and the media, the globalisation of power into unelected bodies like the IMF and NATO, and the hyping of alleged foreign threats.
The corporate media distracts from real issues, promotes the elite as credible and helps with divide and rule tactics.
The good news is that the internet revolution has broken the media monopoly.
The Nazis know it is all going to fall down - our job is to make sure THEY don't define the solutions.
Rise of the Fourth Reich, how Germany is using the financial crisis to conquer Europe
By SIMON HEFFER - 17 August 2011
Yesterday’s crisis meeting between Angela Merkel and Nicolas Sarkozy was arranged before the participants knew of the disastrous growth figures in the Eurozone that emerged in the morning.
The background to the meeting was last week’s tumult in the world financial markets. Shares had gone into freefall after the downgrading of America’s credit rating.
Worse than that, however, were the tremors rattling some of Europe’s most important banks, notably in France, caused by further evidence of the utter failure of even the more developed European economies to live anything like within their means.
Angela Merkel and Nicolas Sarkozy met to discuss the crisis yesterday, with the outcome of conversations suggesting a fiscal union could be created - of which Germany will dictate terms
Chancellor Merkel has managed to use the hard-earned money of German taxpayers to bail out profligate Eurozone countries without suffering any political fall-out. This is unlikely to remain the case and Mrs Merkel knows it.
That is why yesterday she played down talk of the European Central Bank — funded by German-backed Eurobonds — paying off the debts of these all-but-bankrupt nations.
Instead, there was forceful talk of Eurozone countries being coerced into balancing their budgets and reducing their debt through what Merkel and Sarkozy called a ‘true European economic government movement’ made up of all the heads of state and led, initially, by the EU President Herman Van Rompuy.
Frau Merkel called for a ‘stronger coordination of policy’ and ‘a new quality of cooperation’ within the Eurozone.
Although she will not yet admit it, this all suggests the first step has been taken towards a fiscal union that will leave Germany dictating the financial terms for the rest of Europe.
It is the one country that is able to do so. Greece, Ireland and Portugal are economic basket cases. We have heard more and more about the trouble in Spain, where unemployment is over 20 per cent.
Italy is tottering — the figures for 2010 show it has debts of 116 per cent of GDP, making the country second only to Greece at around 143 per cent.
Meanwhile, the recent addition of France to the list of at-risk economies has caused real shock and panic across the Channel. Its banks hold about an eighth of Greek debt, or $57 billion, its stock market has tumbled and credit rating agencies are talking of removing France’s triple A status.
So, after a summer of increasingly shrill panics around the Mediterranean, the contagion is moving north. Individual bail-outs have been tried, but they obstinately refuse to work. Only an idiot would think they would: they treat only the symptoms of Europe’s economic decline, not its causes.
If only everybody could be like the Germans, and spend just a mite more than they earn, then all would be well, the markets seem to say.
Germany lay in ruins in 1945, but it then invested in manufacturing plant, developed first-class education, innovated, raised its productivity and competed on quality not price.
Over the next 60 years it won the peace as comprehensively as it lost the war.
The addition of the French economy to the at-risk list has sent tremors through European banks, and across the Channel, while also caused the country's shares to tumble
If the euro is to survive — and with it the European project — the other 16 Eurozone countries will have to be like the Germans. Indeed, they must lose the freedom not to be like the Germans.
Be in no doubt what fiscal union means: it is one economic policy, one taxation system, one social security system, one debt, one economy, one finance minister. And all of the above would be German
That means a complete fiscal union in which Germany, as the EU’s most powerful economy and principal paymaster, makes the rules and makes them unbreakable.
George Osborne interrupted his holiday in austerity-free Beverly Hills a fortnight ago to make this point by telephone to the European Commission and the ECB.
It is a high-risk strategy on his part, for if such a plan succeeded it would make Europe effectively a German empire, with non-Eurozone countries such as Britain on the sidelines.
Mr Osborne clearly believes we have no choice. His concern is that if the European economy implodes we would be badly damaged: not so much because of the debt owed by countries such as Greece to British banks, but also because of the loss of export markets in the Eurozone countries and investment by them in Britain.
However, the prospects of Germany’s partners in the Eurozone are starker still.
If the global financial markets continue to have no confidence in the sticking-plaster rescue packages offered by Eurozone leaders, some nations will go bankrupt — one or two, such as Greece and Ireland, are already more or less trading while insolvent.
They may hope their salvation, apart from pulling out of the single currency and devaluing, would be to accept Germany properly bolstering the euro and effectively colonising the Eurozone.
This would entail a loss of sovereignty not seen in those countries since many were under the jackboot of the Third Reich 70 years ago.
For be in no doubt what fiscal union means: it is one economic policy, one taxation system, one social security system, one debt, one economy, one finance minister. And all of the above would be German.
That is not merely the price the markets would demand to be confident about the euro’s future, and to be happy to buy debt that could help fund Greece, or Ireland, or Italy. It is also the price that Germans themselves seem to be demanding for their support.
Stern, the German news magazine, conducted a poll last week among Mrs Merkel’s own supporters that showed that 52 per cent were opposed to her bail-out policy, and 62 per cent worried about the course of her party generally.
She is only two years from having to fight another election and cannot defy democratic gravity for ever.
Germany has already pumped 120 billion euros into the 440 billion bail-out fund. It is the fifth biggest economy in the world, which would mean that imposing its way of doing things on the other 16 nations would carry tremendous clout internationally.
It also has another reason for needing to shore up its partners: 42 per cent of its exports go to the Eurozone, with France alone taking 90 billion euros’ worth a year.
However, the latest figures show that demand for German goods is slowing, as is German growth. Shortly before the extent of the French problem with Greece was made public, Commerzbank — one of Germany’s leading banks — announced that it had to use 93 per cent of its second-quarter profits to write down $1.1 billion of Greek debt.
If Germany is to continue to prosper, Europe must prosper: but a ruthless solution may have to be imposed in order for that to happen. If the European project is to continue, Germany will not merely have to underwrite it, but control it.
The recently-agreed European Financial Stability Facility is not the answer. It is just another in a series of sticking-plasters that allows the ECB to buy the bonds of debtor nations to keep them solvent.
All these sticking-plasters are designed in the belief that the wound will not become yet more gaping: but it always does.
The alternative is the massive surrender of sovereignty to Germany by the rest of the Eurozone that would allow the economic policy of Greece, Ireland and Portugal to be made in Berlin.
That would reassure the markets, but it would also remove any pretence of democracy in those 16 countries: for once you have lost control of your economy, you have lost your sovereignty.
Every spending department in every government in the Eurozone would have its policy made in the old capital of Prussia.
And if the people did not like their governments being left with fewer powers than a county council, that would be tough. The alternative is ruin.#
Where Hitler failed by military means to conquer Europe, modern Germans are succeeding through trade and financial discipline. Welcome to the Fourth Reich. _________________ www.rethink911.org www.actorsandartistsfor911truth.org www.mediafor911truth.org www.pilotsfor911truth.org www.mp911truth.org www.ae911truth.org www.rl911truth.org www.stj911.org www.l911t.com www.v911t.org www.thisweek.org.uk www.abolishwar.org.uk www.elementary.org.uk www.radio4all.net/index.php/contributor/2149 http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
Amid talk of setting political traps for Labour, the Chancellor of the Exchequer used his Autumn Statement to attack many of the most vulnerable people in our society
It is right to be disturbed by the psychology of a politician who uses millions of working poor and unemployed people as a political football. That is exactly what George Osborne is doing with his 1 per cent cap on spending increases on benefits and tax credits over three years – which, in real terms, is a cut. That six out of 10 of those who will suffer are in work is irrelevant to the policy’s architects: here is an attempt to divide people with rhetoric of “strivers” versus “shirkers”.
The hope is that, by opposing such a cap, Labour can be painted as the unapologetic champion of the widescreen-TV-watching, multiple-child-producing, closed-curtained-home-dwelling “shirkers”.
That a gang of multimillionaire class warriors is intentionally attempting to turn poor people against each other for political advantage is as shameful as the often grubby world of politics gets. When even the mildest suggestion is floated that Britain’s booming wealthy elite should cough up a bit more, the Tories slap it down as “the politics of envy”, and yet they shamelessly attempt to direct the resentment of struggling low-paid workers towards the supposedly luxurious conditions of their unemployed neighbours. Has there even been such a concerted, deliberate attempt by a postwar government to turn large chunks of the electorate against each other? Thatcher would blush.
It surely represents the most aggressive attempt to drive down the living standards of the poor since the second-ever Labour government was destroyed in 1931 after an attempt to slash payments to unemployed people and wages. Disastrously, it will further suck desperately needed demand out the economy. Austerity has proved self-defeating (just as the critics, smeared as “deficit-deniers”, warned) and it is the working poor and unemployed who must pay the price.
Just look at what this ideologically crazed cabal has done to our economy. According to Citibank, further large revenue shortfalls will drive the Government’s debt-to-GDP ratio close to 100 per cent of GDP, up from 43 per cent before the crisis unfolded. The underlying deficit is growing, despite attempts to massage figures with raids on the Bank of England’s quantitative easing coupons and the gifting of assets from the Royal Mail’s pension funds.
Osborne is borrowing £100bn more than expected. We are in the most protracted economic crisis in modern times; the economy is still 3.1 per cent below the pre-Lehman Brothers crash peak, and analysts warn that an unprecedented triple-dip recession is approaching. A “lost decade” is upon us. As the catastrophe unleashed by this Government worsens, so the campaign to redirect anger to our neighbours must intensify.
To be clear, the situation facing the working poor and unemployed people was already bleak. The Resolution Foundation predicts that, in 2016, wages will be no higher than they were at the turn of the century. The poorest 10 per cent face a slide in living standards of 15 per cent by the end of this decade. Unlike the economy, food banks are booming like never before. Osborne claims his measures are to make work pay but, given that the majority of people in poverty are in working households, this is a nonsense.
There is now talk of the Labour leadership taking a stand against Osborne’s cuts. It comes after backbencher John McDonnell sent a desperate plea to his fellow MPs that, “instead of falling for this grubby trap, let’s take them on”. Labour’s response to the onslaught against the welfare state has been weak, partly because its spokesperson on the issue is Liam Byrne, a man who sums up all that is wrong with modern politics – technocratic, obsessed with tactics and stripped of purpose or belief. It has proven totally counter-productive: while the Tories can claim a clear message, Labour’s top team has risked looking hopelessly muddled and cowardly.
If the Labour leadership does show courage, it must defend the interests of the battered working poor without fuelling the sense that unemployed people are “shirkers”. According to the Joseph Rowntree Foundation, there are now 6.5 million unemployed or under-employed people, all looking for work that does not exist. Neither are unemployed people a static group: at least one in six of us has claimed Jobseeker’s Allowance in the past two years, and millions are trapped in a cycle of low-paid work and joblessness. And as a recent report from the foundation showed, the widespread belief in ”three generations who have never worked” is a total myth. “Despite strenuous efforts,” reads the report, “the researchers were unable to locate any such families.”
To be fair to the Labour leadership, the political space for challenging welfare cuts is limited indeed. While a YouGov poll in September revealed that more than half opposed further welfare cuts, there is a Government and media-fuelled pandemic of hate against “scroungers”. There urgently needs to be a campaign led by trade unions and charities to challenge myths and give a voice to those affected – challenging the all-pervasive extreme caricatures of layabouts.
There is an alternative
Such a campaign needs to push alternatives, too. It is often alleged that the original plans of the Beveridge Report have been subverted, but it was published at a time of near-full employment. In the 35 years after its publication, unemployment rarely topped a million. Long-term unemployment alone was higher last year than all forms of unemployment in the early 1960s – the damning legacy of the trashing of British industry from the 1980s onwards. Most do not realise that by far the biggest chunk of welfare spending is on elderly people. And if Beveridge’s original aims have been corrupted, it is because the welfare state has become a subsidy for landlords charging extortionate rents and employers paying poverty wages.
Today, Labour unveils plans that move towards German-style rent controls. If combined with a council house building programme – creating jobs and stimulating the economy – the £21bn wasted on housing benefit (which should be renamed “landlord subsidy”) would be reduced. Similarly, the number of working families receiving working tax credits has risen by half since 2003 – because of a surge in low-paid jobs. A living wage would bring down spending on tax credits, and increasingly in-work benefits like housing benefit and council tax benefit. Improving workers’ rights stuck in the Victorian era would allow working people to demand better wages from their employers, too, at a time when big corporations sit on a £750bn cash mountain.
Osborne has set a trap made out of the livelihoods of the poorest people in British society. Labour must call his bluff, but a campaign challenging the Government’s demonisation campaign must create the space to do so. Let this ruse backfire – and expose the inhumanity of a Conservative Party determined to make the poorest pay for the economic calamity it is responsible for.
Observer's Will Hutton wrote:
George Osborne's savage attack on benefits is an affront to British decency
George Osborne in his autumn statement displayed a total contempt for the welfare of the less well-off
What constitutes a good society? What are our responsibilities and obligations to one another? To what extent is our humanity about looking solely after ourselves or being part of something we call society? The autumn statement, opening a new chapter in its rewriting of Britain's tattered social settlement, has suddenly made these the fundamental questions in British politics. The last vestiges of an approach to organising society based on a social contract have been shredded. In its place there is an emergent system of discretionary poor relief imposed from on high in which every claimant is defined not as a citizen exercising an entitlement because they have hit one of life's many hazards, but as a dependent shirker or scrounger.
David Cameron and George Osborne, repudiating the canons of the Enlightenment, the New Testament and the British commitment to fair play, think they are on a political slam dunk. Osborne gloried in his depiction of his actions in support of the nation's "strivers" and attack on the shirkers. With a populist centre-right press behind him, he thinks he has launched a political masterstroke. Does the Labour party dare to vote against next year's proposed welfare bill removing the link between inflation and the increase in benefits?
Everyone knows the coalition argument by heart. Fairness demands that the recipients of Britain's allegedly enormous welfare bill play their part in the crash programme to eliminate Britain's budget deficit.
Austerity must hit everyone. The welfare system, so the argument goes, has become a colossal scam encouraging systematic cheating and, worse, a culture in which idleness is rewarded and work penalised. What is more, support for social solidarity as a principle is disappearing. Polls reveal large majorities who support the coalition's propositions.
But can so much of our culture, and what it means to be part of western civilisation, be put aside so easily? The idea that the best society is one organised around a voluntarily agreed contract between its members who come together and acknowledge reciprocal obligations is not so lightly torched. It may be unfashionable to defend the conception of a social contract, but our religion and our culture enshrine the notion of mutual responsibility and obligation.
Life is risky and hazardous for everyone. The bad luck of a broken family, unemployment, poor health, unexpected expenses of old age, mental illness and physical incapacity can hit anyone, however hard working. These risks confront everyone.
A good society recognises these risks and insists they should be shared and insured against in an agreed system of collective insurance. The great thinkers of the Enlightenment proposed that if society was to get beyond theocracy, anarchy or despotism, then it had to be underwritten by such a social contract. To organise society as an individualistic war of one against another was barbaric, while the other models, slavishly following the rules of one religion or one supreme leader, denied freedom.
Cameron and Osborne will publicly say that they still respect such values, but, privately, they are pursuing a different agenda. The terms on which millions have made their plans and life choices have been torn up. The automatic link between inflation and the uprating of benefits is to be scrapped for at least three years. The tax relief available to those building retirement pensions is to be further withdrawn. This comes on top of the capping of benefits, whatever the need, the restrictions on housing benefit, further limiting of incapacity benefit and the shrinking of access to child benefit. Additionally, there is a new bridgehead further to remove employment protection in the labour market, trading employment rights for shares in the company.
Is any of this fair? The heart of fairness is to establish a proportional relationship between contribution and outcome to which everyone consents. People have made calculations about how they are to handle the costs of old age, bringing up their children, physical incapacity or the lack of work in their area on the basis of social contributions to their circumstance that they reckoned on being an inviolable part of the deal. Now they find it is all turned on its head by fiat and for which no one voted. A social contract is a bargain over time. I pay my taxes and national insurance contributions. I should get benefits back when I need them.
What is happening is both illegitimate and contemptible and as the proposals are rolled out, more and more people will start to think so as they are affected too. The anti-welfare opinion poll majorities will begin to dissolve.
Is this necessary? Osborne insists it would be a "disaster" to turn back from his target of balancing the budget within five years and social spending must share the burden. He is an economic illiterate. Economics 101's first principle is that if households, companies and banks are simultaneously saving and building up surpluses, as they are at present, then someone in the system has to have a deficit to compensate, otherwise there is a downward depressive economic vortex. That someone necessarily is the government. Its deficit is the counterpart of surpluses elsewhere. Osborne could and should have used his autumn statement to give the private sector the confidence to invest, to borrow, to innovate and to spend and so run down its vast £700bn cash stockpile. He should have adopted a bold target for the growth of nominal income, launched a multibillion pound infrastructure programme and cheap loan guarantee scheme. Then the pressure on the government's own books would have been relieved.
He did none of these, instead believing that financial repression and shameful withdrawal of benefits are the triggers of recovery. Is every last aspect of Britain's social contract defensible? Plainly not. As far as possible, a social contract should be designed to recognise labour market realities and not undermine incentives, restrict itself to insuring against inevitable risks and hazards and be supported by sufficient taxation and a government doing its level best to promote economic growth and jobs. Reform should take place within such a framework, but that is not what is proposed. Labour is steeling itself to do the right thing; if it can spell out what a 21st-century social contract looks like, this is an argument that can be won.
The Lib Dems also have to brace themselves. Osborne, his politics, economics and values, should be opposed to the last. Are they prepared to do what must be done?
The current geopolitical dislocation, largely anticipated by LEAP/E2020 since February of 2009 (GEAB No. 32), has resulted in a global fragmentation than will accelerate over the course of next year, amidst global recession. The end of the leadership of traditional powers will bring about global chaos in 2013, with the “world after” beginning to emerge.
It will be a somber year for the United States, as it loses its status as the sole superpower and finds itself unable to influence the construction of a new global governance. For if all players are desperately seeking a way to gain the upper hand in the game, only those countries and regions prepared for the shockwaves can even hope to influence the emergence of the “world after.” Alliances of any kind (CELAC, UNASUR, MERCOSUR, ALBA, CAN, ALADI, NAFTA, OAS, AU, NEPAD, SADC, COMESA, ECOWAS, UEMOA, CEMAC, the Arab League, EU, EFTA, ASEAN, APT, EAC, BRICS, CASSH, Eurasian Union, etc.) all reflect such attempts, but they are all more or less advanced, more or less homogenous, and more or less resistant to the coming storm.
Euroland, born in the crisis and strengthening with each wave like a tidal power plant, Asia, and South America are better equipped to become the big winners in the “reshuffled” world, while the old powers, like the United States, the United Kingdom, Israel, Japan, etc., are failing to adapt to the multi-polar, post-crisis world and find themselves utterly destitute. There is an extraordinary open world game afoot, one providing numerous opportunities to those willing to seize them. This is evident in the Middle East, where populations are taking the opportunity to change the region in accordance with their aspirations; in the BRICS, where their advancing pawns approach declining powers; and in Europe, where each attack by the crisis creates the energy to adapt to the challenges of tomorrow.
The economic situation (recession) and geopolitics (major tensions in the Middle East, but also in Asia (1), etc.) make 2013 a difficult and dangerous period, with mishaps likely, making stable regions that benefit from this state of affairs more attractive by comparison. Everything is relative, of course, but global violence in 2013 figures to make Euroland one of the few havens of peace, stability, and comfort… and for investors it will be one of the few regions offering some visibility for the future (2). This will create a powerful engine for exiting the European crisis in 2013.
A rapprochement of Euroland with BRICS, another future-bearer group of countries, would weigh in favor of the necessary (3) reforms in global governance. The next G20 summit in September in St. Petersburg, outside of Western influence for the first time, is the last opportunity to address issues paramount to global governance, including the international monetary system’s reform. For in 2014, the best-adapted regions are already making their way in the “world after”.
Shares of global middle-class consumption, 2000-2050 - Source: Business Insider/OCDE
In this GEAB issue No. 70, our team will analyze this fragmentation and restructuring, starting with the catalyst of these current tensions: the Middle East. A large part is devoted to Europe, via Euroland, pursuing its entry into the “world after.” To understand these Euroland developments, one must understand those in one of its key players, Germany, and we therefore conduct a comprehensive study of the German political landscape and the upcoming 2013 elections. We also present our assessments of country risks and the yearly evaluation of our 2012 anticipations, before giving our recommendations and GlobalEuromètre results.
In this GEAB public communiqué No. 65, or team has chosen to present its analysis of the Euroland.
Profiling Euroland in the world after the crisis
The media war against the Euro was useful inasmuch as it forced the Eurozone to implement the reforms necessary to overcome the crisis. There was, of course, no revolution here, playing as we are by the “rules of the game” (4), that is to say without scaring the markets. No thundering statements, but compromises (5) and solid actions made after lengthy discussions. And gradually the structures have come into place that strengthen the Eurozone. The contrast with US inaction is striking.
This should not obscure the many problems in Greece and Spain, for example; no one said it would be painless to recover from the bursting of the housing bubble and a historic global systemic crisis; as a matter of fact these countries could benefit more from technical assistance and expertise from other European countries. But overall, the situation is improving, the new Greek debt restructuring has been successful (6), deficits are reduced in Greece and Spain (7), Italy was put back on track by Monti (, the Anglo-Saxon media themselves no longer speak of an eventual Greek exit from the Eurozone, and more recently the US media has even began praising European progress… (9)
Let there be no mistake: 2013 will be difficult for a Europe in recession. But whether it is through the banking union which will begin functioning in early 2014, through increased political integration or through the European Stability Mechanism, the independence of Euroland states is affirmed (10). One sees it in disagreements with the IMF on Greece (11): by 2015, the European Stability Mechanism will have sufficient credibility and skills to let the IMF deal with developing countries (or save the US or UK) and concentrate only on European problems. This decoupling from the institutions of the “world before” and from the United States allows Euroland to engage in the constructive dynamic of adaptation to the “world after”, through custom-made tools.
Visible signs of the decoupling and independence of Euroland, despite criticism, are the solutions to the crisis, ones at odds with those practiced in the US. It is indeed “austerity” (12) that prevails in Europe, and avoids the faltering evident in the US budget.
Euroland’s resistance also involves the pooling of public debt. With the launch of “project bonds” (13) to finance EU infrastructure projects, increased pooling is underway, and the way is open for Eurobonds. A weakened German Chancellor, after the 2013 elections (as we shall see), has little discretion to refuse the Eurobonds requested by the SPD, which will be in the coalition government. Since only the voice of the Germans was lacking on the subject, aside from the banking union, 2014 will be the year of Eurobonds. Despite the approach of the elections, Angela Merkel has already yielded on the subject of Greek debt (14), a sensitive issue for Germans; but it is of course in her interest to ensure the proper functioning of the Eurozone, a large outlet for the country’s exports.
Finally, far from being the foil that the Anglo-Saxon media would make it out to be, the Eurozone is attractive despite the crisis: Poland wants to become a member (15), regional separatists do not envisage an exit from the Euro (16)… Another sign of the fact that it belongs to the “world after” landscape and that it is a zone with visibility within the crisis: it provides shelter to members states from geopolitical tensions.
Euroland : en route towards political union
Thus, with the progress that has been accomplished, and despite a slight recession in 2013, in the view of LEAP/E2020, the end of next year will mark the end of Euroland’s crisis. The worldwide tempest of 2013 will cause disruptions but will not destabilize Euroland, which will find itself well anchored and increasingly sturdy. Though they may not yet be entirely visible, the mechanisms allowing an exit from the current crisis will be set in place starting in 2013, and will gain strength throughout the year, allowing for a clear recovery in 2014.
However, for the relief from crisis to last, necessary democratization must be undertaken. This is, furthermore, what the European Parliament (17) is requesting. Paradoxically, the latter is aided by the marginalization of the traditional national parties: in France, the UMP has exploded (1, as predicted in GEAB n°64; in the United Kingdom, Ukip is casting a shadow on the Tories (19); in Germany, the CSU and the CDU are also bogged down in ‘‘their’’ scandals (20)… This marginalization can be explained by the increasing integration in Euroland: it has become evident to everyone that henceforth the real power is situated at the European, rather than national, level. Therefore it is only natural that the parties are Europeanizing, and Barroso has asked political parties to put forward in the European elections a “principal candidate” for all countries (21), which is a real revolution after 30 years of total deafness to the issue of democratization (22) on the part of European institutions! These 2014 elections, therefore, will consequently be the catalyst for the emergence of Euroland.
One word on the Erasmus program, which is now threatened by budgetary shortfalls as a result of austerity measures. Some politicians no longer have much political sense!! In a full-on crisis of the Euro, which has no doubt been managed efficiently, but contrary to any democratic principle, and by means of rigorous policies that are at times quite painful for the population, and within a context of endemic unemployment, particularly high among the young, the one and only positive European reference, i.e. the Erasmus program, is going to lose not only its financial means (23) but also its name (24)… If a considerable reform of this 20 year-old student mobility program is necessary in order for it to adapt to the immense European stakes of the 21st (25) century, its name must quite obviously be preserved (why drop off the winning team) and its budget must be sufficiently augmented to guarantee its longevity through the new budgetary period that will run from 2014 to 2020, therefore long past the end of the crisis. Show some vision, for goodness sake!
Number of students participating in Erasmus each year; the ambition of 3 million students over the years - Source: Europa.eu
However, national political ambitions are of course always in play, and European advances are evaluated in light of the balance of power between nations. In giving back to France the voice that Nicolas Sarkozy, totally in step with Merkel, caused it to lose, the arrival of François Hollande, has allowed other voices to be heard, has broken the polarization of the Franco-German block against the rest of Europe, and has in brief reopened European debate, and it was certainly time. But the economic powerhouse that is Germany, in comparison notably with the current dreariness of the French economy, confers upon Angela Merkel considerable influence.
In the next section we will analyze the future of German politics, and namely the federal elections that will be held in Autumn 2013. From here on, the Chancellor will be campaigning and will avoid any unnecessary risks and any proposition that could displease the electorate. In this difficult year, the other heads of state will have to succeed in convincing a hesitant Chancellor. To a lesser extent, the situation will continue afterwards as well, for Angela Merkel will be on even more fragile ground after the elections. In this regard, the unblocking of multilateral discussions in Europe is a positive sign.
(1) For example, the launch of the North Korean missile (source: The Guardian, 13/12/2012), or the Sino-Japanese disputes over contested islands (see for example Le Monde, 13/12/2012).
(2) In this present world chaos, Euroland presents many similarities with Switzerland during the European wars of the last century.
(3) “Necessary”, since, as determined by the Euro-BRICS seminar held on September 27-28 in Cannes, by LEAP and MGIMO, without renovated global governance that harmoniously integrates the diverse new global powers, the chaos of 2013 will lead to a multipolar world consisting of opposed blocs, an immense geopolitical danger.
(4) While slowly changing those rules, so that they are no longer just those of the markets: the banking regulations, supervision of credit rating agencies, etc.
(5) As anticipated by LEAP/E2020, the election of François Hollande in France has renewed debates and discussions in Europe. This contrasts with Sarkozy, who blindly followed Merkel, and frustrated those other countries not part of the Franco-German “engine”. The arrival of a new government was experienced by all other Europeans as a relief and a breath of fresh air.
(6) Source: Le Monde, 13/12/2012
(7) Sources : Greek Reporter (11/12/2012) et Business Standard (05/12/2012)
( Monti figures to remain influential despite the theatrics of Berlusconi, who has little chance of being elected. Source: Le Nouvel Observateur, 11/12/2012.
(9) See for example Bloomberg (11/12/2012), CNBC (23/11/2012), FoxBusiness (28/11/2012), etc.
(10) The US media has spoken of it themselves: CNBC (26/11/2012) titled The Euro Zone Is ‘Shaping Up Quite Well’ recounts a story of progress in Euroland.
(11) Source: Der Spiegel, 21/11/2012
(12) Austerity remains measured in many countries; in others, it is to get the same effect as monetary devaluation, which the rules of the Eurozone cannot allow.
(13) Source: European Parliament, 05/07/2012
(14) Source: Le Monde, 03/12/2012
(15) Source: Le Monde, 30/11/2012
(16) This is also part of what may explain the difference between polls and the last minute results in Catalonia: just before the election the debate focused on the potential exiting from Europe of the new sovereign region (source elPeriodico, 22/11/2012); together, the CiU and ERC separatist parties then lost a seat in contrast to the stated fears of a tidal wave of separatism.
(17) Source: RTBF, 20/11/2012.
(1 Source: Le Figaro, 26/11/2012.
(19) Source: The Guardian, 26/11/2012.
(20) See infra.
(21) Source: Euractiv, 17/09/2012.
(22) We know of what we speak: for almost the past 30 years, the democratization of the European Union was the warhorse of our Director of Studies and of Strategy, Franck Biancheri, who passed away this past October 30, and who led a very uneven battle against the European and national political and institutional systems that were completely reluctant towards any change in this area. Six years ago, seeing the clouds building on the horizon for the oncoming global crisis, Franck Biancheri knew that at last he held the tool for this democratization: the crisis itself would allow the project of political integration to move forward, by creating a new engine for European construction, lightened from the United Kingdown and therefore adapted to advance a new political union: Euroland.
(23) Source: Le Monde, 05/10/2012
(24) The grouping together of different European educational programs (Comenius, Leonardo, Erasmus, etc.) at first led to the name of “Erasmus for all” then to “Yes for Europe”. Apparently there are Europeans in Brussels who find that for a European educational program, the name of the great Dutch humanist of the 15th century isn’t good enough... They wanted at least a “Yes for Europe” and perhaps even a “Yeah-rope”!! It is essential that such saboteurs of Europe be swiftly brought to reason…
(25) In 2003, Franck Biancheri, who was also one the fathers of Erasmus, wrote, for example, this article entitled : « Erasmus… et après ? » (Erasmus. . . and then what ?), Europe 2020.
Joined: 25 Jul 2005 Posts: 12103 Location: St. Pauls, Bristol, England
Posted: Sat Jun 29, 2013 10:54 pm Post subject:
£850bn: official cost of the bank bailout
Government support for Britain's banks has reached a staggering £850bn and the eventual cost to taxpayers will not be known for years, the public spending watchdog says today.
The National Audit Office (NAO) revealed that £107m will be paid to City advisers called in to work on the rescue because the Treasury was too "stretched" to cope with the sudden financial crisis which broke in the autumn of last year.
The commitments include buying £76bn of shares in Royal Bank of Scotland and the Lloyds Banking Group; indemnifying the Bank of England against losses incurred in providing more than £200bn of liquidity support; guaranteeing up to £250bn of wholesale borrowing by banks to strengthen liquidity; providing £40bn of loans and other funding to Bradford & Bingley and the Financial Services Compensation Scheme; and insurance cover of over £280bn for bank assets.
As a country, we've grown accustomed to living beyond our means. The Government's tax revenues are rarely enough to fulfill its generous spending promises, so every year Britain runs a large budget deficit. The money we can't raise from taxation needs to be borrowed, and as taxpayers, we're the guarantee on the loan. Every year, this budget deficit is added to our national debt.
In 1997 Labour inherited a budget that was actually in balance. After a painful and turbulent decade under the Tories, the public finances had finally been brought under control. But after four years in office Gordon Brown took out the country's credit card and let rip. By the end of 2009-10 our annual deficit had ballooned to £170.8 billion.
This graph shows how the UK's budget deficit has fluctuated as a percentage of the country's economic output (GDP):
As the graph shows, the budget was barely in surplus for more than a few years. We've been maxing out a new credit card almost every year, even in the good times. If a company were run like this, it would have long been declared bankrupt. So how much longer can we defy financial gravity? Well, we're about to find out.
Public finances out of control
At the very time tax revenues are declining and a debt crisis is ravaging the global economy, our politicians have chosen to go on an unprecedented spending splurge. To fund it, the Government borrowed a monumental £170.8 billion last year. If all goes well, we're set to borrow another £167.9 billion this year.
This kind of deficit is far greater than during the recessions of the 80s and early 90s and even higher than when Britain went cap in hand to the IMF in 1976. This isn't money saved for a rainy day. Because we continued to rack up debt in the good years, this latest spending spree is fueled by one big borrowing binge.
As a Conservative I have no pleasure in exposing David Cameron's deficit claims. However, as long as the party continues to talk down the economy via the blame game, confidence will not be given an opportunity to return. For it is an undeniable and inescapable economic fact: without confidence and certainty there can be no real growth.
Below are the three deficit claims - the mess. The evidence comes from the IMF, OECD, OBR, HM Treasury, ONS and even George Osborne. The claims put into context are:
The last government left the biggest debt in the developed world.
After continuously stating the UK had the biggest debt in the world George Osborne admits to the Treasury Select Committee that he did not know the UK had the lowest debt in the G7? Watch: Also, confirmed by the OECD Those who use cash terms (instead of percentages) do so to scare, mislead and give half the story.
Its common sense, in cash terms a millionaire's debt would be greater than most people. Therefore, the UK would have a higher debt and deficit than most countries because, we are the sixth largest economy. Hence, its laughable to compare UK's debt and deficit with Tuvalu's who only have a GDP/Income of £24 million whilst, the UK's income is £1.7 Trillion.
Finally, Labour in 1997 inherited a debt of 42% of GDP. By the start of the global banking crises 2008 the debt had fallen to 35% - a near 22% reduction page 6 ONS Surprisingly, a debt of 42% was not seen as a major problem and yet at 35% the sky was falling down?
Labour created the biggest deficit in the developed world by overspending.
Firstly, the much banded about 2010 deficit of over 11% is false. This is the PSNB (total borrowings) and not the actual budget deficit which was -7.7% - OBR Economic and Fiscal Outlook March 2012 page 19 table 1.2
Secondly, in 1997 Labour inherited a deficit of 3.9% of GDP (not a balanced budget ) and by 2008 it had fallen to 2.1% - a reduction of a near 50% - Impressive! Hence, it's implausible and ludicrous to claim there was overspending. The deficit was then exacerbated by the global banking crises after 2008. See HM Treasury. Note, the 1994 deficit of near 8% haaaaaah!
Thirdly, the IMF have also concluded the same. They reveal the UK experienced an increase in the deficit as result of a large loss in output/GDP caused by the global banking crisis and not even as result of the bank bailouts, fiscal stimulus and bringing forward of capital spending. It's basic economics: when output falls the deficit increases.
Finally, the large loss in output occurred because the UK like the US have the biggest financial centres and as this was a global banking crises we suffered the most. Hence, the UK had the 2nd highest deficit in the G7 (Not The World) after the US and not as a result of overspending prior to and after 2008- as the IMF concur.
Our borrowing costs are low because the markets have confidence in George Osborne's austerity plan and without it the UK will end up like Greece.
Yes, the markets have confidence in our austerity plan and that's why PIMCO the worlds largest bond holder have been warning against buying UK debt.
The real reason why our borrowing costs have fallen and remained low since 2008 is because, savings have increased. As a result, the demand and price for bonds have increased and as there is inverse relationship between the price of bonds and its yield (interest rate) the rates have fallen. Also, the markets expect the economy to remain stagnate. Which means the price for bonds will remain high and hence, our borrowing costs will also remain low.
Secondly, the UK is considered a safe heaven because, investors are reassured the Bank of England will buy up bonds in an event of any sell off - which increases the price of bonds and reduces the effective rate. Note, how rates fell across the EU recently when the ECB announced its bond buying program. Thirdly, because, we are not in the Euro we can devalue our currency to increase exports. Moreover, UK bonds are attractive because, we haven't defaulted on its debt for over 300 years.
David Cameron would like people to believe the markets lend in the same way as retail banks lend to you and I.
Overall, when the facts and figures are put into context these juvenile deficit narratives and sound bites ("mere words and no evidence") simply fail to stand up to the actual facts. The deficit myth is the grosses lie ever enforced upon the people and it has been sold by exploiting people's economic illiteracy.
So, David Cameron when are you going to apologise?
Cameron is playing the blame game to depress confidence and growth to justify austerity. Secondly, to use austerity as justification for a smaller state to gain lower taxes. Thirdly, to paint Labour as a party that can not be trusted with the country's finances again. Therefore, we Conservatives will win a second term because, people vote out of fear. The latter strategy worked the last time in office (18 years) and will work again because, in the end, elections are won and lost on economic credibility. Hence, as people believe Labour created the mess they won't be trusted again.
Finally, as the truth is the greatest enemy of the a lie I urge you to share this on Facebook, Twitter, blogs, text and email etc etc. So the truth can be discovered by all. Finally, have no doubt, people have been mislead by the use of the following strategy:
World Bank conspiracies of massive corruption are discussed with under-fire whistleblower Karen Hudes. She discusses how she has been charged with trespassing from Eric Holder, and how the executive directors of the World Bank were blackmailed in a prostitution scandal from the same bordello Eliot Spitzer frequented.
We get a lot of information on the single conglomerate that dominates the global economy and the small group of whistleblowers that have kept their eyes on the people's interest on this Buzzsaw interview hosted by Sean Stone.
Karen Hudes studied law at Yale Law School and economics at the University of Amsterdam. She worked in the US Export Import Bank of the US from 1980-1985 and in the Legal Department of the World Bank from 1986-2007. She established the Non Governmental Organization Committee of the International Law Section of the American Bar Association and the Committee on Multilateralism and the Accountability of International Organizations of the American Branch of the International Law Association.
In addition she has recently come under fire for whistleblowing at her more recent position at the World Bank.
00:01 Welcoming Karen Hudes to Buzzsaw.
01:00 The charges filed by Eric Holder against Karen.
01:50 Continuing World corruption and media cover-ups.
03:45 One whole conglomerate controlling the major share of the world market.
05:18 Each individual country controlling it's own interests and the World Bank board of directors vs. Eric Holder.
06:37 Her involvement with the World Bank and arrest.
11:20 The major government corporate conspiracy at the heart of the World Bank.
12:50 Where bad management succeeds + Corruption in the Philippines.
15:10 The board gets threatened with blackmail for prostitution over Paul Wolfowitz.
19:30 Why the World Bank has become a con.
21:00 Recognizing the conglomerate and their gatekeepers.
22:15 The revolving door of corruption.
24:15 The opposite of martial law and contacting governors.
They seem to raise it in hope, more than anything else. The answer I give is “yes and no.” That may seem typically fudge-like but it also happens to be accurate.
On some levels, the City is different: banks are weighed down with compliance and procedure: there’s far greater attention being paid to recruitment at the top level; bonuses are increasingly being paid in shares; firms are anxious to be seen to be doing the right thing.
They’re pursuing pretty much zero tolerance to anyone caught crossing a line. Humility and maintaining a low profile are the orders of the day.
So far so good. But deep down, have attitudes really shifted, has the culture altered? Here, I have to report a resounding “no”. We’ve had numerous examples of bad practice, including instances of mis-selling and manipulation of rates. Right now, the Co-op Bank debacle continues and there are claims that RBS pushed struggling businesses to the wall so it could take over their properties on the cheap. Meanwhile, no less a figure than Justin Welby, the Archbishop of Canterbury, has felt moved to intervene, and join with Lord Lawson, the former Tory chancellor, and other senior peers, to try to toughen up the Government’s banking reform bill.
Here’s another scandal to add to the mix. A friend contacted me. He was outraged by the behaviour of an investment bank. He’d approached it with a proposal – I can’t go into detail but, suffice to say, he was setting up a new business and was looking to forge a lasting relationship with a bank. My friend and his partners are not slouches – they come with established records, of the sort that would cause anyone in finance to nod in recognition and want them as clients.
My pal and the bank got on well. Then they quoted how much they would charge for their services. When he gasped, and queried the price, he was told: “We’re too big to fail.” In other words, by dealing with them, his money was safe – they were guaranteed by dint of relying on a future government bail-out not to go under – and therefore he should pay more.
It’s unclear how much the bank is imbursing the Government for this explicit insurance policy – presumably nothing, but there’s no doubt if they hit a crisis, they expect the taxpayer to cough up.
I confess to not believing him. I was so shocked as to assume he was having me on. But when I quizzed him, he remained solid. I played a bit of a guessing game as to the identity of the bank, but he was having none of that – he did not want people thinking their conversations with him would be relayed to the press.
There was no doubt in my mind it was true. He had no reason to call me; he was gaining nothing by making up such a tale.
In which case, I must put up my hand to naivety. When Mervyn King banged on about “moral hazard” I tended to scoff at the Bank of England Governor. I thought the cerebral, unworldly academic in him had won through, that Mervyn was finding conspiracy and deliberate, cynical, calculated action when there was none. I did not suppose that banks felt able to chase greater profits because they knew the authorities would not let them collapse.
I know, I know. I was a fool, a total innocent where bankers and morality are concerned. I should have realised: that to give a bank even a sniff of making extra profit is enough; that pretty much everything that is put in their way can be turned on its head and made into an opportunity.
Mervyn was right all along. We should have let banks go to the wall, rather than save them. In our desire to shore up the system we’ve created monsters that now feel able to exploit our goodwill, which do not care two hoots for us or the overall well-being of society.
LONDON In early October 2008, three weeks after the Lehman Brothers collapse, I met in Paris with leaders of the countries in the euro zone. Oblivious to the global dimension of the financial crisis, they took the view that if there was fallout for Europe, America would be to blame so it would be for America to fix. I was unable to convince them that half of the bundled subprime-mortgage securities that were about to blow up had landed in Europe and that euro-area banks were, in fact, more highly leveraged than America’s.
Despite the subsequent decision of the Group of 20 in 2009 on the need for rules to supervise what is now a globally integrated financial system, world leaders have spent the last five years in retreat, resorting to unilateral actions that have made a mockery of global coordination. Already, we have forgotten the basic lesson of the crash: Global problems need global solutions. And because we failed to learn from the last crisis, the world’s bankers are carrying us toward the next one.
The economist David Miles, who sits on the monetary policy committee of the Bank of England, may exaggeratewhen he forecasts financial crises every seven years, but most of the problems that caused the 2008 crisis excessive borrowing, shadow banking and reckless lending have not gone away. Too-big-to-fail banks have not shrunk; they’ve grown bigger. Huge bonuses that encourage reckless risk-taking by bankers remain the norm. Meanwhile, shadow banking investment and lending services by financial institutions that act like banks, but with less supervision has expanded in value to $71 trillion, from $59 trillion in 2008.
Europe’s leaders aren’t the only ones with these blind spots. Emerging-market economies in Asia and Latin America have seen a 20 percent growth in their shadow-banking sectors. After 2009, Asian banks expanded their balance sheets three times faster than the largest global financial institutions, while adding only half as much capital.
In the patterns of borrowing today, we can already detect parallels with the pre-crisis credit boom. We’re seeing the same over-reliance on short-term capital markets that ultimately brought down Northern Rock, Iceland’s banks and Lehman Brothers.
While the internationalization of the renminbi is opening up new opportunities for global investment in China, it is also increasing the exposure of the global economy to any vulnerability in its banking sector. China’s total domestic credit has more than doubled to $23 trillion, from $9 trillion in 2008 as big an increase as if it had added the entire United States commercial banking sector. Borrowing has risen as a share of China’s national income to more than 200 percent, from 135 percent in 2008. China’s growth of credit is now faster than Japan’s before 1990 and America’s before 2008, with half that growth in the shadow-banking sector. According to Morgan Stanley, corporate debt in China is now equal to the country’s annual income.
Although sizable foreign reserves make today’s Asia different from the Asia that experienced the 1997 crash in Indonesia, Thailand and South Korea, we are all implicated. If China’s economy were to slow, Asian countries would be doubly hit from the loss of exports and by higher prices. They would face downturns that would feel like depressions.
And China’s banking system may not be Asia’s most vulnerable. Thailand’s financial institutions, for example, appear overdependent on short-term foreign loans; and in India, where 10 percent of bank loans have gone bad or need restructuring, banks will need $19 billion in new capital by 2018.
If the emerging markets of Asia and Latin America are hit by financial turmoil in coming years, will we not turn to one another and ask why we did not act after the last crisis? Instead of retreating into our national silos, we should have seized the opportunity to fix global standards for how much capital banks must hold, how much they can lend against their equity, and how open they are about their liabilities.
The Volcker Rule, now approved by American regulators, illustrates the initial boldness and ultimate weakness of our post-2008 response. This element of the Dodd-Frank financial reform law of 2010 forbids deposit-taking banks in the United States from engaging in short-term, proprietary trading. But these practices are still allowed in Europe. Controls are even weaker in Latin America and Asia.
International rules are needed for international banks. Without them, as the International Monetary Fund has warned, global banks will evade regulation “by moving operations, changing corporate structures, and redesigning products.”
When I was chairman of the G-20 summit meeting here in April 2009, our first principle was that future financial crises that started in one continent would affect all continents. That was why we charged the new Global Financial Stability Board with setting global standards and rules.
Nearly five years on, its chairman, the Bank of England governor Mark Carney, has spoken of “uneven progress” in recapitalizing banks and making them disclose their risks. The G-20 plan for oversight of shadow banking is, as yet, only a plan. While the world’s $600 trillion derivatives market is being regulated with new minimum capital and reporting requirements, global financial regulators must “find a way to collaborate across borders,” Mr. Carney says.
In short, precisely what world leaders sought to avoid a global financial free-for-all, enabled by ad hoc, unilateral actions is what has happened. Political expediency, a failure to think and act globally, and a lack of courage to take on vested interests are pushing us inexorably toward the next crash.
Joined: 25 Jul 2005 Posts: 12103 Location: St. Pauls, Bristol, England
Posted: Wed Feb 12, 2014 11:42 am Post subject:
all to discredit public banks so HSBC/Barlays private banks look better - pathetic
RBS used vampire practices to strangle viable companies, MPs told
Government adviser reveals his frustration at talk of bank kindness to zombie businesses
JAMES MOORE Author Biography Wednesday 29 January 2014
The Government adviser Lawrence Tomlinson has told MPs that viable businesses were being “strangled” by the activities of Royal Bank of Scotland’s Global Reconstruction Group (GRG).
Appearing before the Treasury Select Committee, the Business Department’s “entrepreneur in residence”, said: “I find it really frustrating, this talk about zombie businesses and that the banks are being so kind to them. It’s more like vampire businesses... As soon as they get any cash that they can use to grow, it gets taken out of them. We’ve seen people whose charges come to exactly the amount of profit that they made.”
The release of Mr Tomlinson’s report into RBS, GRG and the bank’s West Register property arm generated a huge controversy and the bank is now being investigated by the Financial Services Authority. RBS has also commissioned a report from the City law firm Clifford Chance, which is due in the spring.
Sir Andrew Large, the former deputy governor of the Bank of England, who wrote a sharply critical report on RBS’s treatment of small businesses that was also commissioned by the bank, has said he would be disturbed if the more “extreme” accusations made by Mr Tomlinson were proved to be true.
Mr Tomlinson said: “I am under no illusion about how shocking these assertions in my report are. I was truly shocked... I didn’t believe them.” He said he had been approached by “more than 1,000” businesses which have faced problems with GRG since the report’s publication.
He accused RBS of, in effect, turning GRG into a “debt collection agency” and said whistleblowers told him that they “couldn’t remember” when they had seen a business go into GRG and later emerge sound.
Mr Tomlinson pointed out that in the 2011-12 period “GRG was working on £14.5bn of debt of which only 6 per cent returned to performing portfolio. Now that’s a pretty stark number”.
He agreed when Mark Garnier MP described GRG as a profit centre that was a “incentivised to asset strip” businesses falling into its hands.
“I run a business employing more than 2,000 so I have a lot of suppliers. Since I’ve been entrepreneur in residence, people have come to me and said ‘I’m in GRG this is what happened to me’. These are people whose businesses I know and I have been shocked they are in there.”
Mr Tomlinson denied that the people contacting him had been running failing businesses and were blaming the bank for their troubles.
Several MPs said they had heard similar tales of woe from their own constituents.
Mr Tomlinson has called for both RBS and Lloyds to be split into three separate banks each. He denied this would be overly expensive, pointing to what he described as the “success” of the spin-off of TSB from Lloyds. _________________ www.rethink911.org www.actorsandartistsfor911truth.org www.mediafor911truth.org www.pilotsfor911truth.org www.mp911truth.org www.ae911truth.org www.rl911truth.org www.stj911.org www.l911t.com www.v911t.org www.thisweek.org.uk www.abolishwar.org.uk www.elementary.org.uk www.radio4all.net/index.php/contributor/2149 http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
Joined: 25 Jul 2005 Posts: 12103 Location: St. Pauls, Bristol, England
Posted: Thu Feb 13, 2014 7:46 pm Post subject:
Today Lloyds deliver bent set of accounts to stock market, parliament and public alike.
Lloyds Bank claims a £415m pre-tax profit – but the numbers don’t add up
Lloyds Banking Group plunged into the red in the second half of last year as it upgraded technology to the “most significant operational risk” facing the bank in the wake of January’s outage that interfered with credit and debit card payments.
The bank trumpeted a statutory pre-tax profit of £415m – the first since its 2008 bail out – and said it encouraged people “to look at the year as a whole”, as the chief executive Antonio Horta-Osorio took a £1.7m bonus and declared the state-backed bank ready for privatisation.
But Ian Gordon, banking analyst at Investec, said breaking the year into quarters revealed a starkly different picture, made up of “a large one-off-driven profit in quarter one, nothing in quarter two, and heavy losses in quarters three and four”.
He said: “This simple fact has seemingly been obscured by spin over the past two quarters (or through use of year-to-date numbers conveniently repeating the Q1).
“Today you can’t ignore the reality: attributable profit in half one, 2013, was £1,560m… Attributable loss in half two, 2013, was £2,398m, so attributable loss for the year of £838m.”
Attributable profit is what is left for shareholders after provisions such as that for PPI compensation, other write-offs and tax are factored in.
These numbers put a different gloss on the results to that preferred by Lloyds. It steered reporters to the bank’s £2.9bn “underlying profit” at the first half, which reached £6.2bn by the end of the year.
But critics of this number point out that provisions to cover various scandals and regulatory issues are becoming so regular that they shouldn’t just be stripped out as “one-offs” as many banks prefer to do.
The “real” numbers, after including all costs, also throw a new light on Mr Horta-Osorio’s bonus, which he said was merited by the bank’s “performance” and on the 8 per cent overall hike in staff bonuses to £395m.
David Hillman, a spokesperson for the Robin Hood Tax group, which campaigns for a tax on banks’ financial transactions, said: “It’s disgraceful that a bailed-out bank gets fined billions for ripping off its customers, but still pays out lottery-sized sums to its top staff. In what other industry would this be allowed to happen?”
Andrew Tyrie, the chairman of the Parliamentary Commission on Banking Standards, gave a more measured response but he noted that the transition to “normality” at Lloyds had “taken longer than many expected”.
“It will only be complete once Lloyds has been fully returned to private sector ownership and is clear of the legacy of past misconduct.”
Future returns to the private sector of the Government’s stake – still at 33 per cent – could be complicated by further IT issues. Lloyds made IT the “most significant” operational risk in the most recent figures.
Last month’s glitch hit transactions made by ATMs and debit cards issued by Halifax, Lloyds, Bank of Scotland and TSB. The latter is due to be spun off.
It was caused by the failure of two out of seven computer servers. Lloyds has more than 30 million customers, and is by far the biggest UK retail bank. _________________ www.rethink911.org www.actorsandartistsfor911truth.org www.mediafor911truth.org www.pilotsfor911truth.org www.mp911truth.org www.ae911truth.org www.rl911truth.org www.stj911.org www.l911t.com www.v911t.org www.thisweek.org.uk www.abolishwar.org.uk www.elementary.org.uk www.radio4all.net/index.php/contributor/2149 http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
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